Ever wondered what a price spread actually means in pair trading? 📊
🔹 Spread shows the difference between two coins, calculated as a price difference or a ratio.
🔹 Since coin prices vary greatly, we compare relative changes rather than raw prices.
🔹 Pair traders monitor how the spread moves, not just the price of a single coin.
🔹 Spread rises when one leg outperforms the other, and falls when the opposite happens.
💡 Example: Coin A is 10 and B is 5, so the A/B ratio is 2. If A goes to 11 and B stays at 5, the ratio becomes 2.2. The spread changed even though B didn't move at all.
⚠️ Common mistake: Looking at just one coin's price and forgetting you are trading the difference between two assets.
How would you explain spread to a friend in one sentence?
#Futures #CryptoTrading #CryptoEducation #RiskManagement
🔹 Spread shows the difference between two coins, calculated as a price difference or a ratio.
🔹 Since coin prices vary greatly, we compare relative changes rather than raw prices.
🔹 Pair traders monitor how the spread moves, not just the price of a single coin.
🔹 Spread rises when one leg outperforms the other, and falls when the opposite happens.
💡 Example: Coin A is 10 and B is 5, so the A/B ratio is 2. If A goes to 11 and B stays at 5, the ratio becomes 2.2. The spread changed even though B didn't move at all.
⚠️ Common mistake: Looking at just one coin's price and forgetting you are trading the difference between two assets.
How would you explain spread to a friend in one sentence?
#Futures #CryptoTrading #CryptoEducation #RiskManagement