What is a spread in crypto pair trading? 📊
🔹 A spread shows the difference between two coins, calculated as a price difference or a ratio.
🔹 Coin prices vary a lot, so we compare relative changes rather than absolute prices.
🔹 A pair trader tracks spread movement instead of focusing just on coin A.
🔹 The spread rises when one leg outperforms the other, and falls when the opposite happens.
💡 Example: If coin A costs 10 and coin B costs 5, the A/B ratio is 2. If A goes to 11 while B stays at 5, the ratio becomes 2.2. The spread changed even though B didn't move.
⚠️ Typical mistake: Looking only at the price of one coin and forgetting that you are trading the difference between two.
How would you explain the spread to a friend in one sentence?
#Futures #CryptoTrading #CryptoEducation #RiskManagement
🔹 A spread shows the difference between two coins, calculated as a price difference or a ratio.
🔹 Coin prices vary a lot, so we compare relative changes rather than absolute prices.
🔹 A pair trader tracks spread movement instead of focusing just on coin A.
🔹 The spread rises when one leg outperforms the other, and falls when the opposite happens.
💡 Example: If coin A costs 10 and coin B costs 5, the A/B ratio is 2. If A goes to 11 while B stays at 5, the ratio becomes 2.2. The spread changed even though B didn't move.
⚠️ Typical mistake: Looking only at the price of one coin and forgetting that you are trading the difference between two.
How would you explain the spread to a friend in one sentence?
#Futures #CryptoTrading #CryptoEducation #RiskManagement