How To Trade Cryptocurrencies
You trade cryptos in pairs, like the following:
Crypto A/Crypto B
Crypto A is your base currency.
Crypto B is your quote currency.
It’s easy to remember. You read from left to right, and “b” (for “base”) comes before “q” (for “quote”).
Base Currency/Quote Currency
Your capital is your quote currency, and the crypto you’re buying with your capital is your base currency.
You then sell your base currency to get your quote currency back which is your capital + some profit.
You can use any crypto as your base currency.
However, your quote currency is limited to a few, depending on the crypto exchange you’re using. But they’re usually BTC, ETH, or USDT, USDC, BUSD or similar.
USDT or USDC are “stablecoins“, in that USDT1.00 or USDC1.00 is always equal to USD1.00. They’re designed that way, so that there’s no wild fluctuations in their value like that we experience with bitcoin (BTC) or Ether (ETH).
As such, if you use a stablecoin as your quote currency, it’s easy to know how much profit you’re making every time you sell your base currency at a higher price than when you paid for them.
For example, you may be trading the following pair:
You will buy ETH (Ether) and use it as your capital. ETH will then be used to buy a set amount of BTC (bitcoin). When your BTC is sold at a higher price to make a profit, it is sold for ETH. And so, as you buy and sell your BTC over time, your ETH will increase.
However, ETH’s value fluctuates from hour to hour. If you have earned 10 ETH from trading your BTC – have you actually made any profit? You may have, at this point in time, but tomorrow you may not have, because tomorrow ETH’s value may have dropped by 50%.
So by using USDT/USDC/BUSD/any stablecoin as your capital (or quote currency), where one unit of them Is always equal to USD1.00, you will know exactly how much profits you have made every day as their values don’t change from hour to hour.
Because we are always buying low and selling high, and we choose cryptos that have returned good profits recently, and we use a stablecoin as our quote currency, we will always earn profits from our bots as long as there are sales of the base currency.