Settle an argument please?

[jimbo07818]

Ok this is a fairly long post but its an argument that needs settling otherwise myself and my business partner are stuck at a crossroads here.

Trading pairs:

This is my take on it.

All they are is a market to buy ONE coin with another coin.
The base coin is the coin first in the pair and you use that to buy the second coin.
It used to be mainly BTC, then ETH and LTC and now you can use BNB as well on Binance.
It gives people more flexibility to use a variety of coins to trade with, rather than having to convert to BTC all the time.
It's also cheaper to send a coin like LTC to another exchange to trade with.

Once you have used your base coin to buy an alt coin, thats it.
You have swapped one asset for another.
The alt coin is in NO WAY WHATSOEVER then LINKED to the coin you bought it with.
If both the alt coin AND the base coin you bought it with RISE and you sell the alt coin back to the same base coin, your gains in base coin will basically be nothing.
You certainly doint get "double the gains" if you trade say BNB for ICX, both coins rise 20% then you trade your ICX back to BNB. Your amount of BNB will be about the same?

You want the base coin to remain static while you see gains in the alt coin then buy more of the base coin back if THAT is the coin you want to accumulate more of.

You certainly dont want the base coin to rise and if it HAS then you should trade back to another base coin that has lowered in value and wait for that to rise or stick it in FIAT until your base coin returns to the value it was when you made the trade and THEN buy the base coin back so you see the true gains.


Now would all the above be correct?

I've likened/simplified trading theory to a frog on lilypads on a lake where the lilypads colour represents the market being in a rise or a dip (candlestick colour):

You can only jump when your lilypad is green and you can only jump to a pink lilypad or use a green lily pad to double hop to a pink lilypad.
If you're on a lilypad that's pink, you should wait till it turns green in order to jump to your next pink lilypad.

You dont need to reply with any long winded responses if so, just say "you are correct" or if wrong then feel free to correct me!

We really need a 3rd party to clarify this as neither of us is accepting the other's explanation.

[Maveth13]

If both the alt coin AND the base coin you bought it with RISE and you sell the alt coin back to the same base coin, your gains in base coin will basically be nothing.
You certainly doint get "double the gains" if you trade say BNB for ICX, both coins rise 20% then you trade your ICX back to BNB. Your amount of BNB will be about the same?

You want the base coin to remain static while you see gains in the alt coin then buy more of the base coin back if THAT is the coin you want to accumulate more of.

Yes this is correct. Though your base coin and the altcoin you bought doesn't really rise(and fall) at the same pace, most of the time. Your base coin also is certainly not going to be static, so you would want an altcoin that would have a greater yield than the base coin in the same timeframe. The importance of diversifying your portfolio comes in play here.

[Xester]

Actually you are not receiving the same. If for example you trade coin A to coin B and both of them increased in value by 20%, this does not mean that you still have the same. You have forgotten one simple yet important aspects of trading and that is the transaction fee and the difference in value in buy and sell. You may actually end up losing some value if you convert them back to the base coin without considering those important aspects.

[ethereumhunter]

Actually you are not receiving the same. If for example you trade coin A to coin B and both of them increased in value by 20%, this does not mean that you still have the same. You have forgotten one simple yet important aspects of trading and that is the transaction fee and the difference in value in buy and sell. You may actually end up losing some value if you convert them back to the base coin without considering those important aspects.

yes, you are right. and although the transaction fee is not too big, if we don't check how much value in buy and sell between coin A and coin B then we cannot take our profit. as long as our value is bigger than the transaction fee, then we still make a profit. besides that, if we convert them back to the base coin and somehow the price is down, we need to wait for a while until the price is up again so we don't lose any value from the base coin.

[sp383]

Actually you are not receiving the same. If for example you trade coin A to coin B and both of them increased in value by 30%, this does not mean that you still have the same. You have forgotten one simple yet important aspects of trading and that is the transaction fee and the difference in value in buy and sell. You may actually end up losing some value if you convert them back to the base coin without considering those important aspects of trading.

[johnnythunder]

Actually you are not receiving the same. If for example you trade coin A to coin B and both of them increased in value by 30%, this does not mean that you still have the same. You have forgotten one simple yet important aspects of trading and that is the transaction fee and the difference in value in buy and sell. You may actually end up losing some value if you convert them back to the base coin without considering those important aspects of trading.