In cryptocurrency trading, currencies are traded in pairs, similar to forex trading. A currency pair consists of two currencies, with one being the base currency and the other the quote currency. For example, in the BTC/USD pair, Bitcoin (BTC) is the base currency, while the US Dollar (USD) is the quote currency. The price of the pair reflects how much of the quote currency is needed to purchase one unit of the base currency.

When trading cryptocurrencies, traders can place two types of orders: buy orders and sell orders. A buy order is placed when a trader expects the price of the cryptocurrency to rise, allowing them to purchase it at a lower price and sell it later for a profit. Conversely, a sell order is executed when a trader anticipates that the price will decline, enabling them to sell the cryptocurrency at a higher price before it drops further.

The primary goal of trading cryptocurrency is to generate profits by capitalizing on price movements. When a trader buys a cryptocurrency and its price increases, they can sell it for a profit. Conversely, if the price decreases, the trader may incur a loss when selling. Managing these outcomes requires effective risk management strategies, including the use of stop-loss orders and position sizing.