How to trade Litecoin: the Ultimate LTC Trading Guide
How to trade Litecoin: the Ultimate LTC Trading Guide
18 March 2022
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An Ultimate Guide of How to Trade Litecoin: All You Need to Know about Successful Litecoin Trading
With hundreds of popular cryptocurrencies, it’s hard to keep track of the specifics of each one. Trading involves a high risk of losing money, so before you start it, we strongly recommend you to read through this article and understand what you are going to deal with if you decide to trade Litecoin.
Read on to find out more about trading platforms, complex instruments, trading strategies, and other things that will make your Litecoin trading more efficient.
What Is Litecoin Trading?
Launched in October 2011, Litecoin is in 20th place in the list of cryptocurrencies by market capitalization as of the beginning of 2022.
As you may know, LTC is not issued by governments; it’s produced through mining. Only a limited amount of LTC can ever be in circulation - no more than 84 million Litecoins. Just so you can compare: the maximum amount of Bitcoins is just 21 million.
Litecoin trading, just like trading of any other cryptocurrency, is speculation on cryptocurrency price movements with the help of a CFD trading account; it involves buying and selling the coins via an exchange.
Brief History of Litecoin
Let’s consider the price action of Litecoin. The first big date in the history of Litecoin is October 2011. A former Google engineer, Charlie Lee, founded a new cryptocurrency, complimenting Bitcoin. By 2012, the cryptocurrency had gained popularity and gathered quite a loyal fan club.
At the end of 2013, Litecoin experienced its first significant bull run - the price surged by over 1,700% and moved from $2 to $40 within a few days. It was the first huge success.
Unfortunately, the bull run was short-term - the price began to fall in December 2013.
In 2014, the overall bearish market trend dragged the price down further. The scandal with the Mt. Gox cryptocurrency exchange, which held the majority of Bitcoin, didn’t help the situation, as it was the biggest Bitcoin exchange in the world.
In February 2014, the company said it paused withdrawal requests. Through the whole month, traders were left with no certainty about their money. In March 2014, the exchange went bankrupt. Because of these events, the value of Bitcoin decreased by 36% in just one month. The negative market sentiment pulled the price of Litecoin to the all-time low of $1.11 on January 14th, 2015.
From 2015 to March 2017, the currency’s price was lower than $5. However, in 2017, it managed to reach the incredible mark of more than $350 as it benefited from retail investors’ money flowing into the cryptocurrency market. Many novice investors were afraid to miss a great chance to boost their income, so they started investing in crypto. LTC increased by a record 5,800% that year.
In 2018, another huge fall occurred due to the overall tendency in the market. LTC’s price crashed to $25 at the end of the year.
Rise and fall sequences have been taking place since then, through 2019 up until the current day. In June 2019, the price reached another high point of $113.96 after the CEO of American Express, Bill Barhydt, expressed enthusiasm for LTC’s smart contracts on a Reddit session of Ask Me Anything. However, the price fell significantly at the end of the year due to the overall trend.
2020 was a tough year for millions. The crypto world also struggled. Fortunately, in May 2021, the Litecoin price hit its all-time high of $225.79 thanks to Bitcoin’s success.
Reasons to Trade Litecoin
Let us begin with the bright side of Litecoin. Here are some solid reasons why you may want it in your portfolio:
Low risk of inflation due to the decentralized nature of the digital coin.
Easy to trade and a great start for newbies as Litecoin has really low volatility levels and almost zero transaction fees.
A proof-of-work algorithm helps to create new coins. It makes mining more energy-efficient, accessible to miners, and eco-friendly.
Reasons Not to Trade Litecoin
Now, let’s have a look at things that may concern you if you decide to give Litecoin trading a try:
Branding issues are not as insignificant as they may seem at first sight. It may be amusing that even Google thinks that the word “Litecoin” is a typo for “Bitcoin,” but many people confuse these two digital currencies.
The founder, Charlie Lee, sold his LTC in 2017 when the currency was at its peak. Even though there is a trustworthy and professional team of developers behind Litecoin today, many people are questioning its future.
How to Trade Litecoin in Five Easy Steps
Now let’s see which tools are on the market to trade the crypto. Just like any other digital currency, Litecoin can be traded via CFD, which allows traders to open buy and sell positions and earn a profit based on the market fluctuations. You can make a profit by buying low and selling high.
1. Select a Litecoin Trading Method
There are several trading methods.
You may buy Litecoin on an exchange and hope that you’ll be able to sell it at a higher price. Basically, you need the price to go up to be able to sell with the most profit. Relying on a price to rocket may not be the best idea.
You may make a profit from Litecoin price movements without being an owner of the currency. This method is based on CFDs. We will talk about it in more detail later.
To use crypto exchanges, you need to create an account on one of them. The choice is quite wide:
Coinbase is an exchange where it’s possible to buy, sell, send, and receive LTC. It has its own separate wallet, via which your LTC are sent.
Gemini has a wide selection of different cryptocurrencies, which you can trade on a spot market.
Binance is a place where futures, leveraged tokens, and crypto loans can be bought and sold.
Crypto.com is one of the most well-known platforms with earnings and crypto-cash visa cards. There are some advantages and drawbacks of this trading method.
Various bonuses for novice traders
Phishing scams, viruses, losing your wallet access. That’s why you must find a reliable crypto exchange.
Transaction charges. Choose an exchange that offers the lowest fees.
CFD is also known as a contract for difference. It is a form of a futures contract between a trader and a broker, or a financial derivative, to put it another way. CFD traders have nothing to do with the underlying assets. They have a right to get the difference between the current asset value and its future value. If a trader makes the right predictions, they get the difference. Inversely, if they are mistaken, they have to pay this difference to the broker.
CDFs trading has good and bad sides you need to consider in order to make an informed decision about which method to use.
An opportunity to use leverage.Still, remember that leverage raises not only potential profits but also multiplies losses.
The majority of CFD brokers are licensed by the FCA or CySEC, or other watchdogs. Traders are protected from fraud and may receive compensation if their brokers go bankrupt. Therefore, always check whether your broker is authorized and licensed
Access to global markets from a single platform
It’s faster - you don’t actually buy or sell an asset. That’s why transactions are made within seconds. You can react immediately if something happens on the market, so you have a chance to benefit from instant changes.
2. Learn Key Factors That Move Litecoin’s Price
Before you can start trading Litecoin safely and with significant benefits, it’s necessary to know the factors that can move the price up or down. Here they are:
Supply and demand are the major factors that determine all other factors. LTC has a huge supply, much larger than Bitcoin’s. Partially, this is the reason why the LTC price is lower. As the supply reduces, the price goes up. At the same time, the more investors decide to buy and hold Litecoin, the higher the price gets.
Reputation matters when it comes to the rise or fall of any cryptocurrency price, and Litecoin is not an exception. Government crypto regulations and network developments are the key elements that will either boost or pull the price down.
When big and reliable companies agree to take LTC as a payment method, it results in the price increasing.
Just like any other cryptocurrency, Litecoin’s price depends on Bitcoin’s significant price fluctuations.
Cost of mining. An increase in the cost of production leads to a price decline.
3. Choose Your Litecoin Trading Strategy
The right trading strategy is the key to your success. It’s a good idea to try as many of them as you can, analyze how each strategy works for you (you may even keep a diary to track the results). and choose the ones you are comfortable with and which bring you the most profit. Here are some technical analysis trading strategies.
Ichimoku Litecoin Trading Strategies
Ichimoku Kinko Hyo (or Ichimoku Cloud) is a day trading indicator created through years of research made by a Japanese journalist Goichi Hosoda. The indicator contains plenty of tools to make an accurate prognosis about the price direction.
Ichimoku can be translated from Japanese as “glance at a chart in equilibrium.” This is what Ichimoku can help you with:
To mark the direction of the main trend.
To display the momentum and the strength of it.
To show the support and resistance levels.
To give trade signals.
Let’s talk a little bit more about the signals. Here are some of the examples:
A bearish signal appears when the price goes below the base line.
A good time to start selling is when the turning line falls below the base line, the lagging line crosses the price chart and heads down, or when the price breaks below the Ichimoku Cloud.
If you want to take profit from a short position, keep your eyes on the lagging line and wait until it breaks back above the price chart.
When the price goes above the Cloud, there is an uptrend. However, a sideways trend may butt in, given the fact that the lagging line is corrected.
Bollinger Bands Litecoin Trading Strategy
The Bollinger Bands indicator consists of three lines:
a Simple Moving Average line is based on the last 20 periods;
a positive SMA is the upper band;
a negative SMA is the lower band.
There are three possible ways trading may go:
Beyond the outer borders. It means that a certain trend has started or continues. If the price hits the upper band, it’s an uptrend; if it touches the lower band, it’s a downtrend.
Reverse from the outer bands. If the price strikes the upper bands, the asset is overbought. If it touches the lower one, it is oversold. Provided the trend is strong, the price may stay at each of the bands or even go under them.
Cross and pull back from the middle line. When you see the price at the middle band, it’s a signal that the trend is changing. The middle line serves as a support/resistance level. If you see the price moving between the middle and the upper band, it’s a sign of a strong uptrend. If you see a strong downtrend, try to sell when the price is at the middle band, as it will target the lower boundary of the indicator.
MACD Litecoin Trading Strategies
The Moving Average Convergence Divergence, or MACD, is an indicator mostly used by day traders to determine the trend strength, define the trend direction, and define reversal points. Here are four signals the MACD gives you:
If the MACD goes up to and crosses the signal line, it means that the market is bullish. When the MACD crosses the signal line to the downside, it’s a signal of a bearish trend.
Extreme highs and lows on the MACD histogram signal the price is overbought or oversold. Thus, you may catch a signal of the price reversal.
Keep your eyes on divergence and convergence between the price and the indicator. When the price decreases but the MACD indicator’s lows get higher, it’s a bullish convergence. This is a signal to buy. When the price moves higher and the MACD maximums come to a lower level, a bearish divergence is formed. This is a hint for you to sell.
When the MACD histogram crosses the 0 line bottom-up, it’s a sign of an uptrend. When the MACD crosses 0 upside-down, there is a downtrend.
On Balance Volume Litecoin Trading Strategies
OBV, or On Balance Volume, is a trading indicator whose predictions are based on the volume flow. The indicator was created by Joseph Granville in 1963.
The OBV strategy gives the best results in combination with other indicators.
The signals are pretty easy to read. When the indicator goes up, there is an uptrend. If you see the indicator going down, there is a downtrend.
You can combine it with the Moving Average indicator to find the right moment to trade LTC with another cryptocurrency. If OBV trades above the exponential moving average (or EMA), you should consider buying Litecoin. And vice versa, when it trades below the EMA, it’s better to sell your Litecoin.
Holding Litecoin Strategy
This is the so-called HODL strategy (yes, it does look like a typo in the word “hold,” but that is what the strategy is really called). The main idea behind this strategy is to hold the crypto coin and not to sell it no matter what until the price rises in the future. Here are the main types of wallets where you can have your LTC safe and sound until you decide to get rid of them:
Hardware wallets A hardware wallet can be in a small USB stick form which gives you access to your Litecoins via a private key stored on the tool. It may be a good choice because these plug-in devices can’t be hacked. However, you need to remember that they are still vulnerable to phishing scams. A hardware wallet may be protected by a key or a passphrase. Even if you lose your wallet, access can be restored with a seed phrase.
Desktop wallets This is a virtual wallet installed on a desktop or on your laptop. Some of them may come with additional options, such as node software or exchange integration. Desktop wallet security may be easily compromised if your computer isn’t sufficiently protected, so it’s a good idea to improve your computer’s antivirus systems as much as possible.
Mobile wallets Mobile wallets work just like the desktop ones but on your mobile phone or tablet. Such online wallets often provide users with quick payment methods. Please, research their security features carefully before you start using them.
Paper wallets A paper wallet is a piece of paper with private keys and QR codes printed on it. These codes help you to facilitate your transactions. The information is not stored on the computer, so the security of paper wallets is quite high. However, there is still a risk of losing or damaging the wallet or misreading the information on it, so weigh your pros and cons before choosing this method of storing valuable data.
4. Choose a Litecoin Trading Platform and Open an Account
Choosing the right trading platform requires lots of time, but at the end of the day, it’s worth all the effort. Here are some tips that may help you to save time:
Pay attention to the interface - it should be easy to use and understandable
High speed is another important factor. Slow platforms may get on your nerves and leave you losing deals
Graphic representation and charts are necessary to have a clear picture of what is happening in the crypto market
The platform must be regulated by a state authority
The NAGA platform is one of the best choices as it allows you to do the following:
Trade almost a thousand different digital assets
Get instant order execution
Install it on iOS and Android
Find out what other more experienced investors do and make the same deals
Read the latest news and updates
Open multiple trading accounts with various supported base currencies
Get personal support via a chat, email, or phone
5. Trade Litecoin for the First Time
If you have limited experience with trading, here are some basic steps you can take to make your first deal a successful one.
Select a Trading Pair for Litecoin
Litecoin can be traded to fiat currencies and as a cryptocurrency pair with BTC, ETH, DASH, and other altcoins.
Decide Whether to Go Long or Short
There are two types of orders - long and short. A short order means that you sell Litecoin and predict the price to go down. A long order means that you buy an asset forecasting a price rise. There are two things to consider - a market order and a limit order. A market order is when you want to purchase or sell the crypto at the best price available right now on the market. It is a fast and reliable way to commit a trade. Unfortunately, during periods with high volatility, the price you wish to have and the price you turn out to get in reality can differ a lot. A limit order is when you want to purchase or sell the crypto at a certain price. There is minimum slippage risk, but your order sometimes may not be filled.
Set Stop Loss Orders
Implementing a stop-loss order helps you to get more benefit, save you from large losses and set you free from monitoring the holdings on a regular basis. The only disadvantage is that short-term price movements can become a reason for unnecessary sales.
Monitor Your Trade
Stay tuned in and monitor your trade regularly to be up-to-date with the price direction. You may also keep an eye on charts and read updates and news articles from reliable sources.
Close Your Trade to Fix a Profit or Cut a Loss
You may close your trade if you think that you have already got the maximum available profit or if the amount of the loss is getting closer to an amount you can afford. We recommend placing take profit and stop loss orders, so you won’t have to check the price constantly.
Why Trade Litecoin with NAGA?
The right trading platform has all the instruments a trader needs to gain experience, minimize losses, and benefit as much as possible. Here are some reasons why you should consider NAGA if you are interested in trading Litecoin and other cryptos.
More than 1 million users in 100 countries
All the financial services you need are in one place on your smartphone
NAGA’s activity is licensed
You get access to the latest news and expert articles on crypto trading
NAGA makes trading easy for newbies
You can keep track of other people’s trades and copy them
IMPORTANT NOTICE: Any news, opinions, research, analyses, prices or other information contained in this article are provided as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and therefore, it is not subject to any prohibition on dealing ahead of dissemination. Past performance is not an indication of possible future performance. Any action you take upon the information in this article is strictly at your own risk, and we will not be liable for any losses and damages in connection with the use of this article.
RISK WARNING: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. A high percentage of retail client investors lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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12 January 2023
The latest data from the US Bureau of Labor Statistics shows that the headline rate of inflation in the United States fell to its lowest level since late 2021 in December. The decrease in inflation has sparked hopes that the Federal Reserve will soon be able to stop raising interest rates, which in turn could provide a boost to economic growth and stock prices.
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