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.
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.
Let us begin with the bright side of Litecoin. Here are some solid reasons why you may want it in your portfolio:
Now, let’s have a look at things that may concern you if you decide to give Litecoin trading a try:
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.
There are several trading methods.
To use crypto exchanges, you need to create an account on one of them. The choice is quite wide:
There are some advantages and drawbacks of this trading method.
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.
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:
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 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:
Let’s talk a little bit more about the signals. Here are some of the examples:
The Bollinger Bands indicator consists of three lines:
There are three possible ways trading may go:
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:
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.
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.:
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.
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 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.
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.
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:
The NAGA platform is one of the best choices as it allows you to do the following:
If you have limited experience with trading, here are some basic steps you can take to make your first deal a successful one.
Litecoin can be traded to fiat currencies and as a cryptocurrency pair with BTC, ETH, DASH, and other altcoins.
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.
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.
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.
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.
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.
Even though Litecoin has seen tough times, the future looks bright at the moment, so you may consider adding some Litecoins to your portfolio
The minimum amount varies from platform to platform. If the platform you choose has leverage, $100 is more than enough to start trading.
Yes, you can profit from Litecoin trading if you choose the right trading strategy and do your research first.
Right now, according to different experts’ forecasts, it’s better to trade LTC, not to invest in it. No matter what year it is, if you trade CDFs, you’ll always make a profit as you earn money on buying and selling the financial asset.
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