In 2020 it’s estimated that there are now somewhere between 4000 and 7000 cryptocurrencies, depending on who you ask. With so many out there being traded every day, what makes Litecoin trading any more attractive than the rest? Part of the appeal of LTC trading is the fact that the coin was designed to be more usable than Bitcoin, which may offer the prospect of high value for traders but it isn’t very user-friendly. Litecoin’s blockchain can verify blocks in less than three minutes, compared to Bitcoin’s more usual 10, and it also has a far greater supply, with 84 million coins to BTC’s 21 million.
On the list of top cryptocurrencies (measured in terms of market capitalisation), Litecoin sits in seventh place, but that does not reflect on its attractiveness as a tradable asset. There are good reasons to trade LTC, so let’s take a look at them.
How to trade LTC: where it sits in the market
Before you decide to trade Litecoin you should understand its position in the market and the factors which affect how its price moves.
Ethereum’s excellent performance this year has been eye-opening while Litecoin has languished in comparison, but that doesn’t really convey the whole picture because the surprising thing you’d notice had you been Litecoin trading recently is that its price doubled in just eight weeks, rising above $80 back in February. The flash crash in March pummelled this and many other cryptos and it’s limped along ever since, never quite gaining the momentum that has seen other coins rally.
What Pushes LTC Up:
Halving – the halving of the LTC block reward last August increased prices.
Usage – demand rises on news that retailers accept Litecoin
Bitcoin – when its price goes up all others are dragged up in its wake
What Pushes LTC Down:
Competitors – it’s a turbulent market with some very capable rivals
Supply – Litecoin has a bigger supply than many competitors
Bitcoin – just as it can push prices up, so can it push them down
Where to do Your Litecoin Trading
When you’re buying LTC for the first time you might want to try using an exchange. Quite a few of them make it easy to turn traditional currencies like dollars into cryptocurrencies, and on top of that, many will also offer you information on strategies to help you get started.
You should only trust a strategy for any asset if it’s based on both fundamental and technical analysis. Fundamental analysis means taking your cues from the news, and what the crypto industry is doing, while technical analysis means getting into the nitty-gritty of charts, where you’re looking for trends that could affect Litecoin’s price. A good exchange will also let you open a demo account, so you can practice trading Litecoin and your mistakes won’t lose you any real money.
A word of warning though. It’s a largely unregulated industry, so make sure that the exchange you decide to go with has a good reputation before you decide to part with any money. You can find out who is trusted and who isn’t by looking at plenty of reviews. You want to know that they offer adequate security measures and you also want the reassurance of knowing that their trading volumes are substantial. When volumes are higher, so is the platform’s liquidity, and that means it’ll be easier for you to trade Litecoin.
Litecoin trading strategies
Currency.com lets you see how LTC/USD has been trading over any given interval. You can look at changes over the previous minute or over the previous seven days. Several trading strategies use candlestick charts. Bullish patterns may point to imminent price rises, while bearish trends can be the smoke signals that suggest a sell-off is on the cards.
Even the most experienced traders can’t ignore the advantages of using safeguards. They’re essential for trading regular assets, and even more important in the volatile cryptocurrency arena where losses can quickly become huge.
Having a stop loss in place gives your investments a safety net, bailing you out when prices plunge. A take profit does the same in the opposite direction, effectively letting you quit while you’re ahead. Automatically selling before things get too bad and selling while you’re ahead and before the price dips again are both sensible options for your Litecoin trading toolbox. Automation like this helps traders to cut impulsive decisions out of their approach and trade only on data.
Research is every trader’s best weapon. The wider you read, the more opinions you absorb, and the more analysis you take in, the better prepared you will be to trade LTC. Learn as much as you can, stay up to date, and add your own insights. If everything points towards a decline in Litecoin prices in your opinion, take a short position to profit from the dip. But if you can’t escape the conclusion that Litecoin is going to rise then take a long position instead.