Secrets of trading with Litecoin cryptocurrency

Hello, comrades Forex traders!

Earlier, we already found out how to trade Bitcoin and Ethereum, today we offer to pay attention to one more popular cryptocurrency - Litecoin.

While all the subtleties and nuances of effective trade with instruments such as EURUSD have long been taken into account by the markets, even the simplest strategies of technical analysis are still working with Litecoin.

In other words, this is an excellent chance for both traders and investors to hunt for hundreds and thousands of percent of profits in a young and dynamically developing market today.

Today, cryptocurrencies attract more and more investors and traders around the world. Streams of virtual and unaccountable money are increasing, and the number of companies and organizations accepting payments in Bit- and Litecoin, as well as in some other cryptocurrencies is growing rapidly. Low commission and fast transaction speed, as well as principal accents on the personal confidentiality of holders, provided the cryptocurrency with the status of revolutionary modern assets, interest in which is growing day by day.

What is Litecoin?

The project was founded and implemented by Charlie Lee, a former Google employee, in 2011. Litecoin (LTC) was created on the basis of the Bitcoin program code and is its fork or branch. It differs, first of all, by faster block generation (2.5 minutes, which is 4 times faster than Bitcoin), an increased maximum of the number of coins (84 million, which is also 4 times larger) and another hashing algorithm (script, instead of SHA-256). To date, LTC is the world’s fourth cryptocurrency by total market capitalization.

Development, as well as of Bitcoin, is based on the technology of blockchain, implying a distributed data storage system for transactions. It is the chain of blocks that the translations are confirmed and synchronized in, and, as we have already mentioned, it is much faster than the BTC. The transaction is usually completed after generating 6 blocks, which is 15 minutes.

In general, the main difference between Litecoin and Bitcoin is a larger volume of coins, a higher transaction speed, and a complicated algorithm for mining. In all other basic relations, LTC is identical to BTC: there is no administrative center, and therefore, there is no central regulation of the number of coins in circulation. The issuance process is similar to the one in Bitcoin, but a bit more complicated, and the currency is exchanged for fiat money, BTC, and analogs - mainly on electronic exchanges, such as Kraken or Bitfinex.

The main problems of the market

The first problem - the size of the blockchain, because of which it takes more and more time to open a purse. As a chain of blocks that stores information about all transactions that have been committed, as the number of transactions increases, the software installed on the user’s computer requires the downloading of an increasing amount of data, which can significantly affect the prospects for future currency growth.

Second - ambiguous legal status. Many countries have perceived well the emergence of cryptocurrencies in the market, and some see them as an immediate threat to the economy. What measures the political establishment is ready to take to restrict or prevent operations with the cryptocurrency is certainly unknown. But, from a technical point of view, this assumes a significant limitation of the Internet as a whole.

Another problem is related to the fact that the cryptocurrency is not provided with anything, except, literally speaking, the belief in them. They are not tied to anything and therefore the prospects for growth or depreciation are most often provided by the technical side of the market and differ by a relatively small number of fundamental factors. Nevertheless, among the latter one can identify news and rumors that indicate the growth of the general mood of the market (the emergence of new cryptocurrencies, public or academic discussions, political criticism, corporate support and high-profile scandals).

The development of market technologies also significantly affects this market. In 2014, the median Litecoin rate, the script algorithm which until then was resistant to ASIC, on some exchanges dropped by more than 50% just three months after companies specializing in developing of hardware for mining (such as Alpha Technology) began to produce ASIC products specifically for Litecoin, offering it not only to commercial companies, but also to the private consumer.

Where to get the LTC chart

You can work with the Litecoin chart with the help of the TradingView service, which is available in the online charts service on our website if you enter the name of the tool - LTCUSD.

 

Here you should choose a chart in accordance with the exchange you are interested in. We recommend working with the most famous and large exchanges (such as Kraken or Bitfinex) since quotes can vary significantly depending on the trading platform.

Among popular brokers, Litecoin can be traded on AMarkets. Below is the specification for USD.

To start, it’s better to try trading on a demo account in order to get used to the terms of trade. The specifications for real and demo accounts do not differ.

Trading Strategies

Cryptocurrency can be traded around the clock and 7 days a week. This is a trend tool with short consolidations and therefore trading strategies with not too big goals work well.

What is characteristic of many cryptocurrencies, and Litecoin is no exception, the global trend tends to go up as volatility generates increasingly stronger levels of correction.

Technical analysis works out perfectly, and even the usual moving average can serve as an indispensable indicator for analyzing the behavior of quotations.

Scalping is not our option, because of the high spread. Consider deals on H1 and above. Also, do not forget that the concept of trading sessions for Litecoin is not applicable and activity can appear at any time of the day.

For investors, it will be useful to learn that more recently LTC has left the three-year pit. However, for today the agiotage has had time to subside (which is seen below on the monthly chart) and the further fate of the long-term dynamics of the asset remains the subject of long discussions.

Also, many investors tend to exploit Litecoin as a hedging asset, in the light of its political neutrality. However, we should not forget that crypto-currencies are extremely volatile.

As a result, our strategies are predominantly trending ones with not too big goals. Timeframes from H1 and above, and scalping is not an option. With the long-term investment, it is worth waiting for a correction, after which to buy at the (seemingly) lowest point, if the news foreshadows another wave of growth for the cryptocurrency market as a whole. For intraday trading, the simplest strategies - trend and breakout strategies - are suitable. However, try not to miss the latest news and stay abreast of the global trend.

Conclusion

To date, the cryptocurrency market offers an attractive space for both intraday trading and long-term investment. The simplest trading strategies are well developed here, and the influence of rare fundamental factors on the market remains fairly predictable and irreversible in short prospects. However, beginners should not be deluded by the apparent simplicity of the trade, and for the beginning, it is recommended to turn to the theories and practice of using volatility. Another thing you should take into account are the relatively higher overhead costs than when working with traditional Forex tools, as well as the need to abstain from scalping, the effective implementation of which will hinder high spreads.

Keep an eye on the news, and stay up to date with the latest developments on the cryptocurrency markets, do not forget about stop loss and money management, and profits will come to you!

Regards, Michael

ForexTraderPortal.com