Litecoin Day Trading For Beginners
Litecoin (LTC) is one of the oldest and most established cryptocurrencies used by day traders, with significant daily trade volumes and price swings.
Litecoin uses open source software to create a peer-to-peer cryptocurrency and surged in trading popularity after its release, gaining the nickname of Bitcoin’s little brother.
Learn how to day trade Litecoin with this beginner’s guide.
Top Litecoin Trading Brokers
All Litecoin Brokers and Exchanges
What Is Litecoin?
Litecoin (LTC) is a digital currency that allows instant, low-cost payments to anybody in the world.
The global payment network does not rely on any central authorities, such as a bank. Instead, complex maths creates a secure network that ensures rapid transaction times and impressive storage efficiency.
Its value has been tied to the increasing popularity that blockchain technology has enjoyed in recent years. It has also secured significant industry support while enjoying substantial trade volume and liquidity.
History
Litecoin was released via an open-source client on GitHub on October 7th, 2011. The founder was a former Google employee by the name of Charlie Lee. His network went live on October 13th and was a hard fork of the Bitcoin More client.
At that time it offered a reduced block generation time of 2.5 minutes, a seriously increased total maximum number of coins, plus a different hashing algorithm, known as Scrypt.
In November 2013, the value of this cryptocurrency grew as much as 100% in single 24-hour periods.
April 2017 saw it became the first of the top five cryptocurrencies to adopt Segregated Witness.
In May of 2017, the first Lightning Network transaction took place using Litecoin. 0.00000001 LTC was transferred from Zürich to San Francisco in less than a second.
Pros Of Trading Litecoin
It is perhaps unsurprising to see the staggering price history of this cryptocurrency when you consider its benefits, including:
- Speed – Part of Litecoin’s potential comes as a result of the advanced open-source technology it uses. LTC generates blocks four times faster than BTC, while also confirming the legitimacy of transactions much faster.
- Market capitalization – Whilst its long-term outlook may be uncertain, LTC’s market capitalization puts it ahead of most crypto tokens and gives it firm credentials. This has led to its availability from some well-regarded brokers, and not only on crypto exchanges.
- Atomic swaps – Atomic swaps enable the cross-chain exchange of coins without using a third party. For example, if Jack wanted to swap 1 Ethereum for 4 Litecoins, he’d usually go to an exchange, incurring fees. However, atomic swaps allow him to swap his 1 Ethereum with Olivia, who was looking to swap her 4 Litecoins anyway, without either having to pay anything.
- Accessibility – A lot of Litecoin’s initial expected growth was born from its straightforward accessibility. You can buy and store LTCs, whether you are from India and Japan or the UK and US. You also have a number of investment vehicles to choose from, including ETFs and crypto CFDs.
Cons Of Trading Litecoin
The outlook for this cryptocurrency has also been hindered by several factors, including:
- Adoption – Litecoin is one of the oldest cryptocurrencies, but it simply hasn’t been as successful as many competitors. Bitcoin has cemented its place as the most successful cryptocurrency, while newer tokens like Ether (ETH), Solana (SOL) and Ripple (XRP) have outpaced Litecoin in terms of volume traded.
- Competition – There are a huge number of other altcoins available. This makes distinguishing itself amongst so many competitors extremely challenging. Not to mention, some argue Litecoin hasn’t adequately explained what is so unique that they offer.
- Liquidity – It simply isn’t as liquid as the most traded crypto tokens, and it hasn’t been adopted by as many businesses. The lower liquidity can lead to choppy trading and wider spreads, a key consideration for day traders.
Litecoin Day Trading Tips
1. Daily Chart Consolidation
Price charts and volume graphs are fantastic tools you need to harness. Historical prices can show you why Litecoin may have risen or fallen in the past, so you can better predict when they will again in the future.
Cryptocurrencies often spike during periods of consolidation where, Litecoin, for example, will trade within a relatively tight price range. With this type of environment, Litecoin will normally have attractive follow through after a range is broken. So, to get the best entries, try to align patterns on your daily candlestick charts with your intraday time frame.
2. Be Patient
Once you have confirmed a breakout on the daily, you must find a secure entry in a shorter time frame; 15-minute charts are often recommended.
You don’t necessarily want to buy on the break of a resistance level just because you see a breakout on a daily. You can enter if you have a pattern to back up your position. So you may want to wait for a pullback after that first push. This may give you a better risk-reward ratio, as well as lower prices.
3. Have a Strong Exit Plan
You need to ensure you have an effective exit plan once you have identified a good entry. Try to base your exits around daily and intraday resistance levels.
With Litecoin, it helps to scale out into strength because it is so volatile that an unrealised gain can swiftly transition into a loss if you’re not careful.
Scaling out can be great for beginners, in particular, as it prevents emotions persuading you to hold onto a position too long.
4. Get Educated
There are a host of resources available to aspiring Litecoin day traders. Informative websites can help you get to grips with blockchain technology. Most brokers also provide a range of research materials, as well as displaying prices live and Litecoin to dollar (USD) exchange rates.
In addition, check the latest news for expected prices for today and longer-term expectations. Training videos, webinars, tutorials and books are also easily accessible and can help with your Litecoin trading development.
See our strategies page for guidance on how to capitalize on market opportunities.
Bottom Line
Litecoin appeals to active traders for a number of reasons, including speed, volume and market capitalization.
However, volatility and news announcements can send the price of these coins plummeting and could lead to a crash. Therefore, caution must be taken when day trading with Litecoin.
FAQ
Can I Trade CFDs On Litecoin?
Yes, a number of brokers offer contracts for difference on Litecoin. Crypto CFDs allow traders to take a position on the future price of the crypto without owning the token itself.