Litecoin Trading Guide

So you want to trade Litecoin online but you’re not sure where to start? This guide will explain how this cryptocurrency came into being, what its position in the market is, and, importantly, how you can buy and sell Litecoin.

Skilling Logo

Skilling

4.6
Demo account Yes
Minimum deposit 100€
Minimum deposit: €100
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider
eToro logo

eToro

4.2
Demo account Yes
Minimum deposit $200
Minimum Deposit: €200
67% of retail investor accounts lose money when trading CFDs with this provider.
Plus500 Logo

Plus500

4.5
Demo account Yes
Minimum deposit 100€
Minimum Deposit: €100
76.4% of retail CFD accounts lose money.
avatrade logo

Avatrade

4.5
Demo account Yes
Minimum deposit 100€
Minimum Deposit: €100
Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
easyMarkets logo

easyMarkets

4.5
Demo account Yes
Minimum deposit 100€
Minimum Deposit: €100
Between 74-89% of retail investor accounts lose money when trading CFDs with this broker.
Markets.com Logo

Markets.com

5
Demo account Yes
Minimum deposit 250€
Minimum deposit: €250
73.9% of retail investor accounts lose money when trading CFDs with this provider.
Trade.com Logo

Trade.com

4.5
Demo account Yes
Minimum deposit 100€
Minimum deposit: €100
Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.

What is Litecoin trading and is it safe?

Litecoin (LTC) is a cryptocurrency that was inspired by Bitcoin but processes transactions in a slightly different way. The blockchain was launched in 2011 by Charlie Lee who described it as a lightweight version of Bitcoin. Another way of thinking about Litecoin vs. Bitcoin is that the former is silver and the latter is gold. In fact, this is a comparison that the developers made in the blockchain’s early days.

The similarities between the two cryptocurrencies are that they both process blocks of information in a decentralised manner. The mechanism that ensures transactions are secure and valid is proof of work. This contrasts with cryptos such as Ethereum, which validates transactions via the proof of stake method. But we don’t need to dive into the technical details of this to understand Litecoin and, in turn, how to trade Litecoin online.

The main thing you need to know is that, fundamentally, Litecoin and Bitcoin are similar. The two main differences are that Litecoin will eventually produce 84 million tokens, whereas Bitcoin will only produce 21 million. Additionally, Litecoin prioritises transaction speed over how much data is processed per transaction. Therefore, in essence, it’s a lighter, faster cryptocurrency that, in theory, could have useful real-world applications.

It’s also important to note that Litecoin is legal both as a technology and a trading instrument. When you use our regulated Litecoin trading sites, everything on offer complies with UK laws. In other words, you can trade Litecoin online in a safe, secure, and legal way using online brokers such as Skilling, AvaTrade, and Plus500

How to trade Litecoin online

The Litecoin trading market is packed with options, and because this crypto has been around since the beginning, it’s available on every type of exchange. Therefore, if you want to buy Litecoin and own the tokens, you can use a cryptocurrency exchange. Alternatively, if you want to start crypto trading Litecoin, you can speculate on its price movements instead of buying tokens. This gives you the ability to go long or short via a top-rated FX exchange.

Chose an exchange platform & open an account

What’s the best Litecoin trading platform? This depends on your preferences, trading style, and overall goal. As we’ve noted, there are two ways to trade LTC: you can own the asset or you can speculate on its price movements.

Buying Litecoin tokens is a fairly simple process. You find the right cryptocurrency exchange, create an account and make a deposit. Depending on the exchange, you might be able to make a deposit using bank transfers and credit/debit cards. It might be the case that you can only deposit using other cryptocurrencies such as Bitcoin.

If that’s the case, you need to send tokens from a pre-existing crypto wallet to the exchange. Once you’ve made a deposit, you can buy LTC via the exchange. You’ll then own Litecoin tokens that can earn you money if you sell for a higher price than you bought them for. Conversely, if their value decreases and you sell, you’ll lose money.

The other way to trade Litecoin online is via contracts for difference (CFDs). These virtual contracts allow you to make trades based on a token’s price. You’re not actually buying any Litecoin. Instead, you’re using its price fluctuations as the basis for virtual contracts. This allows you to speculate on the price increasing or decreasing. Thus, CFD Litecoin trading gives you more flexibility than owning the underlying asset. 

Buy some Litecoin

Follow the steps below to buy LTC online:

  1. Read our reviews to find the best Litecoin trading platform online.
  2. Use our secure registration links to create an account/s as your preferred platforms.
  3. Verify your account. This requires you to upload official forms of ID.
  4. Make a deposit once your account has been verified.
  5. Search for Litecoin/LTC.
  6. Input the amount of Litecoin you want to buy. The price will be based on the current market rate. Alternatively, you can set a price target and the software will execute the trade automatically once the price has been reached.
  7. Once you’ve completed the trade, you’ll own LTC tokens and make a profit if you sell and the price of Litecoin is higher than what you paid for it.

Trade

If you don’t want to own the underlying asset, you can trade Litecoin CFDs. This allows you to go long or short. To enter the Litecoin trading UK market, follow the steps below:

  1. Follow steps 1 to 5 (above).
  2. Decide whether you want to go long or short. Going long means you believe the value will increase. Going short means you believe the value will decrease.
  3. Enter the number of CFDs you want to purchase and execute the trade. *Note: you can initiate additional commands such as stop loss and take profit limits, there is more on this below.

Profit

Every Litecoin online trading platform we recommend allows you to make a profit when the value of LTC increases or decreases. In other words, if the price moves in the right direction and you sell, you’ll make a profit. It’s that simple.

If you own the underlying asset and the price increases, you make a profit. If you trade Litecoin CFDs, you can make a profit if the price decreases and you’ve gone short. Alternatively, you can make a profit if the price increases and you’ve gone long.

Close your position to take a profit or cut a loss

Crypto trading, like FX trading in general, is all about selling for a better price than you bought at. We’ve described what that means in the section above. Of course, entering and exiting trades at the right time isn’t easy. As well as timing, you need to monitor the financial markets and analyse as much data as possible to get a sense of where the price of Litecoin is heading.

The best Litecoin trading platforms provide a variety of tools that not only enhance your experience but give you a chance to maximise your potential. Two useful tools are “take profit” and “stop loss” commands. These tools allow you to set commands that will automatically end trades at pre-determined times.

Stop Loss = You input an amount you’re willing to lose at the point you’re buying LTC. This tells the Litecoin trading platform to automatically end the trade once your loss limit has been reached.

Take Profit = You input an amount you want to make at the point you’re buying LTC. This tells the Litecoin trading platform to automatically end the trade once your profit goal has been reached.

Take profit and stop loss limits are useful for two reasons. Firstly, the LTC trading market can be volatile. That means prices can change significantly in short periods of time. Keeping on top of these movements and exiting the market at the right time is tough unless you’re constantly glued to your computer or mobile. Therefore, it’s useful to have commands that will automatically end trades at what you believe is the right time.

These two features are also a great way to keep the emotion out of trading. Riding positive runs for too long and not knowing when to accept a loss are common mistakes in the trading world. Along with inexperience, emotions contribute to these mistakes. Stop loss and take profit commands take the emotion out of trading and allow you to set targets when you’re thinking clearly.

Tips to trade Litecoin

Crypto trading can be tricky. It can also be hugely profitable. No one can ever say for certain which way the market is going to swing. However, what you can do is arm yourself with as much information and as many Litecoin trading strategies as possible. Again, there are no guarantees when it comes to Litecoin online trading. However, the advice below can help you get a better handle on the market. 

Learn what moves Litecoin’s price

Data, analytics, and current affairs are the things you need to monitor when it comes to sizing up the price of LTC. The best Litecoin trading platforms have charts you can view. These price charts not only show you the current value of LTC but historic highs and lows. You can also view trend lines. These things allow you to get a broad overview of the market and, in turn, start to make predictions about which way the price will swing.

You can supplement technical analysis with advice from traders and current affairs. Indeed, if you know what’s going on in the crypto trading community at large, you may be able to unearth some information that will affect the price of Litecoin.

For example, if you heard that a major bank was testing a new payment system on the Litecoin blockchain, that’s a big deal. Thus, the value would probably increase. Your job as a Litecoin trader is to keep your finger on the pulse. If you can spot breaking stories and use technical indicators to your advantage, you stand a better chance of making the right moves.

Pick a Litecoin trading style and strategy

As well as using all the information available to improve your decision-making process, you need to adopt a style of trading. It’s possible to implement various styles and switch between them at will. However, you need to find one that suits your personality and budget.

Trading Styles

Trading styles generally fall into two broad types: active and passive. Naturally, every style requires some form of activity. However, it’s the degree to which you’re active that’s important. Some trading styles require you to be constantly monitoring the market and moving in and out of trades at a rapid pace.

Others allow you to be a little more passive. Choosing the right one should be a matter of preference. Do you prefer short bursts of intense activity or are you better suited to trades that can be left for longer periods of time? Only you can answer these questions. However, to do that, you need to know what the main types of Litecoin trading strategies are. For that, see the section below.

Trading Strategies

In general, there are four main trading strategies:

Scalping: If you enjoy short bursts of intense activity, scalping could be perfect. Put simply, this type of trading strategy requires you to make multiple trades in a short period of time, which can mean going long and/or short many times in an hour.

Day Trading: Litecoin trading markets are open 24/7, which means it’s ideal for this strategy. The fundamental principle here is that you never hold a position overnight. Everything starts and stops during normal day trading hours.

Swing Trading: Volatility is inevitable in the trading world. When prices swing from one trend to another, there’s a certain amount of volatility. Swing traders look to capitalise on these periods of change and, in turn, make moves before a new trend is established.

Position Trading: Those that prefer to do some analysis, make trades, and wait for longer periods of time, may prefer position trading. The general aim of this strategy is to review price charts and see if the current value of LTC is higher than recent highs or lower than recent lows. If the price is moving towards one of these positions, you can go long or short accordingly.  

Decide whether to go long or short

When should you go long or short? This all depends on how you perceive the market. The point to understand here is that trading Litecoin CFDs allows you to take either position. If you believe the price of LTC is increasing, go long. If you believe it’s decreasing, go short.

Set your stops and limits

Stop loss and take profit limits provide a certain amount of certainty to your Litecoin trading activities. Monitoring the markets and staying on top of things is tough. Moreover, when money and emotions mix, things can get a little murky.

Setting limits allows you to bring more logic and control to the mix. You set these limits before you execute a trade. In theory, this means you should be thinking clearly and without emotion. That’s important and the main reason you should be using these features. 

Risks

Nothing is guaranteed in this game. The Litecoin online trading market is just as volatile, if not more so than forex. That means there’s always going to be risk involved. You won’t always make money. However, you can give yourself the best shot at making a profit by researching your asset, using technical indicators, setting limits, and managing your money. You can’t eliminate risk, but you can try to reduce it as much as possible.

Conclusion

Litecoin trading online is a great way to play the cryptocurrency markets. It might not be as popular as Bitcoin but it’s a major crypto with a market that offers a healthy amount of liquidity and volatility. Therefore, if you can find the right strategy, stay on top of the market and invest wisely, the potential is there. The best Litecoin trading platforms will help you do that, so check out our recommended FX sites today.