What is Litecoin and how does it work?
While almost everyone has heard of Bitcoin which has been very successful on the stock market in recent years, fewer investors know Litecoin has also gained popularity in recent years and is a direct competitor.
Like other crypto currencies, Litecoin is a dematerialized currency that allows transactions between sellers and buyers online, through a secure platform. Litecoin can of course be exchanged for US dollars or any other currency, as long as you have a suitable crypto-currency portfolio.
But it's also possible to speculate on the price of Litecoin without owning a dematerialized portfolio, using CFDs and without having to actually own one. These contracts for difference allow you to take a position on the rise or drop of the price of this asset depending on the strategy implemented.
How to analyse the price of Litecoin on the stock market?
Now let's get to the heart of the matter by looking at how to anticipate variations in the price of Litecoin on the stock market. As we mentioned above, a consistent analysis of a stock market value should be based on both the use of technical analysis and fundamental analysis.
- Technical analysis is essential to any investment strategy and this particularly applies to the most volatile assets like Litecoin. You can customize the charts made available to you by your broker in order to display the volatility, trend or other indicators of your choice. From there, you'll simply have to interpret these indicators in order to deduce the most probable trends. It's up to you to choose which technical indicators you are most comfortable with in order to facilitate your reading of the live charts.
- Fundamental analysis is also important if you want to trade Litecoin effectively on the stock market. As far as Litecoin is concerned, keep an eye out for any news to analyse. However, it is best not to limit your fundamental analysis to this single virtual currency but to the entire cryptocurrency market, in fierce competition and whose prices are therefore closely linked. Start by analysing past announcement effects in order to know how this asset reacts to market news.
While it may be tempting to use only one of these analysis methods, it is best to compare the signals obtained by each in order to maximize the objectivity of your analyses. So when technical analysis and fundamental analysis send you the same sell or buy signals, it will no doubt strengthen your strategy.
To set up your investment strategies using these different analysis methods, you should write down all the signals obtained as well as the limits that you'll have set for yourself regarding your money management and your risk management. This will allow you to always have your goals in mind and not to give in to a movement of panic or too much enthusiasm.
Who is Litecoin online trading for?
Trading Litecoin, like trading all assets on the stock market, naturally requires proper preparation and sufficient market knowledge. Therefore, it’s more suitable for traders who already have experience in stock market speculation or who have sufficient knowledge about trading in general. It's not recommended at all for novice traders. Also, before you start trading Litecoin on the Stock Exchange, it's essential to find out as much as you can about this asset and take the time to set up a real investment strategy.
Strategy is the basis of any investment in the stock market. In order to be consistent, your trading strategy should be based on both signals from technical analysis and sound fundamental analysis. Feel free to use all the tools made available to you by your trading platform to maximize your chances of accurately anticipating the future trends of this cryptocurrency. A good strategy should allow you to detect the best time to take a position, as well as the right time to close your positions.
Since Litecoin is a particularly volatile asset, you need to be able to stay calm and focused when there is a big move and stick to your strategy. This is also one of the reasons why Litecoin trading is only for experienced traders. Finally, you'll also need to apply good money management.