Trading Strategies for Litecoin
Litecoin is a peer-to-peer cryptocurrency that utilizes the blockchain technology to maintain a public ledger of all transactions without being managed by any central authority. Litecoin was an early bitcoin spinoff or altcoin, as it was designed to solve lots of problems that Bitcoin was facing. It has reduced the block time of Bitcoin from 10 minutes to 2.5 minutes. Therefore, Litecoin’s transactions are faster and the fees relatively low. A transaction using LTC, which is Litecoin’s ticker symbol, costs 0.00000001 LTC.
Binance and Coinbase are by far the most popular places to buy and sell Litecoin. Binance, for instance, is the most trusted and recommended place not only for Litecoin trading but also all other cryptocurrencies. They are known for their strong team, proven products, superior technology, and industry resources.
The most common indicator used in the Litecoin trading strategies is the On Balance Volume (OBV). It uses a combination of volume and price activity to inform you the total amount of money going in and out of the market. For instance, if Litecoin price is moving up, we expect that the OBV indicator too will rise, indicating an inflow of money. The opposite is also true. However, leading indicators such as an OBV are prone to alteration as a result of price fluctuations in the market. For this reason, a second indicator, the 20-day moving average, should be used.
Learning how to scalp trade is an essential technique as it translates to building consistent profits. We are thus going to discuss key steps to follow when buying Litecoin:
- Wait until the OBV indicator enters into a prolonged period of consolidation.
When the OBV indicator is seen consolidating, it means there is buying up of cryptocurrencies by investors.
- Wait for a breakout above the OBV consolidation zone.
When the investors accumulate a cryptocurrency, it will always trade sideways. When all the available supply is exhausted, the smart money will mark up the Litecoin price.
- Buy Litecoin when we’re close above the 20-day moving average.
As discussed earlier, we will use the 20-day moving average indicator to confirm the OBV readings. After the OBV breaks above its consolidation, Litecoin price breaks and closes above the 20-day moving average. One can hence place a buy order.
- Hide the protective stop loss.
Place your protective stop loss below the most recent support level.
- Define a take profit level.
Take profit when Litecoin price breaks and closes below the 20-day moving average as this is an indication that the market is about to reverse.
The above steps are also applicable when selling Litecoin but in reverse.
- (Admiral Markets, n.d.)
- (Day Trading, n.d.)
- (Ava Trade, n.d.)