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Litecoin Trading – FAQ

How do I start trading Litecoin?

To start trading Litecoin you’ll need to find a reputable broker and open an account. It’s also advisable to research the fundamentals of cryptocurrency and the different ways you can trade Litecoin. Our guide should furnish you with enough information to start exploring your options. 

Is it safe to trade Litecoin?

The appeal of cryptocurrency as an asset is just how secure it is – it’s the very nature of blockchain technology. However, it’s important to ensure you use a regulated broker or exchange service, like eToro. Look for licensing from trusted authorities such as FCA, ASIC, and CySEC.

Can I trade Litecoin with leverage?

It is possible to trade Litecoin with leverage, but your options will depend on where you are based. European financial regulations allow the trading of cryptocurrency CFDs with a leverage of 1:2. However, stricter American financial rules mean that US traders will not have the option to trade with leverage. 

How do I find a broker to trade Litecoin?

There are thousands of brokers offering cryptocurrency trading and choosing the right one will depend on a few factors – including your trading goals and existing experience. Fortunately, many brokers will allow you to open a demo account before committing any funds. When browsing the different platforms, make sure any ones you consider are fully regulated by a reputable financial authority. 

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Conclusion

Hopefully, having read through this article you will have a much better idea of how to trade Litecoin. Of course, trading any financial asset is an ongoing learning process and we’d encourage you to take things slow and take in as much information as possible. 

How to trade Litecoin in 5 Easy Steps

A simplified process for trading Litecoin looks like this:

  • Open a brokerage account
  • Deposit funds
  • Research your trade
  • Choose whether you want to open a buy or sell order
  • Monitor your trade
  • Close the position – either manually or with a stop-loss/take-profit order

You have probably realised by now that there is much more you can learn about each step in the process – learning which takes time. However, trading Litecoin is definitely worth the effort as cryptocurrency is one of the fastest-growing and most popular asset classes globally, presenting a fantastic opportunity for savvy investors. 

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How to Trade Litecoin 2021 – Step-by-Step Walkthrough

You have made it this far, so by now you no doubt have a clear understanding of how to trade Litecoin.

As such, you can now follow our simple walkthrough on how to get started in your trading endeavours.

Step 1: Choose a Litecoin Trading Site

The first thing you need to do is decide which trading platform is best for your Litecoin trading goals. There are heaps offering their services, so do proceed with caution.

We have listed below some of the most important metrics to consider when weighing up potential online brokers:

  • Regulation: Is the crypto broker regulated by respected bodies like ASIC and the FCA?
  • Fees: What fees does the trading platform charge to trade Litecoin?
  • Payments: What payment types does the broker support?
  • Account Minimum: What is the minimum stake and deposit at the platform?
  • Litecoin Pairs: Which crypto coins and fiat currencies will be on offer to trade against Litecoin?
  • Trading Platform: Is the broker platform user-friendly and easy to navigate?
  • Mobile: Does the trading platform have a proprietary mobile app?

As you can see, there are heaps of factors to consider before taking the plunge and trading Litecoin.

All things considered, we think eToro is the best all-rounder. We have listed below a few positives about signing up with the popular platform:

  • eToro is registered with FINRA (US) and fully regulated by various well-respected bodies like the FCA, CySEC, and ASIC.
  • The platform offers super-tight spreads, and there is zero commission charged to trade Litecoin
  • Deposits are instant – credit/debit cards and e-wallets are accepted
  • You are able to trade Litecoin against a variety of other cryptocurrencies and fiat currencies
  • You can start trading Litecoin for as little as $25

Step 2: Open a Litecoin Trading Account

Go to the website of your chosen trading platform and elect to open an account. We find this usually takes less than 10 minutes at eToro.

The process begins by filling in some basic personal information about who you are – name, address, date of birth, and such.

The next step (as eToro is regulated) is to upload a copy of your photo ID – passport or driver’s license. You can do this later if you like. But if depositing more than $2,250, or requesting a withdrawal – you will have to complete this step eventually anyway.

Step 3: Deposit Funds

Now you can fund your new trading account. The minimum deposit at eToro to trade Litecoin is $200.

Most online brokers offer a variety of payment methods. eToro accepts credit and debit cards, and also e-wallets like PayPal, Skrill, and Neteller. Whilst bank account deposits are also accepted, you should note this is the slower option.

Step 4: Choose Litecoin Trading Market

After making a deposit, you are free to trade Litecoin. All you need to do now is browse the ‘Trade Markets’ section or type your chosen pair into the search box, for example, ‘LTC/USD. Alternatively, browse what’s available for inspiration.

Step 5: Place Litecoin Trade

Now you can go about placing your Litecoin trade. We have covered orders in detail, so feel free to scroll up for a recap.

Start by placing a buy or sell order, depending on your stance. Next, hit ‘Open Trade’ to action your Litecoin position!

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Other Things to Consider When Trading Litecoin

If you’re serious about learning how to trade Litecoin, then there are a few things you will need to be aware of when making trades. The following are important considerations for entering the world of crypto-trading. 

Fees

You will of course pay fees for brokerage services to trade Litecoin. The fees and commissions will vary between providers and are charged in different ways. 

Trading Commission

Trading commissions are a straightforward charge that is levied for every trade that you make. Some providers charge a flat rate, but most will charge a percentage of the trade. Once again, these vary quite a bit, but are typically between 0.10% and 0.25% per trade. It’s not uncommon to see platforms advertising commission-free trading, but these will draw their profits from having a wider spread. 

Spread

The spread is the difference between the buy and sell price listed by a brokerage or exchange. The spread for Litecoin – and most cryptos – is expressed as a percentage. For example, if the buy price on LTC/USD is $60.00 and the sell price is $60.30 – the spread amounts to 0.5%. 

The spread acts as an indirect fee, as your position will always open at a slight loss. Typically, brokers that offer commission-free trading will have much wider spreads than those that charge per trade.

Other trading fees

Aside from the costs involved in trading Litecoin, brokers may also charge additional fees. These include payment processing fees – charged for withdrawing and/or depositing funds to your brokerage account. It is also not uncommon for platforms to have an inactivity fee if you don’t make any trades for a given period. Once again, these will vary between platforms so be sure to do your research when opening an account – these additional charges should always be factored in when you trade Litecoin. 

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Closing a position

Setting up your Litecoin trade is, of course, only half of the process. You’ll also need to decide when to close the position. As we have already mentioned, if you opened a sell order, then you close the trade with a buy order and vice-versa. 

You can close a transaction at a time of your choosing, however, if you are still learning how to trade Litecoin then we would advise erring on the side of caution and setting what’s called a stop-loss order or take-profit order. Effectively, these are instructions to your broker to close the transaction at specific points and are an extremely useful tool for mitigating risk. 

A stop-loss order means that your broker will close the position if the trade does not go your way. You might, for example, limit your losses to 5%. However, setting the stop-limit too low will not allow for any fluctuation in price, so you’ll want to leave a bit of breathing room here. 

Take-profit orders are a similar idea, except they instruct your broker to close the trade when a specific price is reached. 

  • LTC/USD stands at  $60.00
  • You believe the price will go up, so put in a buy order
  • You want to safeguard against losses of 5% or more
  • This means you put a stop-loss order in at $57.00
  • You also want to close your trade at a 10% profit
  • As such, your take-profit order will be $66.00
  • With these orders in place, the most you will lose is 5% and your best profit will be 10%.
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Entry Price

Next, you need to decide how and when you wish to open your trade. You effectively have two choices at this stage, you can either open a trade on the spot (a market order) or choose to enter at a specific point (a limit order). 

Market Order

A market order is the simplest option. Here you will see your trade executed instantly and the price you enter the market at will be close to the price quoted at the time. There is can be slight variations, due to the time taken to execute a trade and the speed at which prices move, but ultimately a market order can be thought of as what you see is what you get. 

Limit Order

Limit orders allow you to specify the price at which your trade is executed. This is an incredibly useful feature as it allows you to enter the market at the most favourable point. For example, you may be expecting the price of Litecoin to drop before it starts to increase, in which case you can activate your trade from a better position, with more potential for gain. It should be noted that, if Litecoin does not reach the specified price, your order will expire without being executed. 

This of course begs the question: which type of order should I use when trading Litecoin? There is no set answer here – the situation and trading environment will always dictate the best type of transaction at the time. 

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Buy or Sell?

The first thing to consider when opening a position is whether you think the price of Litecoin is going to go up or down. If you think the exchange rate will increase, then you open a buy order.

If, on the other hand, you expect the price to drop, then you open with a sell order.  

Effectively, the order is reversed when closing a position. For example, if you made a buy order and the exchange price of Litecoin increases, then you issue a sell order to close the trade and take your profit. The situation is reversed when opening with a sell order. 

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Stake

The first thing to consider when trading Litecoin – or any asset for that matter – is deciding how much capital you are prepared to put into the trade. It should be remembered that day trading carries an inherent risk, so you should always bear this in mind when budgeting for transactions. 

It’s not uncommon for brokers to set a minimum amount per trade – which varies hugely depending on your provider – but as a general rule, most successful traders will never risk more than 1% of their total account balance. If you’re still learning how to trade Litecoin, then a conservative approach is advised. 

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Getting Started with a Trading Platform

Once you’ve decided on a platform, you’ll need to register and open an account. Each provider will have its own onboarding process, but for most you will need to provide a few details and verify your identity. Any reputable firm will carry out verification checks as standard, but more often than not you are only required to do this when making your first withdrawal. 

Some platforms will allow you to open a demo account, using virtual funds. These are a great way not only to get acquainted with a new platform, but also to get a feel for how the crypto markets work. However, when it comes to making money from Litecoin trading, you’ll need to deposit some real funds to execute trades. 

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Things to look out for when choosing a platform to trade Litecoin

Choosing the right platform for you will largely come down to personal preference, but there are a few factors that should be considered prerequisites. 

Make sure any platform you sign up with has adequate regulation. If you are a UK-based trader, for example, then any broker or trading platform you sign-up with should be fully regulated by the Financial Conduct Authority. In adhering to regulatory standards, platforms have to meet certain requirements ensuring they are operating within the law and client funds are adequately protected.