Litecoin is one of the most popular cryptocurrencies used by day traders, as there is plenty of trade volume and price swings to profit from. Litecoin uses open source software to create a peer-to-peer cryptocurrency and has surged in trading popularity in recent years, gaining the nickname of Bitcoin’s little brother. This page will examine all elements of day trading Litecoin, including its history, current price predictions, important news, charts, mining, and wallets.
What Is Litecoin?
The straightforward definition is that 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 day trading through exchanges is accepted as normal today.
However, it was only 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.
The timeline below should paint a clearer picture of Litecoin’s rise:
- 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.
- Litecoin reached its all-time highest price of $360.93 on December 18th, 2017. Compare that to its value of $4.40 a year beforehand and you realise the magnitude of the 8200% rise.
- February 2018 saw Alza, a key player on the EU online retail scene accept Litecoin as a legitimate payment method.
Benefits
It is perhaps unsurprising to see the staggering price history of this cryptocurrency when you consider its numerous benefits, including:
- Speed – Part of its 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.
- The number of coins – The limited supply of cryptocurrency is part of the allure. Litecoin can reach the 84 million level, while some competitors can reach just half. This means there are plenty of Litecoins for aspiring day traders to play around with.
- Market capitalisation – Whilst its long-term outlook may be uncertain, the current huge market capitalisation it boasts ensures liquidity and profit potential for investors and traders. In fact, Litecoin so far has consistently remained in the top five rankings.
- 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 these cryptocurrencies, 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 futures trading.
Drawbacks
Unfortunately, however, the outlook for this cryptocurrency has been hindered by several factors, including:
- Strength – Some digital currencies suffer a setback and swiftly recover.
- Litecoin, on the other hand, finds itself struggling to stay afloat whenever negative discussions surface, resulting in a drop in prices.
- Competition – With a vast number of other altcoins available, it can be extremely challenging for Litecoin to distinguish itself among so many competitors. Additionally, some argue that Litecoin has not adequately explained what makes it unique.
- Liquidity – Compared to Ripple, for example, Litecoin is simply not as liquid. It has not been adopted by as many businesses, which can result in negative projections and a fall in rates.
- Uncertain future – It is difficult to determine whether Litecoin is worth investing in, as future forecasts do not necessarily reflect its true value. Furthermore, there is uncertainty about whether cryptocurrency will survive in the long run or if it is just a bubble, making it impossible to find an accurate long-term profit calculator.
Mining Litecoin
For those not interested in day trading Litecoin, setting up a GPU mining rig is a popular alternative. Each transaction is grouped with other transactions in a cryptographically-protected block, and miners use their computers’ GPU and/or CPU cycles to solve complex mathematical problems. Eventually, their collective power finds a solution and passes the data within the block’s algorithm.
It is at this point that the transactions within that block are stamped as verified.
Mining hardware and software offers another significant benefit. Each time a block is solved, a certain number of coins is distributed among those who helped solve the problem. Naturally, those in the mining pool that contributed the most will get the majority share.
Of course, you can encounter mining difficulty. For example, the algorithm used is known as Scrypt, which is extremely memory-intensive. As a result, you need to ensure you have the right hardware to meet the specifications for producing Litecoin. In addition, it is worth bearing in mind the cost of electricity. GPU miners, for example, require a tremendous amount of electricity to power their rigs.
Due to increasing popularity, you can now find information on mining calculators and apps from a range of online resources. A quick internet search will also bring up a list of cloud mining explorers.
How To Buy & Store Litecoin
Before you can start conducting price analysis and decide whether to buy or sell, you will need to find a place where you can store your Litecoins.
Unsurprisingly, since its introduction to Coinbase, Litecoin has seen a substantial rise in value. However, you can also buy Litecoins from other exchanges, including:
- BTC-e
- Kraken
- Cryptsy
Hardware Wallets
Once you have purchased your Litecoins, you will also need to store them somewhere, such as a hardware wallet.
These physical devices are available in various forms, but many prefer the USB stick style. However, it’s important to note that even these wallets come with risks. There is a danger that the provider may have logged all the private keys and could raid wallets at a later date. Additionally, security lapses could leave you vulnerable to having your cryptocurrency coins hacked. To remain secure, it’s best to avoid using a pre-owned wallet.
Some hardware wallets with positive user reviews include:
- Trezor
- Ledger Nano S
Desktop Wallets
A desktop wallet is a type of hot wallet that can be downloaded and installed on a single computer, making it only accessible from that device. Although it’s arguably more secure than an online wallet, it can be inconvenient since you can only access your capital from that specific device. One of the top choices for desktop wallets is Exodus, which supports multiple cryptocurrencies, including Litecoin.
Mobile Wallets
Mobile wallets are another type of hot wallet where you can store your cryptocurrency while you’re on the go. Simply download an app to your phone, and you can easily access your crypto capital. Mobile wallets are a good choice for those who like to trade while on the move.
Paper Wallets
The final option for storing Litecoin is a paper wallet, which is an offline cold storage technique for storing your cryptocurrency.
Paper Wallets for Secure Transactions
If you prioritize security and control over convenience, a paper wallet is the way to go. Simply print out your public and private keys and keep them in a safe place. The keys are stored in QR codes that you can scan for future transactions.
By using a paper wallet, you can be sure that your information is out of reach of hackers and that you have complete control over your funds.
Learn About Litecoin with This Video
Tips for Day Trading Litecoin
If you’re looking to gain a competitive edge when trading Litecoin, check out these helpful tips:
1. Use Price Charts
Price charts and volume graphs are invaluable tools for predicting future price movements. By studying historical data, you can better predict when Litecoin is likely to rise or fall.
Keep an eye out for consolidation periods, during which Litecoin is likely to trade within a tight price range. When the range is broken, there’s often a significant follow-through, so try to align patterns on your daily candlestick charts with your intraday time frame for the best entries.
2. Set Stop-Loss Orders
Setting stop-loss orders can help you minimize losses in case your trades don’t go as planned. This way, you can limit your exposure to risk and ensure that you don’t lose more than you can afford.
Remember, day trading is a high-risk, high-reward activity, so always trade with caution and never invest more than you can afford to lose.
Be Patient
Once you have confirmed a breakout on the daily, you must find a safe 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 safely 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.
You will often find it is easier play the pullback following a big move, rather than attempting to anticipate a breakout. Cryptocurrencies, including Litecoin, do not usually head straight up without first taking a break.
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.
An exit strategy where you sell your whole position when your target is hit could be worth considering. Alternatively, you might want to scale out in sections into the spikes, while retaining a quarter of your stocks for the larger move.
Scaling out can be great for beginners, in particular, as it prevents emotions persuading you to hold onto a position too long.
Get Educated
There are a whole 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.
Websites such as Yahoo Finance often provide market updates and local analysis too.
Training videos, webinars, tutorials and books are also easily accessible and can help with your Litecoin trading development.
You can also see our strategies page for guidance on how to capitalise on market opportunities.
Final Word on Litecoin
If you’re looking to become a cryptocurrency millionaire and feature on that rich list you’ll need to decide which digital currency you’re going to start day trading in.
Litecoin appeals for a number of reasons, including speed, volume and market capitalisation.
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 or any other cryptocurrency.
For more information, other crypto options and forecasts for 2023, see our cryptocurrency page.
Further Reading