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How to Trade Litecoin 2021

Last Updated December 14th 2020

Launched in 2011 by Charlie Lee, Litecoin is a hugely popular cryptocurrency to trade.

Interested in learning how to trade Litecoin yourself? You have come to the right place! Litecoin can be traded against fiat money like EUR, GBP, and USD - but also against other digital currencies like Ethereum and Bitcoin.

Cryptocurrency trading is more popular than ever, the world over. In fact, any Joe Public can trade Litecoin from the comfort of their home.

In this guide, we divulge everything you need to know about trading Litecoin. This covers how to manage your risks and rewards, key metrics for selecting the best crypto broker, and Litecoin trading strategies.

What is Litecoin Trading?

As you likely know, although Litecoin is a ‘digital currency’, it is still a valuable financial asset. The price of this and any other cryptocurrency shifts with every second, of every day.

If you have ever traded before, you will know this is the case with any tradable instrument. The price is almost constantly in a state of fluctuation - due to the supply and demand of the market.

Taking that into account, a fundamental aspect of Litecoin trading is trying to predict the future price of LTC. In a nutshell, if there is a high demand for Litecoin, this indicates a belief in its value as a financial asset.

Therefore, when demand is high, the price of Litecoin will increase. If the market is bearish, the opposite will happen - meaning people will begin to offload it. This affects Litecoin negatively and so, the price will fall.

Let’s have a look at a straightforward example of how to trade Litecoin online.

  • Litecoin is priced at $70.50
  • This is illustrated as LTC/USD
  • At $70.50 you believe Litecoin is undervalued
  • With this in mind, you place a $1,000 buy order
  • Months later, you are quoted $141.00 on LTC/USD
  • This shows a 100% increase in value
  • Pleased with your gains - you close the trade by creating a sell order

In our example, you made a 100% profit on your stake of $1,000 - as Litecoin grew from $70.50 to $141.00. As such, at the time of closing your position, it was worth $2,000. As you can see, this translates to gains of $1,000.

One of the rather obvious points of our example is that there is potential to make some impressive gains by correctly predicting the price of Litecoin. On the other hand, had you been incorrect in your speculation - this would have resulted in a monetary loss.

Trying to predict the future price of a digital currency is no easy feat. With that in mind, when you are thinking about how to trade Litecoin yourself, it’s vital you have a firm grasp on how the market works.

How Does Litecoin Trading Work?

As is clear from what we’ve covered so far, trading Litecoin is essentially the same as trading stocks, gold, or foreign currencies.

The main difference is that the other markets have been in existence for decades, even hundreds of years. Whereas LItecoin has only been on the scene for 10 years.

As we said, having a firm grasp on the fundamentals is essential for understanding how to trade Litecoin.

Litecoin Trading Price Movements

Let’s start with Litecoin trading price movements, as it's crucial to have an understanding of what drives the cost of this cryptocurrency.

LTC features on hundreds of crypto exchanges. If the general market sentiment towards the digital currency is leaning towards ‘long’ or ‘short’ - this will be reflected in the rise or fall in price.

The market sentiment on digital currencies was extraordinarily strong in mid-2020. At one point this caused the price of Litecoin to skyrocket by 140%.

The price of Litecoin will always differ slightly between online crypto brokers. On one platform you might find LTC/USD priced at $70.40, on another this might be $70.44. These price differences will usually be minuscule.

Litecoin Trading Pairs

So now you know the basics Litecoin trading price movements, we can tell you about the different pair categories you will have access to.

Let’s start with ‘crypto to fiat’ pairs. 

You will see this term a lot when reading guides like ours, and researching online brokers. For example, we mentioned LTC/USD earlier. This is the exchange rate between Litecoin against the US dollar - Litecoin being the ‘crypto’, and USD being the ‘fiat’.

Having said that, some crypto trading platforms offer access to alternative fiat currencies. This includes LTC/GBP (Litecoin/British pound), LTC/AUD (Litecoin/Australian dollar), or LTC/JPY (Litecoin/Japanese yen) - to name a few.

All the same, the US dollar is pretty much the king of the castle when it comes to crypto-fiat pairs. This enables you to trade Litecoin, and take advantage of the competitive spreads and high liquidity the USD invites.

In addition to crypto to fiat, you can trade crypto to crypto pairs. Some Litecoin platforms refer to these as crypto-cross pairs. As you have probably guessed, these pairs invariably contain Litecoin against another digital coin - such as Ripple or Bitcoin, shown as LTC/XRP or LTC/BTC respectively.

If you happen to be a complete novice when it comes to how to trade Litecoin, it’s best to stick with crypto to fiat pairs.

For a start, it’s easier to quantify your gains and losses. Secondly, it’s easier to speculate on the future price of Litecoin against, say, the US dollar.

Long or Short-Term Trading

It’s a good idea to consider which Litecoin financial instrument best suits your own trading goals.

To clarify, if you are attracted to trading Litecoin because you believe the price will rise in the long run - months or even years down the line, the best thing to do is simply buy the crypto-asset outright.

In the aforementioned scenario, you will leave your LTC coins in the safe hands of a regulated online broker. Alternatively, you can store them in your own private crypto-wallet until you are ready to sell.

If you are a beginner in terms of trading LItecoin, then you are unlikely to understand technical analysis or be able to comprehend price swings. This isn’t a bad thing, as these things can take months or years to master. With this in mind, you may be better off sticking with a ‘buy and hold’ strategy.

If you would like to be more active in the space, aiming for small but regular gains - then consider a Litecoin CFD. On the other hand, you could trade LItecoin via a cryptocurrency exchange, too.

Trade and Own Litecoin

As we touched on above, if you are interested in holding onto Litecoin in the long run - we recommend doing so via a platform offering ownership, in the traditional sense.

eToro is one such online broker. What’s more, this popular social trading platform serves around 13 million happy customers. Here you can trade Litecoin on a commission-free basis, and you can hold your digital coins for as long as you see fit.

Moreover, you don’t need to worry about the short-term price spikes in a volatile market. 

Litecoin Trading

If you want to trade Litecoin by using a day trading or swing trading strategy, then you should keep an eye out for a crypto broker offering the aforementioned ‘contracts for difference’ (CFDs).

CFD instruments are not on offer to US citizens, as it goes against US securities laws. Furthermore, UK citizens can access every CFD instrument under the sun - excluding cryptocurrencies.

So, what are CFDs?

  • CFDs are tasked with tracking the real-world price of Litecoin - or any asset
  • The benefits of Litecoin CFDs include low trading fees and leverage 
  • Additionally, you can make gains from both bearish and bullish markets - by electing to go long or short on Litecoin

Crowd-pleaser eToro offers access to a plethora of cryptocurrency CFDs. To trade Litecoin you can choose from crypto to fiat or crypto to crypto pairs.

If you are unable to get your hands on CFDs, there is always the option of the previously mentioned crypto exchanges. Just be mindful of the fact they are often unregulated. Ergo, you may not be able to use a fiat currency to fund your trading account, either.

If taking the latter route, you will also be more likely to trade LTC/USDT, instead of LTC/USD. Put simply, USDT is a crypto coin called Tether - pegged to the US dollar.

How to Trade Litecoin Online - Setting up a Trade

When learning how to trade Litecoin, one of the most important things to have an understanding of is orders. There are a variety of orders you can utilize when trading this popular digital currency.

In a nutshell, the order you place tells your broker what course of action you wish to take on Litecoin. In fact, if you have ever dabbled in stocks and such, you will see that the process is exactly the same.

Once you have created your order with the exchange or trading platform of your choosing - the broker will do the rest.

You will see below a list of the most commonly used, and useful orders when trading Litecoin.

Buy or Sell Order

This particular order is obligatory.

Put simply:

  • If you have a feeling the price of Litecoin is going to increase - place a buy order
  • Alternatively, if you have a feeling the price of Litecoin is going to decrease - place a sell order

As you can see, it is as easy as pie. We should point out though that all of your Litecoin trades will need a buy and a sell order.

The reason being, if you enter the market with a buy order - you need to close it using a sell order. If you enter the market using a sell order - you need to close it with a buy order.

Entry Price

We’ve talked about the most rudimental trading orders - buys and sells. When you trade LItecoin, you will also have to select between a ‘market order’ and a ‘limit order’.

This tells your broker what your entry price is on the trade.

See below for clarification.

  • If you like the current price of Litecoin, meaning you want your order to be actioned instantly - choose a market order. Due to the aforementioned frequent price shifts, the price you get will differ ever-so-slightly.
  • Now, a quick explainer of limit orders. This is a much more flexible order - you decide on a specific price at which to enter the market. For example, let’s say LTC is priced at $60.05. However, you want to enter the market at $65.50. This is where your limit order comes in.

The vast majority of Litecoin traders elect to place a limit order. This type of order gives traders a level of control, with a clear target.

Exit Strategy

We’ve discussed entry orders to utilize when you trade Litecoin. Your exit strategy will come in the shape of ‘take-profit’ and ‘stop-loss’ orders.

See below for clarification:

  • Starting with stop-loss orders, this order restricts the amount you can lose from your Litecoin trade. Your trade will be closed at a price specified by you. For instance, this might be executed when the value of Litecoin falls by 1%.
  • Now, take-profit orders. This order enables you to lock in your profits at a predetermined price point. For instance, if you instruct your broker of a profit target at 5%, your trade will automatically close at that price.

If you happen to be combatting the inner workings of how to trade Litecoin for the first time - see an example below.

  • Let’s say you are trading LTC/USD - its current value is $65.00
  • You predict the price will increase, so place a buy order
  • Unwilling to lose more than 1%, you place a stop-loss order at $64.35 ($65.00 - 1%)
  • If your position makes 5% in gains you want to exit your trade
  • As such, you place a take-profit order of $68.25 ($65.00 + 5%)

After placing these two orders at either side of your entry price - your broker will close your trade - regardless of whether that is at a loss or a profit. Hopefully the latter.

Here is another quick example:

  • If LTC/USD increases to $68.25 - the take-profit order you placed earlier is executed. Your profit is 5%, and your trade is closed.
  • If LTC/USD decreases to $64.35 - the stop-loss order you placed earlier is executed. Your loss is 1%, and your trade is closed.

All of the above is automatic. So you don’t need to stress about timing the market and closing your trades automatically.

How to Make Money Trading Litecoin

When it comes to making money trading LItecoin, there are several factors that can have an effect on this.

We’ve put together a list of variables below:

Stake

Without meaning to point out the obvious - the more money you are willing to stake on your Littecoin trade, the more you could profit - or indeed lose.

For instance, if you stake $100 on Litecoin and make gains of 1%, this amounts to $1. If you decided to stake $10,000, the same profit percentage sees you take home gains of $100.

This brings us smoothly onto a bankroll management strategy. Many traders use this to trade Litecoin and other financial assets.

In a nutshell, you decide the maximum amount that you are willing to stake on each trade - in relation to your account balance.

Let us explain further. You may decide to limit your risk on the Litecoin trade by never staking more than 2% of what you have in your account.

So, if you had $10,000, you wouldn’t stake more than $200 on any one trade. If your balance was $2,000, your stake wouldn’t surpass $40 -and so forth. Some online brokers will allow you to trade cryptocurrencies for a small amount.

For instance, social trading platform eToro enables you to trade Litecoin for as little as $25 - so this strategy would be a breeze here.

Litecoin Trading Leverage

If you reside in a country where Litecoin CFDs are permitted, you will be able to magnify your gains by applying leverage to your cryptocurrency trades.

Just be aware that whilst this is great for your profits when you have speculated correctly - get it wrong and it also magnifies any losses.

Let’s have a look at a practical example of how leverage could affect your Litecoin trade:

  • You create a $100 sell order on LTC/USD
  • You then apply 1:2 leverage
  • Your profit is 10%
  • Without leverage - your gains were $10
  • With 1:2 leverage - your profit is $20

As you can see, depending on your location - you can amplify your gains. Regulated crypto brokers often offer up to 1:10 in some locations. If you sign up with an unregulated platform you may even be offered as much as 1:100 leverage - although this is not recommended!

Fees to Trade Litecoin Online

Whether you trade Litecoin against a fiat currency or a digital currency - there will be fees to pay. An online crypto exchange or broker is a business, so it needs to make money to keep the wheels in motion.

Before you embark on trading Litecoin, you should check out the list of commonly seen fees in the crypto trading arena.

Litecoin Trading Commission

Practically every cryptocurrency trading platform offering Litecoin is going to charge clients commission fees. We found that in the majority of cases, this is shown as a percentage against your trade value.

For instance, if you signed up with Coinbase, you would be charged 1.49% on all of your Litecoin trades. This would be charged when entering and exiting the LTC market.

Firm newbie favourite eToro will allow you to trade Litecoin and 15 other digital coins at 0% commission!

Litecoin Spread

Spread is another fee to look out for, albeit it’s more of an indirect fee. This is the difference between the buy and sell price of Litecoin.

The tighter the spread is, the better it is for you. In other words - the bigger the gap, the more you have to pay your broker.

For example, let’s suppose that the spread at eToro is currently 0.8% on Litecoin trades. This spread means that before you can make gains, you need for your Litecoin trade to rise by over 0.8% in value. If the price increases by 0.8% exactly - you break even.

Other Litecoin Trading Fees

We’ve talked about the main fees you might encounter when trading Litecoin.

See below a few more to consider:

  • Deposit/Withdrawals: You will find that some trading platforms charge transaction fees for deposits and withdrawals. Coinbase for instance charges 3.99% for every debit card deposit. eToro on the other hand charges 0.5% on all payment types (if not in USD). Deposits using a debit/credit card at Binance come with a 2% fee.
  • Inactivity: Many crypto brokers charge clients an inactivity fee for not using their trading accounts. We found that this tends to be a monthly fee charged after 1 year of not actively trading, or depositing. Be wary, as this fee will be taken every month until your account is empty.
  • Overnight Funding: If you happen to qualify for Litecoin CFDs you will be liable to an overnight fee for every day your trade is left open. This is sometimes called an overnight financing fee or a swap fee.

All things considered, if you want to know how to trade Litecoin as cheaply and conveniently as possible - eToro is a class act. You’ll get zero commission, tight spreads, and deposits of just 0.5%!

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!

How to Trade Litecoin Guide - The Verdict

When it comes to the question of how to trade Litecoin effectively, you can do this very easily via an exchange, or an online broker. We recommend the latter.

Litecoin can be traded against fiat currencies like the US dollar, or against hundreds of different digital currencies - like Bitcoin and Ethereum. Reading guides like ours, and doing your homework is a great way to prepare yourself for the potential risks and rewards of trading Litecoin.

We highly recommend sticking with a reputable and regulated online broker such as eToro. This is a safe place to trade Litecoin commission-free, with tight spreads.

FAQs

  • Is trading in Litecoin safe?

Trading Litecoin is safe, provided you use an online broker that is regulated. For that, we recommend the social trading platform eToro.

  • How do I trade in Litecoin?

The most convenient way to trade Litecoin is by opening an account with a well-respected broker like eToro. Deposit the $200 minimum with an e-wallet or credit/debit card - and you can start trading Litecoin.

  • Can you get rich by trading Litecoin?

While there are heaps of people who make a living from trading Litecoin, many make regular losses. The best thing you can do is educate yourself about the market, and start off with small stakes via a regulated online trading platform.

  • Is Litecoin trading legal in the US?

Yes, Litecoin trading is legal in the US. However, it is important to note that as a US citizen you can not legally access Litecoin CFDs.

  • Can you trade Litecoin with Leverage?

Whether or not you can trade Litecoin with leverage depends on where you live. If you reside in the US or UK, you are not permitted to trade leveraged crypto CFDs. If you really wanted to you could find an offshore trading platform with no regulation. However, this should be avoided at all costs, with so many scammers in the cryptocurrency exchange space.

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