What Are The Benefits of Litecoin Trading?

Last Updated July 23rd 2021
8 Min Read

Litecoin trading enables traders to speculate on whether the price of LTC will rise or fall in value, without the need of taking ownership of the digital asset.

Litecoin (LTC), based on a decentralized, open-source, blockchain network, is a peer-to-peer cryptocurrency, designed and brought to life by a previous Google employee and MIT alumnus, Charlie Lee.

One of the first altcoins to emerge was Litecoin. It was first sold and is now sometimes linked to as the silver counterpart to Bitcoin’s gold. LTC has gone through its ups and downs ever since its initial launch in 2011, but ultimately due to its agile approach and quick acceptance of technologies, it has succeeded to build a strong demand.

Why Trade Litecoin?

Whether or not you’re someone who has been in the trading game for a while, or you’re fresh on the scene, there are multiple benefits to trading LTC.

Litecoin trading helps skilled traders to bet if the price will increase or decline in value. By using derivative contracts such as spread bets and CFDs, you can achieve this. Let’s take a look at some of the benefits of trading Litecoin.

The benefits of Litecoin trading include:

  1. CFDs providing leverage
  2. Volatility 
  3. Low risk of inflation and simple trading
  4. Full access to LTC market, whenever, wherever
  5. Choosing between high or low
  6. Tax regulations to keep in mind
  7. Upper hand on liquidity

 

1. CFDs providing leverage

Being closer to higher leverage is one of the key advantages of trading CFDs on Litecoin. Bear in mind that this refers to betting on LTC market fluctuations and not buying the digital coins in the traditional way via regular exchange trading platforms. CFDs simply are for the purpose of watching the price of LTC, and traders who sell CFDs simply do not own any LTC.

It’s crucial that you continue to ensure that you prepare an effective risk management strategy in advance as an investor, to minimize your risk of falling in the deep end. You should take the necessary cautionary steps in place. Leverages will magnify your gains if not vigilant, although they can double your costs, too.

2. Volatility 

While taking into consideration that the Litecoin market is quite young, it has undergone substantial uncertainty due to significant amounts of short-term trading activity. In recent years, the price of Litecoin has become relatively unpredictable. Although Litecoin’s price has recently increased, it has experienced frequent fluctuations along the way, making it one of the volatile cryptocurrencies.

3. Low risk of inflation and simple trading

Trading on cryptocurrencies such as LTC means having the leniency of simply choosing an online platform and where you buy and sell your LTC directly from a buyer to a seller, on a global audience level, without the need of a broker such as in traditional stock exchanges. On top of this, there is no need to provide extra unnecessary certifications that certify your ability to trade for LTC trading. In this case, you simply sign up for an account on an exchange platform and withgo through a simple verification process.

The fact that Litecoin is decentralized, means that there is no room for inflation. The technology behind LTC’s blockchain is infinite, diminishing the perry about its long term decrease in value.

4. Full access to LTC market, whenever, wherever

Automated trading software is one of the most common and fascinating ways people use to trade Litecoin. Litecoin can be sold 24 hours a day, unlike the stock exchange. So traders from their home computers and personal devices are able to run trading apps and benefits in their sleep. LTC trades can take place directly between individual traders on crypto exchanges worldwide.

It’s most definitely nothing new to the practice of running automatic apps to exchange LTC, however, lately since they’ve been much more specific and profitable, these systems have continued to get a lot of coverage. 

5. Choosing between high or low

Getting to trade your LTC coins ensures that you’ll get to pick whether you want to go long or short with your investment decision. Going long entails that anytime you buy LTC, it’s when you expect the price of the coin to rise. Going short on the other hand is when you choose to take advantage and trade LTC at a moment where prices are both decreasing and rising simultaneously.

There are numerous exchange platforms giving you the option to do either or. It’s possible to forecast an increasing or decreasing trend at the same time. You can also commit to margin trading on most platforms.

Read Also: Litecoin Price Prediction

6. Tax regulations to keep in mind

While the federal judge in the U.S. views Litecoin and other certain cryptocurrencies as assets, the IRS wouldn’t actually treat them that way. It is subject to the same tax treatment as all other investments. Taxes on Litecoin can be levied by selling, exchanging, or actually spending (if the value has risen after you initially purchase it).

Huge tax benefits on LTC trades would be provided by the opportunity of spread betting and CFD trading on Litecoin. With spread betting, you diminish the responsibility of due tax seeing as you don’t actually own the asset. With CFDs, you can mitigate your losses against taxes.

7. Upper hand on liquidity

In capital markets, the term liquidity is commonly used to describe the ability with which a commodity can be turned into cash without difficulties. Liquidity for Litecoin is the ability of it to be quickly exchanged into cash or other coins.

For all tradable properties and assets, including Litecoin, liquidity is key. Low levels of liquidity mean that market instability is present, causing LTC values to surge. On the other hand, strong liquidity means that a steady market exists, with little price fluctuations.

John Kim, Chief Evangelist at the Litecoin evangelist, claims that, like buying a cup of coffee, LTC can be used for small everyday purchases. LTC should not be seen as a financial commodity, but rather as a currency that helps people to buy products and services in the real world. He also believes that LTC is the most liquid cryptocurrency after Bitcoin.

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Should I Buy or Trade Litecoin?

It’s important to understand the variations between buying and trading Litecoin before you make a sound investment choice. When investing in LTC with lower risk levels involved, the use of CFDs would make it easier to assess feasibility. Prior to setting your path straight, any factors, such as liquidity, exposed leverage, and tax liabilities should be at the core of your judgement. If you want to know more about Litecoin check out this detailed Litecoin guide.

You might be interested in buying Litecoin if…

  • You want to take full ownership of the Litecoin amount you buy
  • You’re happy to pay the entire value of the asset upfront
  • You don’t mind paying capital gains tax on any profits
  • You don’t mind waiting for an exchange account before you can buy or sell
  • You don’t mind introductory limits or maximum deposits
  • It is fine for you to pay additional fees for deposits or withdrawals

 

You might be interested in trading Litecoin if…

  • You want to speculate on the price of Litecoin without owning it
  • You want to leverage your position so that you only place a portion of the cost upfront
  • You want to take advantage of the tax benefits of spread betting or CFD trading with Litecoin
  • You want to start trading straight away
  • You don’t like maximum deposit limits
  • You don’t like paying deposits or withdrawal fees

 

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Key Points:

  • The benefits of Litecoin trading include enhanced liquidity, minimized tax costs, exposure under leverage, Litecoin volatility, minimalistic trading and lower risk of inflation, Litecoin market availability, and the option to go long or short.

  • Litecoin (LTC), based on a decentralized, open-source, blockchain network, is a peer-to-peer cryptocurrency.

  • Trading is all about trying to determine whether the price of LTC will increase or decline in value.

  • John Kim, Chief Evangelist at Litecoin, believes that LTC is the most liquid cryptocurrency after Bitcoin.

  • The fact that Litecoin is decentralized, means that there is no room for inflation.

  • Huge tax benefits on LTC trades would be provided by the opportunity of spread betting and CFD trading on Litecoin.

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