Easy To Follow And Profitable Litecoin Strategy: Trading Bitcoin’s Smaller Brother
Litecoin is one of the best channels to gain your first exposure to the crypto market thanks to its liquidity and accessibility.
It was created with the concept of making a version of Bitcoin that would be pretty much easier to acquire, and thus the supply was increased which made it possible to set a lower price.
Seeing as how this is a very popular coin - and one with manageable volatility - we’ve created this guide to show you some ways you can trade Litecoin!
Litecoin Trading Features
Litecoin is a highly liquid crypto coin thanks to how easy it is to obtain it and to start trading. Additionally, thanks to its popularity, it can be quite difficult to find an exchange that doesn’t accept this currency, so that’s another statement about its liquidity and important advantage.
The only issue about trading Litecoin is that it lacks some of the qualities of other larger coins. So, long-term traders may want to stay away from it. However, it's still a great digital currency and highly popular among short-term Crypto traders.
How To Trade Litecoin
With that said, Litecoin offers a huge market capitalization as of today, and day traders may benefit immensely from its availability.
Let’s open our 30-minute chart. As you can see, volatility was quite high and the market was in a range, so placing a trade would seem difficult judging simply by price action.
To ease things, we can add a Relative Strength Index indicator to arm ourselves with some clues regarding when we can enter a trade:
Now, we actually took a winning trade here thanks to the signals given by the RSI.
Here, we see that a bumpy downtrend is forming; we can open a trade as soon as a green candle forms with the RSI breaking the unusual support at 40, indicating that the market is nearing oversold conditions.
Riding the trend as it goes upwards it started gaining some momentum about 7 candles after the entry point. Due to the oversold readings on the RSI, the appropriate levels to place the S/L, in this case, was just under the trading range, below 51.45.
However, after four consecutive green candles, the RSI started to show decreasing momentum, so we quickly closed the whole trade at the 51.75 mark.
The profit was a 0.07 return. Of course, this wasn't an extremely profitable trade - but this was what the market offered and it was tradable to take it.
Seeing the volatility of such a small time frame, it's also a good idea to move for example to a 2-hour chart for more stable prices and clearer Price Action picture.
Can you spot an 85% foolproof pattern?
We can see this as the second top starts descending at the 58.40 mark. It is prudent to wait a bit to see if it stays true and sure enough, it continues descending, so we can go ahead and place a SELL trade:
The entry price was 58.00 as the breakout of the baseline occurred and the pattern was confirmed. The S/L goes in the middle of the double top due to how strong the downside move was, and the T/P as standard, at the first nearest support/resistance level.
As you can see, the pattern was successful and ended up giving a nice 0.4 profit!
Litecoin is my favorite market for trading - it often gives me clear and very profitable trade signals. As usual, Price Action strategies especially with some help from indicators, proved to work the best for me when trading Litecoin.