Trading Litecoin Contract for Difference
In this article, we will show you how to day trade Litecoin with SimpleFX WebTrader. You can test it with a fully functional demo or a live account with some small funds for a start. Litecoin (LTC), one of the most popular cryptocurrencies, was designed to be an alternative to Bitcoin. It’s one of the biggest altcoins with the 7th biggest market capitalization at the moment. It was released in 2011, works on a proven open source technology, and has many enthusiasts worldwide.
What’s the most important Litecoin changes a lot as you can see on the weekly chart below. Whenever you believe in the bright future of Litecoin or not, if you follow the news about this coin, it’s always a good idea to try to use the information for profit. The good thing about CFD is that that it allows you to benefit from either price change: up or down – doesn’t matter.
All you need is a handy platform that provides useful intuitive tools. You also need a trading account, preferably without minimum deposits. A simple trading app makes it much easier to make a profit when an opportunity comes.
In this article, we will show you how day trade Litecoin with SimpleFX WebTrader – CFD made easy – where you can trade. You can test it with a fully functional demo or a live account with some small funds for a start.
Contract for Differences (CFD’s)
A contract for difference, better known as CFDs, is a form of futures contract agreement, which involves a settling of the difference in the value of the CFD on the sale of the contract.
CFDs do not involve an actual owner of the security itself or delivery of physical goods, such as gold, crude oil or even share certificates.
The purpose of trading CFDs is to enjoy the volatility and price fluctuation, without actual ownership, allowing investors to purchase order sizes that can be smaller than the value of a single unit.
Advantages to trading Litecoin through CFDs include
While for certain investors, ownership of Litecoin is part of the trading experience, certain limitations in ownership of Litecoin makes the trading of Litecoin through CFDs a far smoother experience, with a number of trading options that are not available in trading Litecoin as a cryptocurrency via crypto exchange.
Some of the key advantages include:
- Litecoin CFD investors are not faced with the daunting task of having to identify and download a Litecoin compatible wallet, purchase Litecoin on a crypto exchange and then transfer the Litecoins purchased to the newly created wallet to avoid possible theft by hackers.
- Most exchanges have a limited number of pairings that tends to result in investors having to purchase Bitcoin or Ethereum first to then be able to buy Litecoin on an alternative exchange that caters for either BTC/LTC or ETH/LTC pairings, many exchanges not accepting fiat money as a source of funding. In contrast, Litecoin CFDs can be purchased with fiat money, which is a far simpler process.
- Order execution when trading Litecoin CFDs is instantaneous, removing slippage and other issues faced when purchasing Litecoin.
- Investors are able to go both long and short when trading Litecoin CFDs, providing the opportunity to build trading revenues as the cryptomarket and Litecoin rollercoasters along. Volatility throughout this year certainly justifies investors entering sell orders to go short and buy orders to go long on Litecoin depending upon market sentiment and momentum.
- In addition to being able to go long or short, investors and traders are also able to enhance yields through the use of margin, with some brokers offering as much as 500:1.
For those looking for high frequency, leveraged trading of Litecoin, the CFD option would certainly be the favorable choice, removing the need to withdraw and deposit Litecoins from a particular exchange account before being able to even place a buy or sell order, the market likely to have moved during the deposit and withdrawal process.
How to Buy Litecoin CFD’s
The first step in any investment decision-making process is to identify the target investment and then type of investment, whether actual or through a CFD.
As mentioned, some investors will be wanting to enjoy the full experience of owning Litecoin, including holding the Litecoin in a Litecoin compatible wallet. Traders and investors looking to make shorter dated trades will, however, be looking for the exposure without going through the entire process of buying, withdrawing, depositing and selling Litecoin.
The next step in the Litecoin CFD investment process would be to identify a broker that ticks all of the boxes, certain requirements likely to include appropriate security levels, ease of payment, fees and user-friendly interfaces (trading platforms) and of course attractive margins to enhance returns.
SimpleFX is a reputable broker that offers investors a number of platforms to trade or invest into Litecoin CFDs, on Android phones, iPhones, tablets or the web, with the popular Metatrader 4 (MT4) platform available for desktop.
The first step will be to open a trading account with SimpleFX by selecting the ‘Open a Live Account’ link located at the top right-hand-side of the homepage.
Once you enter your email address and confirm that you’re not a robot, open the link in the email sent across to you and click verify, where you will then be prompted to set your account password.
For those looking to fund the newly created trading account with fiat money, there are additional steps involved, while those funding with Bitcoin or Litecoin can proceed without providing additional information.
In the interest of completeness, we have opted for opening a hard currency account.
Choose account type, we have opted for “Individual”, and click Next.
You are then prompted to select whether you are from the EU or outside of the EU. Select appropriately and click Next and agree to the terms and conditions.
Complete the personal information page and click Next.
Once completed and you have uploaded a scan of your identity card or passport, you will then be prompted for address information and upload a scanned copy of a utility bill or other as proof of address:
Click Next and you will then be prompted to take and upload a selfie, holding a piece of paper with SimpleFX written on it along with the day’s date.
Once completed, we would advise that you wait for the verification process to be completed before funding the account.
You will, at this stage, have received an email that, not only confirms the activation of the account but also provides you with useful links, including a link to download the MetaTrader4 application.
Upon confirmation that the verification process has been successfully completed, you can then fund the account and begin trading. Don’t forget to download your MT4 trading platform if you don’t already have one.
To fund the account, go to the menu option at the top left-hand side of the home page and select deposits and withdrawal.
Select ‘Deposit’ and then choose your preferred method of funding the newly opened account, options including, but not limited to, funding with Bitcoin, DASH, Ethereum, Litecoin and Bitcoin Cash, while also having the option to fund using Skrill, Neteller, Local Payments and FasaPay.
Do review the funding currency options when using Skrill, Neteller, Local Payments and FasaPay and it’s also worth noting that, while you are able to fund the account with cryptocurrencies, funding with fiat money is instant, though additional verification steps are involved.
Once the account has been funded, you’re good to go!
Litecoin vs Litecoin CFD’s
As mentioned earlier, there are numerous advantages in trading Litecoin CFDs over the buying and selling of Litecoin, the only real disadvantage being the fact that a Litecoin CFD investment doesn’t give you the ownership of the cryptocurrency.
From a trading perspective, however, trading Litecoin CFDs is far more efficient, with significantly shorter execution times perhaps the most important benefit when considering the continued volatility seen in Litecoin and the broader cryptomarket.
With the outlook for Litecoin and the broader market having been muddied this year, uncertainty over what lies ahead from a regulatory standpoint weighing, traders who opted in favor of Litecoin CFDs over Litecoin would have been able to enhance earnings by going short as well as long and, when considering Litecoin’s collapse from a December all-time high $420 to current sub-$90 levels, it would have been quite a 2-way trade, investing long into Litecoin CFDs through to the December’s high and then short through this year.
Throw in the margin and the intraday volatility and trading Litecoin CFDs look even more attractive for traders and investors who are not looking to just buy and hold.
Trading Litecoin CFDs on margin, both long and short does require vigilance however and, while hindsight may make the whole trading game look easy, the use of technical analysis as well as the monitoring of news and protecting losses is vital.
Cryptocurrencies markets are very difficult to predict. The prices can go up or down any day. If you want to profit from the bitcoin and other altcoins price volatility, CFD trading is your best option. You need a handy platform that provides useful intuitive tools. You also need a trading account, preferably without minimum deposits. A simple trading app makes it much easier to make a profit when an opportunity comes. If you want to try crypto CFD trading check out SimpleFX WebTrader. You can test it with a fully functional demo or a live account with some funds for start.