Trading and CFD

Cryptocurrency trading is making use of the price movements of the underlying cryptocurrencies. The price movement or volatility provides interesting opportunities to create gains by using trading strategies and access to markets. There are various forms of trading.

(Remember that CFDs are a leveraged product and can result in the loss of your entire capital)

  • Trading in real cryptocurrencies by using the various exchanges and/or storing coins in your wallet. By using platforms like Changelly one can shift Litecoins into other cryptocurrencies and create a basket of cryptocurrencies in order to spread risks.
  • Trading on the various exchanges of which some offer margin trading. This implies even more upside potential for gains.
  • Trading by using Contract for Difference (CFDs) in which the underlying assets are cryptocurrencies. The main benefit of trading CFDs is the flexibility to trade against the price movements without actually buying or selling the physical instrument.
  • Trading requires time and experience in order to make profitable trades. To become successful? You need to start experimenting with your own trades and continue to learn.

Introduction to trading

Since the introduction of cryptocurrencies, especially Bitcoin, people involved in Bitcoin know that it can be immensely profitable. From almost free Bitcoins in 2009 to nowadays trading $ 2,000+. There is no question Bitcoin made multi-millionaires. Today financial media coverage is huge and other cryptocurrencies have gained financial track. Without “physical” having cryptocurrencies, there is a method of making profit from price moves. As major exchanges include Litecoin as a tradable instrument, anyone who can read a price chart can now trade Litecoin. Trading has become more accessible without the technical barriers.

Why trade Litecoins?

  • Litecoin is global and is 24/7 available. Litecoin trading is global and is distributed across international exchanges. Literally Litecoins never sleep: Litecoin is tradable 24/7. Online traders anywhere in the world can trade whenever it is convenient to them. Trading outside business hours or over weekends and holidays.
  • Volatility of Litecoin. Volatility or price movement is a trader’s dream. Having a volatility, swings in price can be extremely profitable over short time frames. This requires correct trading. The more price is moving, the more profit can be made by trading upswings and downswings.
  • Trading with leverage. Litecoin can be traded with leverage. This allows traders to generate profit beyond their proportional investment of trading capital. Keep in mind CFDs are a leveraged product and can result in the loss of your entire capital.
  • Price movement is “independent”. Litecoin (and Bitcoin) has a predictable inflation. As a result price movement is generally independent of Forex, stock, bond and commodity markets. Litecon is somewhat insulated from localized risks, it’s easier to trade based on pure price action and technical analysis.

How to trade Litecoin with regular money?

How to trade Litcoin using fiat? Litecoin CFDs allow to trade Litecoin without using Litecoin. CFDs are created to gain exposure to an underlying asset without the necessity of owning it. CFD represent a contract between trader and exchange. The contracts declare that the difference between the trader’s entry and exit price shall be the trader’s profit of loss. So basically it’s an virtual agreement.

Advantages of CFDs

  • As a flexible instrument, CFDs allow traders to go long or go short. (long betting that the price will rise, short betting that the price will fall) CFDs can be entered on any day, at any time. Likewise CFDs can be closed whenever.
  • CFDs have low fees relative to other methods of trading markets. These fees are slightly above the exchanges for direct purchase and sale of Litecoins. In addition to daily interest on open positions, fees are taken from the spread. (difference between buy and sell price)

Disadvantages of CFDs

  • CFDs are suitable for traders and are not the ideal choice for long term holders. There is a cost to maintain open positions. The cost know as premium consumes a small percentage of your daily position. The leverage is enabled through a loan made from exchange to trader, interest must me charged for the duration of the agreement. Litecoins in your wallet are at no (interest) cost.
  • Margin call. Unexpected and drastic market moves must be protected. Losses become liabilities of clients. However if clients are unable to cover the loss then the exchange itself suffer losses. Exchanges protect themselves by the margin call. Exchanges automatically close out clients before their balances become negative. Clients need a better funded margin account in order to minimize a margin call.
  • CFDs requires regulation. Many companies avoid operating in the United States because of regulation.

Experimenting with CFDs

You can always experiment with  CFDs risk free. Plus500 offers a demo trading program. The demo mimics the trading interface, Litecoin price and the workings of CFDs are real but your trading account is with “virtual” money. You can use the demo as long as you like, until you are ready to trade with real money.

Warning: CFDs are a leveraged product and can result in the loss of your entire capital

Plus500 CY Ltd is authorised and regulated by the Cyprus Securities and Exchange Commission (License No. 250/14)

Scroll to Top