ltcusd – Forex Academy

Introduction

Cryptocurrencies are traded in pairs by pairing them with a fiat currency. Always, the cryptocurrency is written on the left and the fiat currency on the right. LTC/USD is a cryptocurrency, which is an abbreviation for the Litecoin versus the US Dollar. Like the Bitcoin and Ethereum, Litecoin is extensively traded in the exchange market.

Understanding LTC/USD

The market price of LTCUSD depicts the value of the US Dollar, which is equivalent to 1 Litecoin. It is quoted as 1 LTC per X USD. For example, if the value of LTCUSD is 41.69, then one Litecoin is worth 41.69 US Dollars.

LTC/USD specifications

Spread

Spread is the difference between the bid and the ask price in the market, where bid price is given considered when shorting a pair and ask price when going long on a pair. The varies from broker to broker. It also differs based on the type of execution model used. Below are the spreads for the LTC/USD pair for both ECN & STP accounts.

Spread on ECN: 50 pips (0.5 USD)
Spread on STP: 60 pips (0.6 USD)

Fee

ECN brokers charge some commission on every position a trader opens and closes. The fee for ECN accounts is about $0.18 per standard lot, which corresponds to 18 pips.

Slippage

Slippage is the difference between the price asked by the user and the price given by the broker. There is this difference due to two reasons – High market volatility & broker’s execution speed.

Trading Range in LTC/USD

Below is the trading range table for the LTCUSD, which represents the minimum, average, and maximum volatilities of a pair for different timeframes using the ATR indicator. These values can prove to be helpful for assessing one’s profit/loss on a trade.

Procedure to assess Pip Ranges

Add the ATR indicator to your chart
Set the period to 1
Add a 200-period SMA to this indicator
Shrink the chart so you can assess a large time period
Select your desired timeframe
Measure the floor level and set this value as the min
Measure the level of the 200-period SMA and set this as the average
Measure the peak levels and set this as Max.

LTC/USD Cost as a Percent of the Trading Range

The cost as a percent of the trading range represents the variation of cost on a trade based on the change in the volatility of the market. And these variations are indicated as a percentage. Using the magnitude of the percentages, we shall determine the ideal times of the day to trade this coin.

ECN Model Account

Spread = 50 | Slippage = 5 |Trading fee = 18

Total cost = Slippage + Spread + Trading Fee = 18 + 50 + 5 = 73

STP Model Account

Spread = 60 | Slippage = 5 | Trading fee = 0Total cost = Slippage + Spread + Trading Fee = 5 + 60 + 0 = 65

Trading the LTC/USD

LTCUSD is a crypto-fiat pair that has got enough volatility and liquidity to trade in the market. LTC is the fourth highest traded coin in terms of volume. However, it is not apt to trade anytime during the day. There are ways through which one reduces their costs for the same trade.

In the above table, if the percentages are high, then the costs are very high and vice versa. So, the cost is more for low volatile markets and less for high volatile markets. If you are a scalper or short-term trader, you may trade when the volatility is high as the profit margin is small, and you can avoid high costs.

Positional traders – these traders usually aim for large movements, and high costs become a little insignificant for their big pip movements. So, such traders may trade when the volatility is around the average values. Finally, it is not advisable to trade during low volatilities because the costs are high, and there is barely any movement in the market.

Slippage is a variable in total costs that can be eliminated by placing orders as ‘limit’ or ‘stop.’ We hope you found this analysis on LTCUSD useful. Stay tuned for more informative content. Cheers.

Litecoin is at the crossroads

Litecoin has hit the biggest support line so far, and kept above it. However, the downwards trend line is reaching the support line as well, and they will cross on the 24th of September. What will happen?

The most likely scenario

There is an extremely high probability of Litecoin breaking out before 24th of September, and the break has an extremely high likelihood of pushing upwards. Litecoin has been following BTC’s patterns for quite a while, but has still been a worse-performing asset than BTC itself. This might change soon. A proper long-short portfolio should have a Litecoin long position for the next 20 days. However, we do suggest a long-short portfolio with another asset being shorted for the same amount of equity in order to negate crypto market movements.

The less likely scenario

There is, of course, the other part of the story. Litecoin might break to the downside if the buyers do not rally up. Even if it’s highly unlikely, there is a chance for this to happen. If Bitcoin does go down in the next 20 days, Litecoin has high probability of following down its path. This is why having a long-short portfolio during the “bear market” is crucial. All Cryptocurrencies are highly correlated and we need to either only trade with the general trend of the market, or take long-short positions with extreme caution.

Final word

Most financial advisors and gurus are losing money in Crypto these days simply due to them not being educated in properly managing risk. This is why Forex.Academy is trying to show people that portfolio and risk management is just as important as creating trade ideas. In the case of Litecoin these days, if the market goes up or stays the same, Litecoin will outperform it. If it goes down, Litecoin will outperform it to the downside as well. Either way, this play on LTC is a market play.