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Litecoin Strategy - Scalping for consistent profits
Scalping the cryptocurrency market for consistent profits with our Litecoin strategy has never been easier. Learning to scalp trade can help you win small quick profits that can add up to build consistent profits in your trading account.
Our team at Trading Strategy Guides is proud to say that many of our cryptocurrency trading strategy have found the recognition among the crypto community. Time and time again they have proved to work in all types of market conditions satisfying our readers.
If Bitcoin is the gold of cryptocurrencies, then Litecoin is the silver of cryptocurrencies.
Moving forward we’re going to look exclusively on Litecoin, and we’re going to give you a brief history of how this coin was created and what purpose it has. Once you understand litecoin functionality, it will become so much easier to trade litecoin. Also read about Personality Strengths and Weakness in Forex Trading.
What is Litecoin?
Litecoin is a decentralized online currency that can be used to purchase services or to buy goods. Litecoin provides a secure and easy way for merchants to accept money as there are no fees to receive payments.
Litecoin was created in October 2011 which makes it one of the first alt-coins in circulation. Charlie Lee was the man who created or developed this cryptocurrency, and litecoin was designed to solve lots of problems that bitcoin was facing.
The advantage of trading litecoin is that it has reduced the block time of bitcoin from 10 minutes to 2.5 minutes. Litecoin confirms transactions a lot faster on the blockchain network, and it has a lower transaction fee.
Now, that we learned about the future potential of litecoin, it’s worth also to learn how to efficiently trade litecoin so we can make some money.
Moving forward, we’re going to highlight a very easy scalping strategy that will help you pull consistent profits trading litecoin.
Before outlining the litecoin strategy rules let’s look at what indicators we need to trade this scalping strategy successfully.
The only indicators you need are the following:
On Balance Volume or the OBV – The OBV indicator is based on the idea that both the volume and the price activity are equally important. In this regard, the OBV combines both price and volume to show you the total amount of money going in and out of the Litecoin.
The main idea behind the On Balance Volume indicator is that the Litecoin price will follow where the volume flow is going.
In other words, volume precedes price!
So, if Litecoin price is moving up, we want to see the OBV indicator rising signaling an inflow of money. Conversely, if the Litecoin price is moving down, we want to see the OBV indicator falling indicating an outflow of funds.
The OBV is a momentum indicator, making it a leading indicator!
But leading indicators are prone to alteration from random price fluctuation which is the reason why we use the second indicator for smoothing the price fluctuation.
In this regard, on our Litecoin price chart, we’ll also plot a 20-day moving average which it will be used to differentiate between what is normal volume activity and what it’s abnormal trading activity.
The use of the 20-day moving average can also signal how severe the potential change in Litecoin price trend may be.
Finally, your complete Litecoin chart setup should look the same as in the figure below:
Now let’s see how you can efficiently trade with the Litecoin strategy and how to make consistent profits by scalping the cryptocurrency market.
Litecoin Strategy – Cryptocurrency Scalping Strategy
The litecoin trading strategy offers you an easy and effective way to scalp the cryptocurrency market for consistent profits. You simply have to use this step-by-step cryptocurrency trading guide to have a chance to survive in this volatile market.
Unlike our Ripple trading strategy which uses naked charts our team at TSG has detected that the cryptocurrency litecoin has more accurate trade signals if you incorporate the On Balance Volume Indicator.
Now, before we go any further, we always recommend taking a piece of paper and a pen and note down the rules of the Litecoin scalping strategy. For this article, we’re going to look at the buy side.
Step #1: With for the OBV indicator to enter into a prolonged period of consolidation at the bottom of the window
Our team at TSG has always had an unorthodox approach to trading which is the reason why we’re proposing a unique trading technique to make better trades with the OBV indicator.
The first rule of the Litecoin strategy is to wait until the OBV indicator enters into a prolonged period of consolidation. In other words, what we look for is for the OBV indicator to spend some time in “oversold” territory.
Technically the OBV doesn’t show overbought and oversold conditions in the market but, we only use these terms to describe the OBV location on the chart (see above chart).
The On Balance Volume indicator as the name suggests shows the volume activity, and when we see the OBV consolidating, usually this means the market is in accumulation process.
But what is accumulation?
Very simple, accumulation is the buying up of cryptocurrencies by the professionals. The buying it’s usually done in a manner that doesn’t attract attention on the price chart which is the reason why we use the OBV indicator to spot when the institutional buying happens.
Now, this brings us to step #2.
Step #2: With for a breakout above the OBV consolidation zone.
When the professionals accumulate a cryptocurrency, it will usually trade sideways. The OBV indicator is the best indicator to outline when Litecoin is being accumulated.
These ranges are deliberately created by the smart money to use fear and panic to shake out weak holders so they can grab as much of the available cryptocurrency at the lowest price.
When all the available supply of a cryptocurrency is exhausted, then the smart money will mark up the Litecoin price or any other cryptocurrency. This process can be best visualized on the OBV indicator when we have a breakout above the consolidation zone created.
The OBV indicator performs better if it’s used in conjunction with other indicators as well as your own judgment and common sense which brings us to the next step of our Litecoin strategy.
Next step will also outline our Litecoin buying strategy.
Step #3: Buy Litecoin when we close above the 20-day Moving Average.
We’re going to use the 20-day moving average indicator to confirm the OBV readings further.
After the OBV indicator broker above its consolidation and right away the Litecoin price breaks and closes above the 20-day moving average, we initiate a buy order.
The next important thing we need to establish for our scalping strategy is where to place our protective stop loss.
See below …
Step #4: Hide the Protective Stop Loss below the most important support level.
Knowing where to place your protective stop loss is as important as knowing when to enter the market.
That’s the way you manage risk!
The best strategy to apply in this case is to place your protective stop loss below the most recent support level. If the smart money were really behind this move than the support level should hold. Otherwise, a break below will invalidate our market view, and we better be out of the market than fighting a losing trade.
Last but not least, we also need to define a take profit level for our scalping strategy which brings us to the last step of our Litecoin trading strategy.
See below …
Step #5: Take Profit when Litecoin price closes below the 20-day Moving Average
The litecoin trading strategy seeks to maximize our potential profits.
We only need a straightforward condition to be satisfied with our take profit strategy.
In this regard, we take profits at the first sign that the market is about to reverse. When the litecoin price breaks and closes below the 20-day Moving average, that’s the most appropriate moment we want to take profits.
Note** the above was an example of a BUY trade using the cryptocurrency trading strategy. Use the same rules for a SELL trade – but in reverse. In the figure below, you can see an actual SELL trade example.
Conclusion - Litecoin Strategy
This cryptocurrency trading strategy is suitable for scalper and daytrader alike. The Litecoin trading strategy will allow you to identify the high of the day or the low of the day within a 24 hour period. The litecoin price is still undervalued comparing it to Bitcoin and Ethereum price, which is why we see great potential in the near future.
Many in the crypto space consider Litecoin to be a better choice then bitcoin so make sure you don’t miss the next big train to the upside.
Thank you for reading!
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