Litecoin Strategy - How to Scalp 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.
If Bitcoin is the gold of cryptocurrencies, then Litecoin is the silver of cryptocurrencies.
Moving forward, we’re going to look exclusively on Litecoin. We’re going to give you a brief history of how this coin was created and what purpose it has. Once you understand Litecoin's functionality, it will become so much easier to trade. Also read about Personality Strengths and Weakness in Forex Trading.
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What is Litecoin?
Litecoin is a decentralized online, digital currency. It 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 (LTE) 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. 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 learning how to efficiently trade Litecoin. After learning this new trading technique, we can make some money!
Moving forward, we’re going to highlight a simple scalping strategy. This strategy will help you pull consistent profits trading litecoin.
Before outlining the litecoin strategy rules, let’s learn which indicators we need to trade this scalping strategy successfully.
The only indicators you need are the following:
On Balance Volume, or 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. This shows you the total amount of money going in and out of the Litecoin.
The main idea behind the On Balance Volume indicator is the Litecoin price will follow where the volume flow is going.
In other words, volume precedes price!
If the 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. This 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. It will be used to differentiate between normal volume activity and abnormal trading activity.
The use of the 20-day moving average can also signal how severe the potential change in Litecoin price trend is.
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. You'll learn how to make consistent profits by scalping the cryptocurrency market.
Litecoin Strategy – Cryptocurrency Scalping Strategy
This 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. Then you'll have a chance of surviving 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.
We always recommend taking a piece of paper and a pen before you continue reading. Note down the rules of the Litecoin scalping strategy. For this strategy, 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. This is the reason why we’re proposing a unique day trading technique. You'll be able 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, we look for the OBV indicator to spend some time in “oversold” territory.
Technically the OBV doesn’t show overbought and oversold conditions in the market. 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. When we see the OBV consolidating, this usually means the market is in the accumulation process.
But what is accumulation?
Very simple, accumulation is the buying up of cryptocurrencies by professionals. The buying it’s usually done in a manner that doesn’t attract attention on the price chart. This is 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, the smart money will mark up the Litecoin price. It will also mark up 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. This 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 is above its consolidation and when the Litecoin price 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. It's better to be out of the market than fight a losing trade.
Last but not least, we also need to define a take profit level for our scalping strategy. This 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, it's the most appropriate moment 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.