Passive investing is a buzzword these days. Just as most cops (and bad guys) couldn’t keep up with Spiderman, most fund managers cannot keep up with the largest indices. Passive investing usually involves investing in an ETF or index fund that tracks……you guessed it, an index. While the returns for a particular year won’t look spectacular, they definitely compound over time into something significant. “If you can’t beat ‘em, then join ‘em” goes the old saying. Passive investing has gained traction because a lot of fund managers couldn’t beat the index. Investors now have an array of products focused on index investing.

There is plenty of attention on indices. However, crypto investors and traders like doing things a bit differently. Therefore, Cerus Markets offers users the opportunity to trade crypto against indices. A crypto index pair allows users to go long crypto while going short an index or vice versa. So, for example, buying BTC/SPX means that you are bullish on Bitcoin and bearish on the S&P 500. You essentially believe that Bitcoin will relatively outperform the S&P 500. Similarly, going short on BTC/SPX means that you believe the S&P 500 will be stronger than Bitcoin over a certain time horizon. 

A crypto index pair also allows users to easily convert from index to crypto. So, if you were invested in an index and now wanted to shift to crypto, you would have to sell the index, get into fiat money, and then use that money to buy crypto. A crypto index pair skips the fiat money part of the chain and saves you transaction costs.

Indices are widely tracked as they are often viewed as metrics representing the overall economic situation of a country and the state of its stock market. Information about indices gets published in all sorts of online and print media. If you are a market participant, then it is difficult to get away from any information about indices. Why not use that information in your trading? In this article, we will cover the top 3 best indices to trade against crypto. We have chosen the most commonly traded cryptos and well-known indices. If you wish to trade something else, then feel free to conduct your own analysis for any crypto-index pair of your choice.

LTC/FTS

LTC is the symbol for Litecoin while FTS denotes the FTSE 100 index. In the LTC/FTS pair, Litecoin is the base currency while the FTSE 100 index is the quote currency. Yes, we know that FTSE 100 is not a currency but an index, but in pairs trading, that is how the symbols get defined. The FTSE 100 is an index made up of the 100 largest (by market capitalization) companies on the London Stock Exchange. FTSE stands for Financial Times Stock Exchange.

In case you are wondering why we chose the FTSE 100 and not a popular index like the S&P 500 or the Nasdaq 100, then the answer is a correlation. There have been moments, especially since 2021, when Litecoin prices and the FTSE 100 have moved in opposite directions. So, if a trader was to go long on an LTC/FTS CFD (contract for difference), then money could have been made. Any period where the FTSE went down and Litecoin went up (due to the negative correlation) would have been excellent for a long position. Similarly, if the FTSE rose while Litecoin prices fell, a short trade would have made money.

The current price trends, as of January 2023, of Litecoin and FTSE 100 look strong. Litecoin is up about 80% since hitting a low in the middle of 2022. The FTSE 100 is close to its all-time high. It has broken out of the sideways channel where it spent most of 2022. The negative correlation between Litecoin and FTSE currently does not appear to exist. However, the correlation numbers for a pair are dynamic and can change constantly.

ETH/HSG

The next crypto-index pair that we would like to discuss is ETH/HSG. ETH stands for Ethereum while HSG stands for the Hang Seng index. Ethereum is popularly known for being the first altcoin (altcoin is a crypto coin other than Bitcoin). The Hang Seng index represents the largest companies listed on the Hong Kong stock exchange. The Hang Seng is a free-float adjusted market capitalization-based index.

We selected the Hang Seng index not because of the unproven advice of just saying “China” when you aren’t sure about a question on the economy, but because of the apparent low correlation between Ethereum and the Hang Seng index. In recent times, especially since 2021, there hasn’t been a clear relationship between the price of Ethereum and the Hang Seng index.

Low correlation instruments will likely require a trader to rely on studying price action closely. The trader cannot fall back on following a positive or negative correlation to guess the likely price direction. The value of the analysis may be higher when trading a pair with instruments that aren’t highly correlated.

The current price trend, as of January 2023, of the Hang Seng index appears to be bullish. After falling 50% in 2021 and 2022, the trend has been up since October 2022. The price has broken out to a 6-month high. Ethereum, meanwhile, is closing in on its 6-month high, but it is yet to break out of that level.

BTC/NAS

Our final crypto-index pair is Bitcoin and Nasdaq. The official symbol of the Nasdaq 100 index is NDQ. However, on Cerus Markets, you can trade the Bitcoin-Nasdaq CFD by punching in BTC/NAS. Bitcoin is the base currency and the Nasdaq 100 index is the quote currency.

The correlation between Bitcoin and Nasdaq is generally high. They both tend to move in tandem. So, if you are a crypto trader and are looking to catch trends in Bitcoin, then it may be worthwhile to also follow what is happening to the tech sector in America. Changes in interest rates tend to affect growth stocks more than value stocks and Nasdaq is full of growth stocks. So, trading the BTC/NAS pair can be a good way to trade the tech economy of America through cryptocurrencies.

The current price trend of Bitcoin, as of late January 2023, has been a strong uptrend in the first few days of January 2023 followed by a period of consolidation. Meanwhile, the Nasdaq 100 continues to trade in a range of 10,800 to 12,000.

If you would like to start trading cryptocurrency-index pairs through CFDs, then open a trading account now. Take advantage of the ongoing 100% welcome bonus offer for new sign-ups.

Are you a fan of Ethereum? Do you wonder what Ethereum hodlers search on Google Maps? Well of course they search for how to get to the moon. “To the moon!”…get it?

If you don’t, then maybe by the end of this article you will. Because we are going to talk about trading Ethereum vs Google. No, it’s not a battle between Ethereum and Google but a discussion on possible ways to trade the two assets.

And if you are still wondering what “To the moon!” means, then you should know that it is a popular phrase among the cryptocurrency community for expressing optimism about the price trend of a cryptocurrency.

Elon Musk made the slogan even more famous by using it multiple times in his tweets about Dogecoin. We won’t be using slogans in this article.

Instead, we will discuss what trading a crypto and stock pair really means, what drives the prospects of Ethereum and Google, and what could be possible strategies to trade these assets via a CFD.

CFD stands for “contract for difference”. It is a leveraged instrument that allows you to amplify your profits. But, if the market moves against you, your losses can also blow up. So, we will conclude the article with a brief discussion on risk management.

Sounds good? Then let’s go!

Trading Crypto vs Shares

Trading one asset vs another is an interesting concept. However, it is not a new one as every forex trade is one currency vs another. 

When you trade the US dollar, you trade it against some currency. It could be the Janapense Yen, the British Pound, or the Swiss Franc.

When someone tells you an exchange rate, it is the amount of one currency needed to buy one unit of another currency. A USDJPY exchange rate of 130 implies that 132 Japanese Yen are needed to buy one US dollar.

In a pair, the first asset is the base asset (USD) and the second asset is the quote asset (JPY).

Now apply the same concept to crypto vs shares. In the case of Ethereum vs Google, Cerus Markets offers a CFD called ETH/GOG. So, here the base asset is Ethereum and the quote asset is Google stock. The value of ETH/GOG effectively indicates the number of Google shares needed to buy one Ethereum coin.

If you go long ETH/GOG, you either believe that Ethereum will rise faster than Google or Google will fall faster than Ethereum. These two extremes also include possibilities like Google staying flat while Ethereum rises a little bit. 

Another possibility could be Google falling while Ethereum stays flat. The idea is that the ratio of Ethereum to Google would rise – which is why you are long.

The same thing applies to the short trade. If you are short ETH/GOG, then you believe that Ethereum will fall faster than Google or Google rises faster than Ethereum. All possibilities of sideways/flat movements as was the case with the long trade also apply in reverse for the short trade.

Getting To Know ETH and Google

If you are going to trade an instrument that has Google and Ethereum in it, then you probably want to know the fundamentals of both assets. You want to know what could drive the prospects of Ethereum and Google.

For Google, its earnings are the main driver of the stock price. Earnings are primarily driven through ad revenues. Ad revenues, in turn, depend on how much people use Google and for how long.

Google’s cloud computing services are also an important revenue generator. One of the key threats facing Google lately is artificial intelligence. You must have heard of ChatGPT. It is emerging as a key competitor to Google.

Other search engines and platforms are also competitors for Google.

Ethereum was created with a focus on dApps (decentralized apps). So, the demand for dApps directly impacts the demand for Ethereum’s network and its coin.

Any changes in Ethereum’s underlying technology which increases its speed and capacity is also an important trend. Currently, Ethereum is undergoing a major upgrade.

Ethereum, however, faces competition from Polkadot, Cardano, and Cosmos ATOM. The price of cryptocurrencies also varies significantly due to fund flows and sentiments.

Strategies for Trading ETH Against Google

If you are looking to trade ETH/GOG, then you will want to first check the price action of the two assets. Ethereum is currently in an uptrend and trading above its 200-day moving average. The moving average is also gradually sloping upwards.

(source: cerusmarkets.com    ETHUSD daily chart with 200EMA)

The chart for Google shows sideways movement in 2023. However, the price is close to a resistance level. It could either reverse and move back down or it could break out.

(source: cerusmarkets.com    GOOGLE daily chart)

There are a few strategies that one can deploy when trading Ethereum vs Google. Traders can use moving averages of various periods to look for crossovers.

Alternatively, starters could use the Bollinger band indicator to generate entry and exit signals. Discretionary traders can simply study the price action, use trendlines, and add other indicators to look for high-probability trades.

Risk Management

CFDs are leveraged instruments. Even if they weren’t, it is important to manage risk while trading. You don’t want to blow up your account and lose all your trading capital.

If you think that is not possible, then please understand that one wrong trade that is overleveraged can wipe out most (if not all) of your capital.

Define your losses, understand the risk-reward ratio of each trade, and size your positions accordingly. Use stop losses wherever you need to and make use of the alerts feature that Cerus Markets offers.

The goal is to preserve and protect your trading capital. If you can do that consistently, then your wins can help you grow your capital.

Final Words

You will now have a good understanding of how to trade ETH against Google. If you feel ready to begin trading crypto vs shares, then sign up with Cerus Markets. Our 100% welcome bonus offer is currently available to all new sign-ups.

The use of moving averages is very common in trading. Moving averages are popular among traders around the world because of their simplicity and ease of use. There are variations of moving averages like simple and exponential. A simple moving average calculates a plain vanilla average by adding all the prices from a certain lookback period and then dividing the sum by the number of periods. 

The exponential moving average is a very popular technical indicator as well. Its formula is more complicated than a simple average. It involves calculating a smoothing factor that is intended to give more weightage to the recent prices when calculating the average. So, as you may have guessed, a moving average is more biased towards recent prices than the ones farther back in the lookback period. The simple moving average gives equal importance (weight) to all prices in the lookback period. Some traders call the exponential moving average the “exponentially weighted” moving average as well.

The exponential moving average “hugs” the price more closely than the simple moving average. One of the criticisms that moving average indicators receive is that they give signals too late when a trend change or a breakout has already occurred with significant price movement. Traders want their signals earlier so that they can capture a greater portion of trade, especially when the trade goes in their favor. It is like trying to have your cake and eating it too.

Selecting The Lookback Period

The beauty of using moving average indicators is that you can customize them any way you want to. You can simply change the lookback period and use the exponential moving average in different ways to indicate different things. For example, you can try using the 200-day exponential moving average to find out what the long-term trend is.

(BTCUSD daily chart with 200-day EMA   source: cerusmarkets.com)

The chart above shows Bitcoin prices post the 2020 pandemic-led market crash along with the 200-day exponential moving average in red. You will notice that the price did not go below the 200-day exponential moving average. High liquidity levels led to a bull run in stocks and cryptos post the 2020 crash. So, the longer-term trend at that time appeared to be upward and the exponential moving average demonstrated it.

However, if you change the lookback period to 50 days, then it gets interesting.

(BTCUSD daily chart with 50-day EMA   source: cerusmarkets.com)

The 50-day EMA is shown in green. The first thing you may notice is that it follows the price more closely than the 200-day EMA. It is more sensitive to price movements than the 200-day EMA. Also, the price went below the 50-day EMA in late 2020. The shorter lookback period allowed traders to catch the correction of September 2020.

So, depending on what you want to trade, an appropriate lookback period can be selected. If you are looking for, say, short-term breakouts and breakdowns, then a shorter period EMA can work. Buy-and-hold investors and those who want to trade long-term may use a longer lookback period.

Some Strategies Using The Exponential Moving Average

The exponential moving average can show the trend of an asset’s price. One may want to look at not only where the price is but also what the slope of the moving average is. An upward-facing moving average usually indicates an uptrend while a downward-facing moving average indicates a downtrend. In the previous section above, both the 50-day EMA and the 200-day EMA are both facing up in 2021 and the price also rose significantly. One possible strategy at that time could have been to go long when the price came close to the 50-day EMA. A stop loss could have been any level below the 50-day EMA since the price was respecting the 50-day EMA throughout that uptrend.

Another strategy that traders can use is the crossover. It involves using two moving averages simultaneously. One EMA has a shorter lookback period while the other has a longer lookback period. When the shorter moving average crosses above the longer moving average, traders could go long. If the shorter moving average crosses below the longer moving average, traders could go short. The idea behind such crossovers is that the shorter period moving average is more sensitive and therefore will signal the trend change before the longer period moving average will. Crossovers become more significant when the close of both the shorter period and longer period exponential moving averages match the price trend. So, for example, if the trend signal is to go long and subsequently, if both the shorter and longer period exponential moving averages slope upwards, the belief that an uptrend is here to stay becomes stronger.

(LTCUSD 4-hour chart with 18 & 50-day EMAs  source: panda-fx.com)

The 4-hourly chart for LTCUSD shows a downtrend that occurred in December 2022. After a period of choppy sideways movement, the price fell significantly. The 18-day EMA (in blue) crossed below the 50-day EMA (in green). The 18-day EMA kept moving above and below the 50-day EMA during the choppy period. But, post the price fall and the final crossover, both the 18 and 50-day EMAs turned downward sloping confirming the downtrend.

Exponential moving averages can also be used like trendlines to find support and resistance levels. In the LTCUSD example above, notice how the price post the fall does a brief sideways trend. It almost touches the 18-day blue EMA before falling further. In a downtrend, the 18-day EMA acted as a resistance and might have been a good place to go short. A stop loss might have been placed somewhere above the 18-day EMA.

A Word On Risk Management

Trading CFDs is risky as they are leveraged instruments. So, it is always a good idea to have some risk management practices in place. If you are planning to catch trends using the moving average, then it is important to size your positions correctly, place stop losses, and define your risk before taking a trade.

Cerus Markets offers both simple and exponential moving average indicators on its market-leading trading platform. Users can trade CFDs in a host of cryptocurrencies and use moving averages to generate buy and sell signals. We encourage you to open an account as well and take advantage of our 100% welcome bonus offer. As we say at Cerus Markets, there is always a bull market somewhere. We hope you can participate in such trends as well.

Is Litecoin going to the moon? We don’t really know and neither can we explain why some people are wearing the “when moon” t-shirt with Litecoins in the two o’s of the moon. If you like trading in Litecoin, then you may be interested to know that there are Litecoin-related CFDs that you could trade. One such CFD is LTC/NAS. These two symbols represent Litecoin (LTC) and the Nasdaq composite index (NAS). 

Litecoin was introduced back in 2011, roughly two years after Bitcoin broke onto the scene. A former Google engineer created Litecoin with the intention of overcoming some of the shortcomings of Bitcoin. The supply of Litecoin is capped at 84 million and it processes transactions faster than Bitcoin. As of February 2023, Litecoin has a market capitalization of close to $6.8 billion. It is among the top cryptocurrency coins in the world in terms of the volume traded.

Let’s talk a bit about the Nasdaq index. It is clarified that when someone says the Nasdaq, it actually means the Nasdaq Composite Index. There are two popular indices when one refers to Nasdaq, the Nasdaq Composite and the Nasdaq 100. The Nasdaq 100 is narrower with fewer companies whereas the Nasdaq Composite has more than 3700 stocks. The Nasdaq is a market capitalization-weighted index with internet and tech companies dominating the index.

If tech stocks and Litecoin both sound interesting to you, then how about combining the two and trading them via one instrument? That is what the LTC/NAS CFD at Cerus Markets is all about. Read on to learn more.

What Does Trading Crypto vs an Index Really Mean?

In order to understand the concept of trading crypto vs index, let us understand a little bit of forex trading. When one trades the USD, it is usually USD versus another currency. So, the USD/EUR trade would involve the US dollar and the Euro. Going long USD/EUR would usually mean being bullish on the dollar, being bearish on the Euro, or both. When one refers to USD/EUR, the first asset (the USD) is the base currency and the second asset (the EUR) is the quote currency. It refers to the number of Euros needed to buy one US dollar.

Now let’s come back to LTC/NAS. Here, the base asset is Litecoin and the quote asset is the Nasdaq Index. It effectively conveys the number of Nasdaq Index needed to buy one Litecoin. This may sound weird but if you imagine that the Nasdaq Index was worth 10,000 USD and one Litecoin was worth $100, the LTC/NAS CFD would probably be trading around 0.01 (100/10,000).

Developing a Solid Understanding of Litecoin and Nasdaq

If you are planning to trade the LTC/NAS CFD, then you would want to be able to foresee where the price of Litecoin is going and the Nasdaq index is headed. For that, you may want to research what Litecoin is, how it is mined, and what kind of demand there is for the cryptocurrency. You may also want to look up recent news related to Litecoin as cryptocurrencies get significantly impacted in the short term by important news. Cerus Markets has integrated the news feature into its platform so that traders can keep up with the latest developments.

You would also want to do some serious analysis of the Nasdaq index. Whether that is done through chart analysis or fundamental analysis of the heavyweight stocks within the Nasdaq index is up to you. But, it is important to have some idea of what the current setup in the Nasdaq is and what the future outlook is. For analyzing charts, traders can make use of a range of technical indicators like RSI, moving averages, etc. that Cerus Markets offers on its platform.

Strategies for Trading LTC Against Nasdaq

As of early 2023, it appears that Litecoin is close to an area of value. It is near a former support level that could now act as resistance. Alternatively, Litecoin could break out. Bear in mind that this weekly chart is for Litecoin in USD.

(source: cerusmarkets.com  weekly chart of LTC/USD)

The Nasdaq index, meanwhile, was in a longer-term downtrend ever since inflation started to be an issue across the world. Tech stocks are growth stocks and they appear to have taken a beating as interest rates rose. Most recently, the Nasdaq briefly went above the 200 EMA before dipping back down.

(source: cerusmarkets.com daily chart of Nasdaq)

A trader looking to trade the LTC/NAS CFD could either use a simple moving average crossover strategy to identify a trend and take a position. Alternatively, he/she could look for support and resistance levels to form an opinion. Traders can also use other indicators like RSI together with moving averages to do their analysis.

Practice Risk Management When You Take Leverage

If you are going to trade CFDs, then you should note that these instruments come with leverage. The LTC/NAS CFD at Cerus Markets has a maximum leverage ratio of 100:1. It means that you can put up $1,000 to take a position worth $100,000. The profits can be outsized but so can the losses. In fact, one bad move against your position can wipe out your trading capital with that sort of leverage ratio.

Therefore, it is important to size your position correctly. This means that even if your stop loss is hit, the resulting loss should only result in a small loss of trading capital. It is important to define the maximum loss that you are willing to take for each trade. You would also want to use features like alerts and stop losses, especially if you don’t want big losses while you are away from the screen. Read up on risk management guidelines before you trade so that you know what you are getting into when you trade a crypto CFD. Cryptocurrency markets are volatile and you need to have a system in place to deal with that volatility.

We hope that you now have a decent idea of how to trade Litecoin against Nasdaq. We encourage you to open an account with Cerus Markets and take advantage of trading opportunities in a range of crypto vs index CFDs. The good news is that we are currently running a 100% welcome bonus offer for new users.

Trading comes with its associated risks. Some define risk as the chance that the market (or instrument you are trading) moves against your view. Some define risk as the chance of permanent loss of capital. Some define risk as the volatility or standard deviation of the daily returns. No matter how you define risk, one thing is certain – trading is not risk-free. If you are going to trade cryptos or any other instrument, then it is important for you to manage risk.

Types of Risks to Consider

There are two types of risks that a trader needs to understand. The first is stock or cryptocurrency risk which is specific to the instrument being traded. If you bought the stock of a company and that company faces a black swan event, then only the stock of that company gets affected. Black swan events could be a governance issue, a fraud, some overnight event that deeply impacts its business, etc. Think of the GameStop episode. Cryptocurrencies tend to face frequent price volatility from events of this sort because the cryptocurrency space is fast-evolving. Any news of forking, hacking, government bans, etc. impacts a cryptocurrency.

The second type of risk is the market risk or systemic risk. This kind of risk is system-wide and affects almost all securities or instruments traded on the market. These risks are driven by broader events like macroeconomic situations, wars, pandemics, etc. Think of the 2008 financial crisis when the entire market in the US fell more than 40% or the COVID crash of 2020. In such cases, it doesn’t matter what stocks or cryptos you hold. Everything gets affected. It is like a bunch of boats in the ocean. When the tide rises, all boats rise and when the tide goes away, all boats sink lower.

There are execution risks as well. For example, if you plan to buy or sell a cryptocurrency or stock at a specific price, you open your terminal and prepare yourself to hit the buy/sell button. However, if the instrument that you are about to trade is too volatile and if its price is moving too quickly and frequently, then there is a chance that your order doesn’t get filled at your intended price. Instead, it gets executed at a much higher/lower price, potentially resulting in a loss. This kind of slippage is very significant if you are trading large quantities.

What Happens When You Don’t Manage Risk?

If you don’t have basic risk-management rules in place, then there is a lot that can happen besides loss of capital. If you trade leveraged products like CFDs or derivatives, then your losses could go well beyond your deposited capital. After all, CFDs allow you to take positions that are much larger than the capital that you have put up. So, running a negative balance leads to something popularly known as a margin call. The broker may demand that you deposit additional funds to cure the negative balance. Margin calls can also result in brokers squaring off your positions automatically, regardless of whether you were in profit or loss at that time. Losing your trading capital through a loss is bad enough, facing a margin call makes it worse.

How Can You Manage These Risks?

You can use some of Cerus Markets’ features to manage your risk:

Stop Loss: You can use the stop loss to define the maximum amount that you are willing to lose. While placing a trade, there is an option to set a stop loss as well. Setting a stop loss means that your trade will be closed or squared off as soon as the price reaches your set stop loss. Stop losses usually work unless the price gaps are up or gaps are down. A gap is formed when there is a noticeable difference between the closing price and the opening price the next day.

Alerts: Cerus Markets allows users to set alerts as well. So, if you want to be reminded when the price crosses a certain level, then you can set an alert through your trading terminal. Alerts work well if you are worried that your stop loss will not hit its intended level due to high volatility. Alerts are also a good nudge for you to log in to your trading terminal and be in front of the screen at a critical moment.

Limit Orders: Limit orders allow Cerus Markets users to set a price at which to enter a trade and exit a trade. This eliminates the execution risk that was discussed above. Sometimes, when prices are moving way too quickly, it might not be manually possible to execute a trade at the desired price point. 

Sometimes, a market order gets executed at a level far away from your entered price point. This can happen due to high volatility or illiquidity. In order to buy, there has to be a seller. If there are very few sellers and you are looking to buy, you might not find a seller willing to sell at your intended price point. A limit order stays in the system and waits for a seller who punches in a trade at your price point.

Position Sizing: This is a more general risk management technique. You should size your position correctly. If you are only willing to lose, say, 2% of your trading capital, then you will enter a trading volume where the risk is only that much. If you trade double the volume, then your potential loss amount goes up to 4%. You will limit your quantity to match your loss limit.

Have A Mental Kill Switch: Have a predetermined loss amount in mind. If at any point, your mark-to-market loss hits that level, then you exit the trade completely regardless of whether things are about to turn around or not. It is like a kill switch that has to be executed without any excuses or reasons.

Final Thoughts

At Cerus Markets, we are dedicated to making traders informed and aware of the benefits and risks associated with trading. We want traders to trade with safety and risk management in place. If you are ready to start trading, we encourage you to sign up and open an account. We currently also have a 100% welcome bonus offer for new sign-ups. Redeem your bonus today and discover the next bull market!