How to Trade Litecoin Against Nasdaq?
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.