A Primer On Trading Litecoin Against Tencent Holdings

Why did Litecoin and Tencent break up? Because Tencent kept saying WeChat, WeChat, WeChat, and Litecoin got fed up and said that it needed its space. 

Jokes aside, we got nothing against Litecoin and Tencent. Neither are Litecoin nor Tencent in any relationship. However, you could try and create trading strategies based on how Litecoin and Tencent prices behave in relation to one another. 

Now we are talking about something interesting, aren’t we?

Cerus Markets offers the LTC/TNC CFD which is a contract for different instruments consisting of Litecoin and Tencent Holdings. We call it Litecoin vs Tencent Holdings. 

So, Litecoin is the base currency while Tencent Holdings is the quote currency. In effect, it means the number of Tencent Holdings stocks needed to buy one Litecoin.

Litecoin was launched back in 2011 with the intention of overcoming some of the disadvantages of Bitcoin. 

A former Google engineer, Charlie Lee, graduated from the Massachusetts Institute of Technology and worked with Google before starting his Litecoin venture. 

His brother, Bobby Lee, is also a well-known figure in the cryptocurrency space for being the founder of the crypto exchange BTC China.

The supply of Litecoin is capped at 84 million and the processing speed of the cryptocurrency is also a lot faster than that of Bitcoin.

Tencent Holdings is a technology and entertainment conglomerate. Think of QQ, Weibo, WeChat, Tencent Music, Tencent Pictures, and Tencent Games. We are talking about one of the giants of China’s technology industry.

This article is about how you can trade one of the leading cryptocurrencies against one of China’s leading tech stocks.


Trading Crypto Vs Stocks

First, let us understand what it means to trade a cryptocurrency vs a stock. It is very similar to trading forex. 

For example, if you trade the USD/JPY, you are basically taking a position in the USD vs the Japanese Yen. The USD/JPY basically tells us how many Japanese Yen are needed to buy one USD.

Trading the USD allows you to have a view of both USD and JPY at the same time. Similarly, trading an LTC/TNC CFD allows you to have a position in Litecoin and Tencent Holdings.

Going long LTC/TNC means you either think Litecoin will outperform Tencent Holdings, or Tencent Holdings will underperform Litecoin, or both could happen at the same time.

This view covers a range of scenarios. Litecoin could move up while Tencent could remain sideways. Or Litecoin could remain sideways while Tencent could fall. Or Litecoin could fall, but not as much as Tencent.

On the flip side, if you are short LTC/TNC, the opposite is true. You would then believe that Litecoin could fall at a higher rate than Tencent Holdings. Or Tencent would rise at a faster rate than Litecoin.

You see how the interplay between the two works when you trade a cryptocurrency vs a stock. The idea is to find a pair in which you understand the price correlation between the two assets involved.

Understanding Litecoin and Tencent

If you are planning to trade the LTC/TNC CFD, then it would be highly recommended that you get yourself familiar with what Litecoin and Tencent are and what are the possible drivers of both their prices.

For Litecoin, you would want to read up on all the latest news related to the cryptocurrency. You would certainly want to watch for any developments relating to inflows and liquidity. 

Any large buying or selling of the cryptocurrency can affect the price or mean something about the long-term prospects of that coin. 

It may also be a good idea to understand the basic technology behind Litecoin, how it is mined, how it is transacted, and what are its use cases.

For Tencent Holdings, you can read up about the business, the news, and annual reports/investor communication put out by the company. 

Tracking a stock would be easier than tracking a cryptocurrency because there is so much structured content out there due to regulatory requirements.

You may also want to understand how the trade war between the US and China can impact China’s technology sector.

Price Action of Litecoin and Tencent

The current price action of Litecoin shows the price to be near important areas of value. The price has pulled back toward the 200-day moving average after breaking out. The price is also close to a level that acted previously as a resistance and then support.


(source: cerusmarkets.com   Litecoin daily chart)

So, Litecoin appears to be in somewhat of a sideways trend, but the very short-term trend of a few days shows an upward trajectory. Much depends on how the price moves from here on as it could break down below the 200-day average or take support and bounce back up.

The RSI indicator is not giving any strong signals either with a value close to 50. If Litecoin manages to outperform Tencent Holdings, then a long position would work out. However, if it breaks down while Tencent holds, a short position could be a possible trade.

Traders could create a trading strategy that involves a long-term moving average like the 200-day average and a short-term moving average like the 50-day average. Trading signals can be generated when there are crossovers.

Traders could also look at indicators like RSI or Bollinger Bands and generate short or long trade signals accordingly.


Risk Management

It is easy to forget, amid all the talk about Tencent and Litecoin, that a CFD is a leveraged product. It means that your profits can be boosted, but your losses can also be disproportionate. 

For example, a 5X leverage means you can take a position that is 5 times the capital that you put up. So, a price movement in your favor can boost your profits 5X. But, a movement in the price against you can give you a 5X loss. 

In the worst case, your entire trading capital can also get wiped out.

We obviously don’t want you to incur massive losses. Protecting your capital should be the foremost priority of any trader. So, we advise that you practice proper risk management.

Risk management could include proper asset allocation, using stop losses to stick to your defined risk, and using other features on Cerus Markets’ platform.

Final Words

You should now have a basic understanding of what it means to trade crypto vs stocks and how you can trade Litecoin vs Tencent Holdings. 

If you are ready to start trading, then feel free to open an account with Cerus Markets. The process is simple and fast and we also have a 100% welcome bonus offer for new sign-ups. Good luck with your trading!

Get your 100% bonus in 3 simple steps:

Open an account in as little as 2 minutes
Deposit at least US$50
Start trading the global markets
The amount of your bonus is based on the amount of your first deposit. Terms and Conditions apply.