Understand what LTC futures are and how to use the leverage in futures to amplify your trading gains
Litecoin futures enable you to take long (you profit when market goes up) and short positions (you profit when market goes down) on LTC. Futures have in-built leverage which acts as a multiplier to your returns. Currently, the following Litecoin contracts are listed on Delta Exchange.
|Contract Type||perpetual futures|
Litecoin (LTC) is the most prominent cryptocurrency in the world. It is a decentralized digital currency that functions without a central bank or single administrator. Peer-to-peer exchange of Litecoin can happen without the need for intermediaries.
Litecoin (LTC) is a peer-to-peer cryptocurrency that enables near instant and low cost money transfers. Creation and transfer of LTC is decentralised and is based on an open-source cryptographic protocol. The Litecoin blockchain started as a hard-fork of the Bitcoin block in October 2011. Due to this, the Litecoin protocol is nearly identical to Bitcoin protocol.
They key differences between Litecoin and Bitcoin are as follows:
Blocktime in Litecoin blockchain is ~2.5mins vs. ~10mins for Bitcoin
The supply of Bitcoin is capped at 21 million, whereas the max supply of Litecoins is 84 million
Litecoin uses scrypt as the hashing algorithm, while SHA-256 is used in Bitcoin blockchain. This choice of hashing algorithm makes is easy to mine LTC using any consumer-grade hardware
Litecoin Futures is an agreement between two parties to buy or sell Litecoin at a predetermined future date and price. The futures contract derives its value from the underlying cryptocurrency, Litecoin in this case. Thus the price of a Litecoin futures contract moves broadly in sync with the price of Litecoin.
Trading futures is thus an alternative to actually buying or selling the underlying crypto (aka spot trading). In spot trading, you can make profit by buying Litecoin low and selling it at a high price. This trade however works only in a bull market, i.e. when Litecoin price is going up. However, in a bear market, there is no trade possible in spot trading. Furthermore, leverage trading is not possible in spot trading.
Trading Litecoin through futures offers several advantages over spot trading of Litecoin, namely ability to both long or short and get access to leverage.
You can profit from rising LTC price by going long Litecoin futures. And, when LTC price is falling, you can make profits by going short. This feature of futures trading enable you to navigate all types of market conditions profitably. Compare this with directly buying Litecoin. When price is falling, you can either sell your Litecoin or suffer losses. In spot trading, there is no way of profiting from falling prices.
If you are a HODLer, you can still use futures to mitigate price risk. Say, you hold LTC. You can mitigate the risks you face when Litecoin is falling by going short LTC futures. In this case, a short futures position acts as a downside protection by effectively locking the $ value of your portfolio without the need for selling your Litecoin. Judicious use of futures as hedge can make you a better and stronger HODLer.
Leverage enables you to open positions that are bigger than your trading capital. If you can open a position that is 10 times bigger than your trading capital, then you have 10x leverage available to you. The maximum allowed leverage for futures listed on Delta Exchange is as high as 100x. There are two ways of thinking about leverage:
Leverage as capital efficiency driver: For opening a position of a given size, higher the leverage lower the trading capital required. The leverage in spot trading is always 1x, while it is 3-4x in margin trading. This means futures is 20 to 100 times more capital efficient than spot or margin trading.
Leverage as a returns amplifier: Because in a leverage trade position size is greater than the capital deployed, impact of prices moves gets magnified. The return on capital deployed is leverage times the price return. This means that you can amplify your trading gains the effective use of leverage.
If LTC increased from $0 to $0 your return would be equal to:
In-built leverage magnifies impact of LTC price moves on your return on capital.
Long when bullish. Short when bearish. Trade all market conditions profitably.
Deploy the capital freed up by using leverage in other trading opportunities
Low trading fees, tight spreads & deep order books of our LTC contracts increase profitability of your trades
Set TP / SL with your order, Leverage advanced order types and instruments (Options, Interest Rate Swaps) to create hedging strategies
Use professional charts & advanced analysis tools to quickly identify trading opportunities