Our Guide To Short Litecoin on eToro

Our Guide To Short Litecoin on eToro

What is short Litecoin?

Shorting is a financial trading term that you might be unfamiliar with. Essentially, people who short an asset believe that the price of the asset will decrease over time. That’s why they “short” assets, in order to make profit. But how can you make profit from a falling market? Using our guide for how to short Litecoin, you will also be able to short Litecoin when you believe that the markets will fall. It can bring in a lot of profit if a currency or asset pretty much devalues to 0. Thus, people are interested in shorting Bitcoin to make a short term profit.

When you short Litecoin, you sell a borrowed asset, so that you can buy it back later on and return it to the owner. Now, let’s do the math. Imagine your buddy gives you a few Litecoin for free to keep for a week. Let’s say the value of those few Litecoin is $1000.  However, you think that the value of those Litecoin will decrease soon. So, you sell them on a condition that you will buy it back at market price in a few days. Thus, you should have $1000. Now you wait and buy the same Litecoins back for $700. You’ve made a $300 profit and then you give the Litecoins back to the buddy of yours.

In the case of financial trading, your “buddy” is usually the broker who gives it to you on a restricted time frame.

Can you Short Litecoin while trading?

If you use any crypto currency exchange or marketplace to trade, it might be very difficult for you to short Litecoin. We recommend Litecoin CFD trading in order to short Litecoin easily. CFD trading is essentially a market of speculation. You purchase CFDs which represent a specific commodity. In this case, you would trade a Litecoin CFD. You purchase a Litecoin CFD, which is representative of the asset and has the price of the asset. Thus, you can either go long or short on the Litecoin CFD to make a profit. Usually, traders prefer to short Litecoin CFD because of the high volatility.

How to Short Litecoin on eToro

Step 1: Open eToro

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When you open eToro, you will be taken to your favorite instruments page where you can monitor individual instruments in live. This is a great feature of eToro, you can monitor what is going on in your favourite coin or stock live.

 

Step 2: Search for “Litecoin”

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In the search bar, search for “Litecoin” and the drop down menu will give you some choices to choose from.

 

Step 3: Click on “Trade”

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On the right of the screen, click on “Trade” and a menu should open up. This menu will have around three columns for the following things: equity, stop loss and leverage.

 

Step 4: Choose Amount and Set Stop-Loss

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Here, you choose the amount of Litecoin you want to short and then you set your stop loss. Setting your stop loss is very important since you need to protect your investment from excessive losses.

 

Step 5: Choose Leverage

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Choose your leverage but be sure that you understand that your losses can exceed your deposits. Also, trading with leverage increases the risk associated with your shorting.

 

Step 6: Confirm Trade

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The next step is to confirm the trade and the order will go through in a few seconds.

 

Step 7: Monitor it in your Portfolio

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Now, click on your portfolio on the left of the screen so that you can monitor the profit and loss of all of your recent trades. You can choose to close the trade when you make a substantial profit or you can close it at a loss to prevent further losses.

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About Article Author

Michael Serrano
Michael Serrano

Michael is an engineer and a bitcoin evangelist. He has been involved in cryptocurrencies since 2013. His biggest wish? 1 billion users of bitcoin, ether and litecoin by 2020. In the last 10 years he has worked for various early-stage start-up as a back-end developer.

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