Power of trading quantity: Understanding a key indicator in the CRIPTO currency market
In the world of cryptocurrency, commercial volume is often misunderstood as a simple reflection of market feelings. However, it is much more than that. The extent of trading, especially its absolute and relative values, is one of the most critical indicators in the CRIPTO currency markets. In this article, we will immerse ourselves to the importance of the amount of negotiations and why this should be considered a key measure for merchants, investors and market analysts.
What is the volume of trading?
The amount of trading refers to the total number of parts of parts or tokens that are exchanged over a specified period, mostly 24 hours. It is calculated by the multiplication of the average daily course with the total number of crafts done during this period. In other words, this is a recording of the number of times when the assets were purchased and sold on a particular day.
Why is trading volume important?
- Market Size and Depth : A large volume of trading indicates a larger market size, which can cause greater liquidity, spread the movement of prices and increased commercial activity.
- Trendi indicators : A great volume of trading can be an indicator of the trendy market, as it suggests that property is gaining on popularity and momentum.
- risk management
: trading scope helps traders manage risks by providing reference to potential losses. If a trader is sold at an inflated price (due to a large amount), but then it buys at a lower price, it can reduce potential losses.
- Market sensation : A reduction in the amount of trading may indicate descending feelings in the market as customers can reduce their activity.
Types of trading volumes
- Absolute volume
: This is the total number of transactions made over a period of time.
- The ratio of relative volumes (RV) : this measures the percentage of variation in the absolute volume at a certain time compared to the basic value (for example, 100). The greater RV ratio indicates an increase in negotiating activities.
take -volume trading
- Volume is not affected by the market volatility : when the price of the Crypto currency is unstable, its trade volume could be temporarily increased, but that does not necessarily mean that it will continue to get the country.
- volatility is a relative : Although the high trading volume may indicate an increased activity, a low amount may always indicate a strong market feeling or upcoming correction.
- Market Momentum : A significant decline in the amount of negotiations may indicate a passage from the purchase trend to the sales trend, indicating a potential low price.
Best Practice to use trading volumes
- Define a reference value : Establish a reference for your trading system by following the historical amounts of asset trading that interests you.
- Watch out and adjust : Beware of trading volumes over time and adjust your strategies as needed.
- Combine with other indicators : Use the amount of trading as one of many tools to analyze market activities, not count only on it.
Conclusion
In conclusion, trading volume is a powerful tool for understanding the CRIPTO currency market and making informed decisions to buy and sell property. Following the absolute and relative quantities of negotiations, traders, investors and analysts can get valuable information about feelings, trends and risk management strategies. Although the space of cryptocurrencies is still developing, it is crucial to be ongoing with the latest achievements in the analysis of negotiating volumes for effective movement in markets.
additional resources
- Coinmarketcap: Complete database on prices of CRIPTO currency and quantity of trading.
- Cryptocompare: provides information about the actual market, including the amount of trading for different assets.
- Traditionview: offers a number of technical indicators, including the graphics of trading volumes.
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