The importance of trading volume in the assessment of market trends in cryptocurrencies
Cryptocurrency trading has become more and more popular in recent years, and thousands of investors are buying and selling digital currencies every day. While many traders focus on price movements and technical indicators to make decisions, there is another key factor that is often overlooked: trading volume.
The amount of turnover refers to the total amount of transactions carried out during a certain period of time, usually measured in units (e.g. coins or dollars). It serves as a market demand for market demand, helping traders assess the strength and direction of the trend. In this article, we will examine why the trading volume is necessary in assessing market trends in cryptocurrencies.
what a volume of rotation can tell you
- Market moods : The high trading volume often indicates increased market interest and sentiments that may be stubborn or bear depending on the context. For example, if the trader notices a significant increase in the volume for a specific coin, it may suggest that investors are optimists about its perspectives.
- market size : Volume of trading provides insight into the overall size of the cryptocurrency market. A large volume of trading indicates a significant number of investors participating on the market, which can be a sign of demand and liquidity.
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Why a commercial volume is important
- For example, if the trader notices a significant increase in the volume for a specific coin after a break above the determined level of resistance, this may indicate that the market is ready to reverse and rest.
- Market instability
: In times of market confusion, commercial volumes tend to grow, because investors try to buy or sell their assets. And vice versa, during periods of peace, the volume of rotation often decreases, which indicates a lack of interest in specific cryptocurrencies.
- The high commercial volume often accompanies a successful continuation of trends.
The best practices of using the volume of rotation
- Monitor trading volume : Trade volume analysis within a few days or weeks to capture long -term trends.
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Application
The amount of turnover is an important factor in the assessment of market trends in cryptocurrencies. Taking into account the volume of trading for their analysis, traders can better understand market moods, size and instability. Remember to monitor commercial volumes in time, use historical data and combine them with other technical indicators to make informed decisions regarding market trends.
Recommendations regarding the analysis of trading volume
- Use indicators of rotation volume : Use online tools or software that ensure a rotation volume analysis, such as the Coinmarketcap “Volume” chart.
- Set alerts : Configure alerts on the preferred cryptocurrency exchanges to inform you when trade volumes reach certain thresholds.
- Keep the software on a regular basis : Make sure that the trade platform and software are regularly updated to access the latest commercial volumes.