Trade Power: Understanding the main indicator of cryptocurrency markets

In the world of cryptocurrencies, trade is often overwhelmed as a simple reflection of the mood. However, this is much more than that. The volume of trade, in particular its absolute and relative values, is one of the most critical indicators of cryptocurrency markets. In this article, we will go into the importance of trade volume and why it should be considered as the main metric traders, investors and market analysts.

What is the volume of trade?

The sales volume refers to the total number of coins or tokens traded for a period of time, usually 24 hours. It is calculated by multiplying the average daily exchange rate by the total number of transactions made during this period. In other words, this is a snapshot of how many times on a given day the property was purchased and sold.

Why is trading important?

1
Market size and depth : high trade volume indicates a higher market size, which can lead to greater liquidity, wider price movement and increased trading activity.

• Trend Indicators : A strong sales volume can be a trend market indicator because it suggests that active is gaining popularity and impulse.

3
Risk Management : Trade volume helps traders manage the risk by providing a benchmark for potential losses. If the trader sells at an inflated price (due to the large volume) but then back to a lower price, they can reduce possible losses.

• Market mood : A decline in trade may indicate a bearded market mood as buyers can reduce their operations.

Types of trade

1
Absolute volume

: This refers to the total number of transactions made over a given period.

Relative Volume (RV) ratio of 2 **: It measures changes in absolute volume over a specified period of time compared to the original value (eg 100). The higher RV ratio indicates increased trade activity.

The main techniques of trade volume

1
Market volatility does not affect the volume : When the price of cryptocurrency is volatile, its trade could be temporarily increased, but that does not necessarily mean that it will continue to get the traction.

• Visual is relative : While high sales may indicate increased activity, low quantity may still indicate a strong market mood or expected correction.

3
Market Impulse

: A significant drop in trade can signal the transition from the purchase trend to sales trend, pointing to possible price weakness.

Protecting of trade volume

• Set the original value : Create the benchmark of your trading system by tracking the historical trade volumes of interest.

• Supervise and adjust : Over time, keep track of the trade metrics and make adjustments to your strategies as needed.

3
Combine with other indicators : Use trade as one of the many tools to analyze market activities, not to rely solely on it.

Conclusion

In conclusion, sales are a powerful tool to understand the cryptocurrency market and make deliberate decisions on buying and selling assets. By tracking absolute and relative trade volumes, merchants, investors and analysts can gain valuable insight into the market, trends and risk management strategies. As the cryptocurrency space continues to develop, it is important to keep track of the latest events in trade analysis in order to effectively navigate the markets.

Additional resources

• CoinMarketcap: Comprehensive Cryptocurrency Price and Trade Database.

• Cryptocompare: Provides real -time market data, including sales of various assets.

• Tradingview: Offers a series of technical indicators, including sales charts.