POWER OF COMMERCE Volume: Understand the main indicator in cryptocurrency markets
In the world of cryptocurrencies, the volume of trade is often misunderstood as simply a reflection of the mood of the market. However, this is much more. The volume of trade, especially its absolute and relative value, is one of the most Christian cryptocurrency markets. In this article, we will take into account the importance of commercial volume and why the main metric of merchants, investors and market analysts should be considered.
What is the volume of trade?
The volume of trade refers to the total number of currencies or tokens that are negotiated over time, generally 24 hours. It is calculated by multiplying the average daily currency course by the number of transactions in that period. In other words, it is an image of how many times the property has been bought and sold on a given day.
Why is the volume of trade important?
- Market size and depth : Large commercial volumes show a larger market size, which can lead to greater liquidity, a greater change in prices and greater commercial activities.
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- Risk management : Commercial volume helps merchants to administer the risk when providing a reference point due to possible losses. If the merchant is sold at an increased price (due to the high volume) but then buys at a lower price, it can reduce potential losses.
- Market mood : Decreased negotiation volume can mean the mood of the bearish market, since buyers can reduce their activities.
Types of Commerce Volume
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- Relationship ratio (RV) : This measures the percentage of absolute volume for a period of time compared to the original value (for example, 100). A higher RV ratio indicates greater commercial activity.
Basic Commercial Volume considerations
- The volume does not affect market volatility
: When the cost of cryptocurrency is volatile, its volume can temporarily increase, but does not necessarily mean that it will continue to attract.
- Volatility is relative : Although high -trade volumes can mean greater activity, the low volume can still mean a strong mood on the market or an imminent amendment.
- Market acceleration : A significant reduction in commercial volume can mean a transition from the purchase trend to the sales trend to indicate the potential weakness of the price.
THE BEST PRACTICE OF THE VOLUME OF COMMERCE
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- Combine with other indicators : Use the volume of trade as one of the many tools to analyze market activities, not trust it.
Conclusion
In conclusion, trade volume is a powerful means to understand cryptocurrency markets and make reasonable decisions about the purchase and sale of properties. When observing absolutely and the relative volume of trade, merchants, investors and analysts can obtain valuable information about the moods of the market, trends and risk management strategies. As the cryptocurrency space continues to develop, it is very important to constantly update the changes in commercial volume analysis to efficiently navigate markets.
Additional sources
- Coinmarketcap: a detailed database of cryptocurrency prices and negotiation volume.
- Cryptompare: Provides real -time market data, including the volume of several assets.
- TrainingView: It offers many technical indicators, including commercial volume graphs.
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