Understanding of the mechanics of the analysis of the volume of the trade in cryptocurrency
Cryptocurrencies have become increasingly popular in the last decade, Bitcoin is one of the most recognized and commercial digital goods. As a result, traders and investors are constantly looking for ways to identify potential opportunities and manage the risk. An important aspect of cryptocurrency trading is to understand the mechanics of the trading volume analysis.
What is the trading volume?
The trading volume refers to the total currency or cryptocurrency amount that is exchanged in a certain period of time. In other words, it is the number of transactions that took place at that moment. The trading volume can be measured in different ways including:
- Number of transactions
- The size of each trade (in terms of amount and price)
- Medium trading volume every day
Why is the trading volume important?
The trading volume is essential for several reasons:
- Risk management : a high volume of trading indicates that a coin or a cryptocurrency is extremely volatile and susceptible to rapid price fluctuations.
- Entry of the market : volatile trading volumes can report changes in the market sensation, as an increase in purchase interests, which can lead to an increase in prices.
3
TYPES OF TRADING VOLUME Analysis
There are different types of trading volume analysis that traders and investors use to analyze market trends:
- Time -based trading volume analysis : this involves the analysis of the trading volume over time to identify models or trends.
- Analysis of the trading volume of the day : this is concentrated on short -term trading volumes, usually in one day.
- Analysis of the weekly/monthly/annual trading volume : this examines the larger trends and media.
Key indicators to be used in the analysis of the trading volume
When performing an analysis of the trading volume, traders should focus on the following key indicators:
- ** days of high commercial volume
- Days of low trading volume : instead identifies the days with low trading volumes, which can suggest a decrease in interest for a coin or cryptocurrency.
3
Tools and resources
To perform a complete analysis of the trading volume, operators can use various tools and resources:
- Trading platforms : Websites such as COINDESK, COINDESK AND Cryptoslate provide real -time market data and analysis.
2
- Social Media : Follow the influences, traders and cryptocurrency analysts to be aware of market trends.
Best Practice for the analysis of the trading volume
To maximize the effectiveness of the trading volume analysis:
- Performs in -depth research : Check the origins of the data and provides precision before using it as a basis for analysis.
- Combine multiple indicators : use a combination of factors, such as days of trading of large volumes, low trading volumes and volatility groups, to create complete market trends.
- Stay adaptable
: Prepare to adjust your strategy based on market conditions.
Conclusion
In conclusion, the understanding of the mechanics of the trading volume analysis is essential for traders and investors who want to know the cryptocurrency market.
