How To Read And Interpret Trading Volume Charts

Reading and interpreting a chart of volume of cryptocurrency trading

As the popularity of cryptocurrencies continues to grow, traders and investors are increasingly turning to network platforms and tools for monitoring market trends and making informed decisions. One key aspect of trading crypto currency is an understanding of how to read and interpret the charts of trading volumes. In this article, we will break the basics of a cryptocurrency trading volume and provide advice on how to effectively analyze these charts.

What is the volume of trading?

Trading scope refers to the total number of crafts that occur over a period of time, are usually measured in units such as dollars or coins. Traders are a key metric to understand market dynamics, as it indicates the level of interest and activity in a particular crypto currency. In other words, trading volume is a key indicator of liquidity and demand.

How to read the trading volume charts

To effectively read and interpret the trading volume charts, follow these steps:

• Understand the type of chart : different types of charts have different characteristics that indicate different market conditions. For example:

* Line chart: focused on the movement of prices over time.

* Bar graph: shows closure prices for each tape.

* Candlestick chart: shows the highest and lowest prices, as well as open and close prices for each day.

• Identify the quantity of trading : Look for changes in the amount of trading that may indicate a significant market activity. For example:

* Increased or decreased amount may indicate a shift in the momentum of price.

* Growing or falling quantity over time can signal the upcoming rush or decline.

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* Time frame: Trading volume varies largely depending on the period of time. Short -term crafts often have a large amount, while long -term crafts can see a smaller amount.

* Market conditions: economic indicators, such as GDP, inflation rates and interest rates, can affect the amount of trading.

* Liquity level: high liquidity (large amount) or low liquidity (low volume) can affect market dynamics.

• Look for samples : Identify repetitive patterns in a chart that can signal a trend or potential breakthrough. For example:

* Consistent increase in trading volume after initial withdrawal may indicate a strong trend.

* The decline in trading volumes after an increase can suggest a correction or a turnaround.

Normal samples to view

• Growing tides

  : Increased trading volume often follows growing prices, indicating demand and interest in property.

• Pad tide : reduced trading volumes may indicate sales pressure or potential malfunction.

• Candidate samples : certain candlestick samples, such as a hammer or crack star, can signal a turnaround or burglary.

• Bullish or Bear Claiming Forms : These samples show that sellers (bulls) are trying to swallow customers (bears), while bulls (bears) are trying to catch sellers.

Interpretation of the trading volume chart

To make informed decisions, use the following criteria when interpreting a trading volume chart:

• Volume above the price : When the price moves above the average movable average of 20 periods and the volume of trading increases significantly, it may indicate a potential breakthrough.

• Momentum volume

  

  : If quantities are increased in tandem with prices movement (eg and increase or fall), but they still show some volatility, this could suggest a change of medium deadline trend.

• Trends of trading volumes : Look for consistent trends in the amount of trading that can guide your decision -making.

Conclusion

Reading and interpreting a chart of trading charts is a key skill that traders can overcome when investing in a crypto currency.