A cryptocurrency’s trading volume is the number of coins that have exchanged hands during a defined period of time, usually 24 hours. In other words, the 24-hour trading volume of a cryptocurrency is how much value of a coin has been bought and sold over the course of a day.
Exchanges usually show the trading volume of a cryptocurrency on their own exchange, which would not be the overall trading volume of that cryptocurrency across the entire market. Before investing, it is important to look at the total trading volume of a cryptocurrency and not only at its volume as it is presented in a single exchange.
Volume is often considered the most important metric for a cryptocurrency trader because it indicates the coin’s normal rate of movement and signals any aberrations from it. If a coin is moving it means money is going to be gained or lost and the game of predictions as to the direction of value is underway. If, for example, a coin with relatively low trading volumes suddenly shows very high trading volumes, that could indicate increased support and an impending rise in value. By analyzing a coin’s volume over both short and longer periods, investors can predict the moves itis likely to make.
Join our newsletter and
be the first to know!
Thousands of subscribers are already getting their news
fresh, FREE, and delivered directly to their inbox. THE BEST WRITERS, THE HOTTEST STORIES, ONCE A WEEK
We value your privacy, your email address is safe with us.
FAQs
Trading volume is defined as the number of shares traded in a particular period of time. So, low trading volume can indicate a lack of interest in either buying or selling. That means it could be bullish if low volume occurs in a downtrend.
What does trade volume mean? ›
What Is Volume of Trade? Volume of trade is the total quantity of shares or contracts traded for a specified security. It can be measured on any type of security traded during a trading day. Volume of trade or trade volume is measured on stocks, bonds, options contracts, futures contracts, and all types of commodities.
What is a good trading volume? ›
There's no specific dividing line between the two. However, high volume stocks typically trade at a volume of 500,000 or more shares per day. Low volume stocks would be below that mark.
How is trading volume calculated? ›
How is volume measured? Volume measures the amount that a financial asset changes hands during a given period of time. For stocks, volume is based on the number of shares traded and for futures and options volume is measured in terms of contracts.
How much is 1 volume in trading? ›
Volume in the stock market means the total number of shares traded in a specified time frame. This would include every share that is bought and sold during the time period in review.
Is trading volume buy or sell? ›
Volume is the amount of stocks that changes hands over some period of time, usually one day. A transaction (consisting of a simultaneous buy and sell) is counted as 1 trade volume. High volume trading on a stock indicates liquidity, and vice versa for low volume.
What happens when trading volume is high? ›
High volume means shares change hands often, showing market activity and how easy it is to buy or sell. More volume usually means more buyers and sellers. On a trading day, volume is often higher at the start and end when short-term traders act quickly.
How to see trading volume? ›
All trading/charting platforms can visually display volume throughout the trading day usually at the bottom of the price chart. Volume is typically displayed as a vertical bar representing the total volume for the specific incremental charting time period.
Why does trading volume spike at the end of the day? ›
Volume tends to pick back up at the end of the day, as institutional investors look to close out positions or enter new ones.
How do you trade volume strategy? ›
The more recent the data being compared, the higher the chance of future volume prediction being correct. If the recent data shows a high volume, traders can place orders along with the current trend, and if the recent data shows a decreasing volume, it is better for the traders to trade against the trend.
Typically, any stock that trades at fewer than 10,000 shares a day is considered a low-volume stock.
Is a lot of volume good for a stock? ›
Why It Matters. If you see a stock that's appreciating on high volume, it's more likely to be a sustainable move. If you see a stock that's appreciating on low volume, it could be a dead cat bounce. Logically, when more money is moving a stock price, it means there is more demand for that stock.
What is a good PE ratio? ›
Typically, the average P/E ratio is around 20 to 25. Anything below that would be considered a good price-to-earnings ratio, whereas anything above that would be a worse P/E ratio. But it doesn't stop there, as different industries can have different average P/E ratios.
What is the mean trading volume? ›
Trading volume is defined as the number of shares traded in a particular period of time. So, low trading volume can indicate a lack of interest in either buying or selling.
What does it mean if trading volume is low? ›
Volatility – When a stock has low daily trading volume, the price of the shares tends to be more volatile. Since a company's market value is based on the most recent price per share, limited shares traded each day can result in the market value seeing large percentage swings intra-day and day-to-day.
What is trade volume effect? ›
Effect of Volume on Stocks
Low trading volume often leads to different interpretations. If a stock is ascending with low volume, it could signify a scarcity of sellers. Conversely, if a stock decreases on low volume, it might indicate a lack of bids.
