What is Volume Analysis in Crypto Trading? Is volume Important

In this topic we will discus What is volume analysis? How to Read and Use volume analysis in crypto trading? Is volume analysis important in crypto? these are the topics that we are going to discus in details.

Volume Analysis

Volume analysis is also trading method that many traders use to study the number of coins(that coin founder/team launch also called crypto units), and contracts in short period of time to understand the market strength, trend confirmations and how much investors are interested to invest in that coin.

In simple word to tell you in volume analysis traders study about market investment and how much trading activity happened to understand the price movement.

Price tell you what happened in market but volume will tell you how strong it was, if you can tell how strong the coin market is you can trade according to it and you can also guess that if the coin is trusted for long term investment.

How to Read Volume In Crypto Trading?

If you read volume it tells you how strong or weak the market is, is it good time to enter the market, or is it good to wait for better opportunity. I have divide how to read volume in six different parts.

How to Read Volume 1

If Price is going upward and volume is also high that’s mean the trend will most likely follow uptrend.

because the trend is strong and buyers are buying the coin(buyer are interested in investing)also the breakout point are valid.

How to Read Volume 2

If price is goin Up but volume is low it’s mean this is weak trend and that’s mean the coin may fall back down soon.

Why this will happened because first not many buyers are interested in investing coin(that may slow the trend in going upward) and break out could be fake. There will be high chances for coin to go downward after sometime later.

How to Read Volume 3

If price is falling and the volume is high it’s mean the trend is strong downtrend and market most likely will enter in downtrend.

that’s happened when sellers are stronger then the buyers, sellers will selling there coins out of panic or another reasons when that happened a strong bearish momentum create and market will go in downward trend.

How to Read Volume 4

If price is falling and volume is also low that mean weak downtrend and market may move upward again.

Because sellers are trying to sell there but buyers are holding the market and market may again go in upward or stable itself.

How to Read Volume 5

This is very interesting part in this coin need to break out point like a strong support or resistance, Let’s say there is a strong resistance and coin break it when that happened many buyers will try to buy the coin If the volume is high the break out is real and coin most likely will pump.

This happened when coin breakout the point and volume start increase that mean the buyers are entering the market and buying coins when demand increase coin price automatically will increase.

How to Read Volume 6

If the coin breakout the resistance level but volume did not increase that’s mean it’s false breakout and coin may not move upward

because there are not many buyers to support the coin and sellers will most likely enter and market will go downward.

these are some important 6 part of volume that you need to remember, you can read volume through this.

There is also one Important part that’s called Unusual Volume Spike( In this big spikes happened means one or more big candle, it happened because there will be some big shot will invest his money or any major new come out about crypto these two are mostly reasons when that’s happened)

What Indicator to Use in Volume Analysis

You can use indicators to analyze volume, Indicators make it easy for you to analyze the volume and it’s study, there are some important indicators that you can use in volume analysis.

• OBV(One Balance Volume)
• VWAP(Volume Weighted Average Price)
• VMA(Volume Moving Average)
• A/D line(Accumulation/Distribution)
• MFI(Money Flow Index)
• CMF(Chaikin Money Flow)
• Volume Oscillator
• Klinger Volume Oscillator

Volume analysis is very important if you are going in Trade in some coin, it tell you is it good time to invest, is there are any other investors who are interested in buying that coin.

This is all for now, successtradeinfo will teach you many more thing in future so stay with us here.

If you want to know what is chart analysis then click here.

If you want to know about what is risk management then click here.

If you want to know what is trading strategy then click here.

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