The cryptocurrency market continues to grow in popularity, and as the number of investors increases, so do the number of doubts surrounding virtual money. One of the most common questions is - what is cryptocurrency volume? If you too are wondering what the definition of volume is, we invite you to read on.
The volume of a cryptocurrency is a basic indicator that is used for the technical analysis of an exchange. Therefore, before we move on to the volume itself, I will explain in a few sentences what technical analysis is. Generally speaking, it is a set of techniques that aim to forecast the future price or rate of a selected asset - it can be securities, cryptocurrencies or commodities.
The aim of technical analysis is to estimate the optimal moments for an investor to buy and sell. In simple terms, the models used in technical analysis assume that asset prices follow a recurring pattern.
Technical analysis assumes that prices follow trends and history likes to repeat itself, thus, based on historical data, it is possible to predict the future prices of assets of interest. The data that technical analysts use can be found on the chart.
You will learn more about technical analysis and trend reading in this article.
I will just cite the Bollinger Bands, which are one of the most popular ways to estimate the ideal time to buy and sell assets. The bands define upper and lower price limits, while the middle band is an n-period moving average. Bollinger bands plotted on a chart represent market volatility in a very clear way.
From the point of view of an investor who reads Bollinger bands, it seems reasonable to sell an asset when the price approaches the upper limit and buy it when the price is closer to the lower limit, outlined on the chart.
Technical analysis is certainly a useful tool, but unfortunately it is never conclusive. Over the past few years we have seen drastic changes that have affected bitcoin (BTC) and other cryptos, but after time we can conclude that many of the events that have affected the exchange rate have been cyclical.
The most difficult part of the analysis is understanding and interpreting the automatically generated indicators, the manual generation of which takes no more time out of the investor's day. The information gained through analysis is a valuable advantage for the investor over the rest of the market.
Now that we know what technical analysis is, it's time to briefly explain what cryptocurrency volume is. It is one of the most important indicators for technical market analysis, which represents the activity of traders - buying and selling cryptocurrencies - in a given time frame.
Most commonly, volume is represented as green and red vertical bars on a histogram. The height of the bar reflects the volume, or turnover. Red volume defines a decline on a cryptocurrency exchange, while green volume represents an increase in coin prices.
The conclusion from the above definition? When the trading indicator and the price in USD or EUR indicate the perfect moment, get on Bitclude and start making money on cryptocurrencies!
Volume is an indicator that definitely facilitates investment in the cryptocurrency exchange. By definition, volume measures the intensity and degree of importance of trends in the market. Its correct analysis allows you to understand the source of price changes and indicates when investors should sell or buy cryptocurrencies.
Importantly, volume determines real interest in financial instruments and not just apparent price fluctuations.
Cryptocurrency exchange volume is a tool that most experienced traders use. If you're interested in bitcoin seriously, be sure to check out the current cryptocurrency volume charts.
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