Volume(Trading Volume)
Trading volume represents the number of units of an asset changing hands in the market over a given period and can be denominated in the traded asset or a currency. It is often used to help assess the strength of price trends, but cannot serve as the sole basis for a trading conclusion.
Basic Definitions and Measurement Methods
Volume, or trading volume, refers to the number of asset units traded in the market during a specific period, that is, the number of units of the asset changing hands. Each transaction is recorded after the buyer and seller agree on a price. Trading volume can be expressed in asset units or denominated in USD or other currencies of denomination.
Trading Volume and Trend Strength
Traders often use trading volume indicators to observe the strength of a trend. When price fluctuations are accompanied by high trading volume, the price change may have greater support from market participants; when a price change occurs in a low-volume environment, it may indicate a weaker trend. These signals should be interpreted together with other information.
High-Volume Areas and Changes
Price levels with historically high trading volume may help traders identify potential entry and exit areas. Rising markets are typically accompanied by increasing trading volume, indicating sustained buyer interest; rising volume during a downtrend may reflect increasing selling pressure. Volume spikes also commonly occur during trend reversals or sharp price movements.
Supporting Role of Moving Averages
Some trading volume indicators incorporate a moving average moving average, calculated using the trading volume of each candlestick over a period of time. This can smooth out fluctuations in individual trading volumes and help assess the relative strength of the current trend. However, trading volume itself is only an analytical tool and cannot guarantee that prices will continue or reverse.
Original Tutorial
https://www.binance.com/en/academy/glossary/volume
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