Principles for trading cryptocurrencies part 4
In today’s article we will review the significant part of trading analysis – trading volume
Let’s explain what trading volume is – the whole amount of cryptocurrency units which trade on crypto exchanges that are traded on base of executed orders within considered period
. Obtaining this volume is important that’s why there’re many charts of trading volume. For example the program software for downloading market data S#.Data(Hydra)
easily can build trading charts and trading volume charts, giving the trader to see and compare them in one work space flow. Definitely it will give you a wide picture for further analysis.
For the analysis itself it’s crucial to know the volume indicator that occurs by reaching some fixed price level. Given information is a signal to start a trade or the opposite – to wait. Volume chart can be vertical or horizontal, however the first one is more used by traders,
By building the graphs based on download market data in Hydra
it has the same time period as for candlestick chart and displays in the form of bars
In short words, if a trader builds a graph by trading volumes over the past 30 minutes then the bar value will indicate the whole cumulative volume of 30 minutes.
By fact, one of the options using charts is to find the end of correction movement in a trend. Thus, if the volume increased dramatically by the price which the direction is opposite to the trend therefore it might indicate the end of the trade itself.
This moment might be benefits for trade in the direction of a trend and often used for trading robots, particularly in a constructor of trading robots
Also, you should keep in mind that a big trading volume of cryptocurrency not always indicates for beneficial price movement the cause of might be set aggressive orders.
In any case, if a trader gets an opportunity to use such financial instruments for analysis it will lead to reducing risk and gaining profits!