What is trade volume?

Trade Volume Definition - Trading volume is defined as the quantity of cryptocurrency traded over the last 24 hours.

Outside of crypto circles, trade volume may be calculated for any form of security that’s traded in a period — usually a trading day.

In calculating the trade volume, the stocks, contracts, bonds, futures contracts and other types of commodities are included. The figure reflects all the shares that were transacted between the buyer and the seller and the trading of these securities significantly imparts the trade volume.

When there is active trading of the securities, the trade volume will be high. When there are fewer securities traded, the trade volume will be low.

Investors use trading volume, alongside other key considerations, to determine whether to invest in a stock/currency or not.

What does trade volume indicate?

Trade volume is an indicator of the quantity of cryptocurrencies traded each day. It is an essential metric that’s used to evaluate trends in the crypto market — giving signals that portray changes in the interest for a particular coin, like a low trading volume crypto coin experiencing a spike.

Traders often consider trade volume as an important metric to gauge the level of liquidity of an asset. They utilize it extensively as it puts them in an advantageous position — knowing when to enter or when to exit at the current price, which could be a moving target.

Trade volume analysis provides a useful correlation between volume and price, helping traders determine which trade to make.

The volume analysis is determined by these two key concepts: the buying volume and the selling volume.

For example, if a thriving coin that normally experiences high trading volume begins to encounter a dip in its 24-hour volume, this may indicate a decline in demand/interest for the coin.

Investors rely on a crypto's volume to predict whether the price of a coin would go upwards or downwards, with Bitcoin typically achieving the largest overall trading volume.

Is high trade volume good?

When a stock trades at an unusually high volume, investors should be aware of what is going on within the company. It might be a sign of recent news, either good or disastrous — although it isn't always. It's not always easy to identify why a stock/coin is rising or falling.

If the price of a stock/coin with a high trade volume is rising, it’s easy to sell at a desirable price.

There may be little interest in buying low-volume stocks, making them difficult to sell. When analyzing a stock's volume, investors may want to think about how difficult it would be to get rid of their shares/coins if they were to do so.

Some contrarian investors may consider purchasing while a stock's price is plummeting on high volume. This method carries risk, but it can sometimes pay off.