Blockchain and Cryptocurrency Advanced - Volume Indicator
When it comes to trading any cryptocurrency asset, volume is one of the factors that is very important and play an important role in determining what is happening in the market. The volume indicator is basically a technical indicator that measures the trading activity of any cryptocurrency asset at any time, such as the amount of a particular cryptocurrency traded in the market by traders and number of traders in the market trading that particular cryptocurrency asset at a particular timeframe. he volume indicator can be applied on most charting platforms like tradingview and is mostly located at the bottom of the chart as a histogram. Each of the histogram bar represents the total volume of the particular cryptocurrency traded at any given timeframe.
The main benefit of the volume indicator is that it is a tool that helps show a visual representation of the trading volume in the market or the amount of the particular cryptocurrency asset traded in the market by traders at any given timeframe. This is very useful for traders as they can make use of that information to have a better understanding of what is going on in the market and the strength of the market in terms of price increase or decrease and buyers and sellers in the market. Take for instance, the price of a cryptocurrency asset can show the direction of the market, but it doesn’t always represent what is going on in the market like how much coins have been traded by traders in the market at a given time and also whether the market is still holding strong regardless of price.
The volume indicator can be used alongside other indicator during technical analysis to confirm market trends. When the market is in an uptrend, it will also show in the volume, the volume indicator will visually show an increase in volume for that particular cryptocurrency asset at any given timeframe. Also, the volume indicator can help traders identify when the trend is becoming exhausted regardless of the direction of the price. This is indicated by a decrease in volume while the price is increasing. This is useful to know when a trend is about to reverse.
