Allinstation 
In today’s article, we will explore a fundamental topic in trading – Volume. Volume is one of the most important factors for market analysis and determining buying and selling forces. After this article, you will know how to read volume to understand the trend of cash flow and predict the level of interest traders have in certain positions to make the right trading decisions.
What is Volume?
Trading volume can be simply understood as the total number of coins or tokens traded within a certain period, such as in time frames like m5, m15, m30, h1, h4, D…
Volume also shows us the liquidity level of a coin or token.
How to set Volume on TradingView
How to adjust Volume on TradingView
Example: How to read volume on TradingView
Let’s read the volume from the example above. First, I am on the H1 frame of the BTC/USDT pair. The red candle in the 7h-8h frame on March 21 shows a red volume bar, indicating stronger selling volume than buying volume. Conversely, for the green volume bar, the buying side will dominate the selling side. And in one hour, nearly 49K bitcoins were traded.
The length of the volume bar is proportional to the liquidity of that coin or token.
This is an important indicator reflecting the positive or negative sentiment of the market and is often used to assess the level of interest traders have in a specific coin.
Increasing or decreasing volume shows us the behavior of the crowd, allowing us to make accurate buying and selling decisions. To understand this better, let’s explore the relationship between volume and price.
The correlation between price and volume
We will divide it into 4 cases
A. Increasing Volume: (Indicates investors are interested in the market)
- Price increase: The crowd tends to FOMO, fear of missing out, and buy a lot of a coin, causing the price to continue rising.
- Price decrease: The crowd will panic sell and dump a coin, causing the price to drop sharply.
B. Decreasing Volume: (Indicates investors are less interested in the market)
- Price increase: This is a stage where the crowd is no longer too interested in a coin, sellers start to rush in to take profits => the price will increase less and may reverse to decrease.
- Price decrease: The price may decrease or increase depending on a third factor.
Practical application of reading volume in trading
Summary of the volume reading method
Mastering the reading of trading volume will help you achieve a high accuracy rate. However, all tools are probabilistic, not 100% accurate, so combining other factors such as technical analysis, fundamental analysis, and crowd psychology is essential for you to have a better position. Thank you for reading this article. If you find this clip useful, remember to follow other technical analysis articles to fully supplement your knowledge of technical analysis!
Hope it will be helpful for you in your journey in this extremely harsh crypto market.
