Gate. io AMA | How to Use Volume to Improve Your Trading

The AMA Flow:

Session 1: Group will be muted to have several questions with our Guest including introduction.

Session 2: Group will be opened for community to ask their questions for 5 minutes. Speaker will select 3 questions to answer.

Session 3: 5 Lucky users with best questions will get $10 bonus of each.

Dan: Hi everyone, It's me again Dan today we have Q&A about "Volumn Analysis"

Jane: Hello @Dan, I really like to know about the Volumn Analysis, it is very technical.

Dan: Ok, let's get it started.

Jane: Thanks, here you go!

1.What is Volume analysis

Q : What is Volume analysis

A: Let's get to know volume of trade first

Volume of trade is the total quantity of shares or contracts traded for a specified security. It can be measured on any type of security traded during a trading day. Volume of trade or trade volume is measured on coins, bonds, options contracts, perpetual contracts and all types of commodities.

A : Volume Analysis (also referred to as price–volume trend and volume oscillators)

Volume Analysis is one of the oldest market indicators,

Volume analysis is the examination of the number of shares or contracts of a security that have been traded in a given time period.

Volume analysis used by technical analysts as one of many factors that inform their trading decisions. By analyzing trends in volume in conjunction with price movements, investors can determine the significance of changes in a security's price.

2.What we know from this volume analysis

Q : Can you tell what we will know from this volume analysis ?

A : You will know the volume trends because volume refers to the number of shares transacted per day.

A : So if Having an understanding of the entire market’s trading volume versus the volume of a single holding can be one important comparison that helps analysts to discern volume trends

Q : What else ?

A : A significant price decrease with a significant volume increase can point to a continued bearish trend or a bearish trend reversal.

A: Also can help an investor to have a more balanced view of all the broad market factors that could be influencing a security’s price which helps an investor to make a more informed decision.

Q : I heard about trading volumn also linked to candlestick chart

A : Yes, it linked just like reflections

Example from this picture.

A : You can see from the picture above, when the candlestick turns bullish (Green) the volume also turns green as well, As same as bearish (red), the volume also turns red.

3.How To Use Volume To Improve Your Trading ?

Q : How to use volume to improve my trading ?

A : I have some guidelines for you but remember, these guidelines do not hold true in all situations, but they offer general guidance for trading decisions.

Q : Wow, I am so excited

A : Let's go with the first one

1. Trend Confirmation

There are several situations as following pictures, take BTC/USDT pair as the example.

1.Price goes up, volume goes up.

When the traders are optimistic about the market, they buy it and stock it until the higher price to sell it out. This picture shows out the traders are happy and positive about the market. Under this situation, the market usually going very strongly, and it is the moment to BUY.

2.Price goes up, volume stays the same.

It shows some part of traders want to push the price higher, but most of them are not very positive about the market, rather to stay calm and observe until next change. So the price will go up but slowly, and it means the market is gathering the strength to go up during this period. Or it fails to gather the strength then goes down. Usually at this moment to keep on observing the good timing.

3.Price goes up, volume goes down.

The price goes up but the volume goes down.

Usually under this situation, the market will go down. As volume can't go higher and even traders try to push the price higher, the market can't go hotter for long time.

4.Price goes down, volume goes up.

Usually this situation is caused from the stronger SELL power, the price going lower and lower while SELL going stronger. And at this stage, keep on observing until the change point.

5.Price goes down, volume stays the same

Price goes down while volume almost no change, means the traders are observing the market, fund leave the market and mostly the market will go down.

6.Price goes down, volume goes down

Obviously, if both price and volume go down, it means the traders are not optimistic about the market, try to sell out all the goods at hand to avoid loss. The price goes go down, may touch the bottom.

From above, we already learned how to read the candlesticks and volume.

The next let's see how to FORESEE the market.

4.Let's talk about the relationship between trading volume and coin price

A:

1.The trading volume reflects the degree of capital participation, emotional investment and pain of market participants, and it will affect the rise and fall of coin prices: the volume of a ticket reflects the degree of attraction of the ticket to the market.

2.The large volume of transactions indicates that the market is active and the hype atmosphere is easy to ignite, so it can also attract more funds. When the trading volume is small, the market is relatively cold talk, lacking the atmosphere of speculation, and naturally the coin price does not fluctuate much.

5.The exciting part is what is the principles of coin selection by volume

A: (1) The position of the trading volume determines the trend of the Bitcoin price. After a long-term consolidation, a continuous large volume and a small increase in prices can boldly intervene and cannot shrink back.

(2) Don't chase the coins that have a huge amount of shares in the high-price area but have little change in their prices.

(3) One of the tricks for choosing dark horse is that according to changes in trading volume, coins tha can rise sharply must have a large bottom momentum, otherwise they will not rise sharply. The greater the momentum of the bottom of the coins, the stronger the rise.

(4) Attention must be paid to the bottom of the arc of trading volume. Pay special attention when the average line of trading volume goes flat. Once the transaction starts to gradually enlarge and the price rises slightly, you should buy immediately.

(5) The key to profit in the market lies in the coins' selection, not just looking at the general trend to make money. Otherwise, it is easy to "earn the index and lose money".