To judge whether a trade is **high or low volume**, you need to compare the current volume with specific criteria, such as historical average volume or previous trading volume. Here are detailed steps to help you determine this:
---
### **1. Compare current volume with historical average:**
**Volume MA**: Calculate the moving average of the volume for a specific period of time (such as 20 days or 50 days). If the current volume is above this average, it is considered high, if it is below, it is considered low.
- **Example**: If the average daily trading volume of SOL/USDT is 30K, and the current volume is 50K, this indicates that the volume is high.
**Moving Average Volume Formula**:
\[
\text{Volume MA} = \frac{\sum \text{Volume over the last N periods}}{N}
\]
---
### **2. Comparison of volume with previous periods:**
- Compare current trading volume with trading volumes in previous days or weeks.
- **Example**: If today's trading volume is 100K, while the average volume in the last 5 days was 60K, this indicates that volume is high today.
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### **3. Using percentages:**
- You can calculate the percentage change in volume compared to a previous period.
**Percentage change formula**:
\[
\text{Percentage Change} = \left( \frac{\text{Current Volume} - \text{Previous Volume}}{\text{Previous Volume}} \right) \times 100
\]
- **Example**: If today's trading volume is 80K, and yesterday's was 50K, the percentage change is:
\[
\left( \frac{80K - 50K}{50K} \right) \times 100 = 60\%
\]
This indicates a 60% increase in volume, which means volume is high today.
---
### **4. Monitoring liquidity and market depth (Order Book):**
- **High Liquidity**: Indicates that there are a large number of buy and sell orders, which means that the volume is high.
- **Low Liquidity**: Indicates that there are few buy and sell orders, which means that the volume is low.
- **How to check**: Look at the “Order Book” to see the number of orders at different price levels.
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### **5. Using technical indicators:**
- **On-Balance Volume (OBV)**: If OBV is rising, it indicates that volume supports an uptrend.
- **Volume Weighted Average Price (VWAP)**: If the price is trading above VWAP with high volume, it indicates buying power.
- **Money Flow Index (MFI)**: If the MFI is above 80 with high volume, it indicates overbought.
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### **6. Monitoring events and news:**
- **Positive news**: such as a new product launch or partnerships that may lead to increased trading volume.
- **Negative news**: Such as technical problems or government regulations may lead to a decrease in trading volume.
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### **7. Practical examples:**
- **High Volume**: If the average daily trading volume of BTC/USDT is 20K, and the current volume is 50K, this indicates that the volume is high.
- **Low Volume**: If the average daily trading volume of ETH/USDT is 15K, and the current volume is 5K, it indicates that the volume is low.
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### **8. General Tips:**
- **Use reliable platforms**: Make sure your trading platform provides accurate volume data.
**Watch volume during peak times**: In markets like Forex, volume is high during overlapping trading sessions (such as the London and New York sessions).
- **Learn from historical data**: Analyze past trading volumes to understand recurring patterns.
