Understanding of the cryptocurrency trading landscape: price campaign, trading volume and Fiat
In recent years, the world of cryptocurrency trade has experienced an exponential increase, which is determined by a combination of factors, including increased introduction, technological progress and increasing institutional investments. However, navigating in the complex landscape of cryptocurrencies can be discouraging for experienced dealers.
In its center, the cryptocurrency trade is based on two basic concepts: price ranges and trading volume. While many dealers focus on the technical analysis to convey knowledge of the case, it is important to understand how these two components interact with each other for the development of a robust trade strategy.
Price action
The effect of the prices refers to the visual models and trends that result from the historical data of the cryptocurrency price movement. This includes everything, from short -term diagrams, which in short sessions (e.g.
Technical indicators such as RSI (relative resistance index), Bolinger gangs and Stoksoscillator are often used to analyze the price campaign. These tools help retailers to identify potential purchase or sales opportunities and to check how the prices are related to their basic value.
For example, if the price of cryptocurrency breaks a certain level of resistance, this can indicate that buyers enter the market in large numbers and increase prices. If the sellers dominate the market, the price can continue to drop.
Commercial volume
The trading volume refers to the number of cryptocurrency exchanges and users who interact with a certain asset over a certain period of time. In other words, it measures an investor or dealer that he bought or sold a certain cryptocurrency.
Larger trade volumes indicate a higher market activity that can be advantageous for retailers who use trends or who want to determine potential support or resistance. Instead, smaller volumes can indicate that the market is less fluid or more volatile.
Fiat’s foreign exchange trade
In contrast to cryptocurrency, Fiat currency transactions within the traditional financial system work, where coins are supported by the central authority and are subject to state regulations. In this context:
* Funds that are traded on Exchange (ETF) (ETF) : These are cryptoclente baskets that enable their performance and enable investors to achieve more assets in a single product.
* Trade with traditional stock exchanges : Many large cryptocurrency exchanges such as Coinbase or Binance offer trade options for USD, EUR or JPY. Investors can buy and sell these coins in real time.
Combination Price action, trading volume and Fiat’s currency transaction
When combining price campaigns, the trade volume and the Fiat currency trade, retailers must take the interaction between these three components into account in order to make the knowledge decisions. Here are some examples:
- Identification of the conditions for the proven or overcrowded : If the action of the prices indicates that an asset is overloaded (e.g. the prices have increased quickly), this can be due to a payment. However, if the trading volume in this situation is low, the likelihood of a reversal decreases.
- Scaling in higher transactions : In order to increase potential profits, retailers can use higher trading volumes to expand their positions, even if the action of the prices indicates that they are in the future.
- Use of the volume price ratio (V/P report) : This report helps to identify the relationship between purchase and sales volumes for a certain cryptocurrency. If V/P is large, it can indicate that an asset is more likely to solve in one direction.
