Level 2 — Understanding Markets
Trading volume
4 minute read
How much changed hands?
Illustrative example · not live data
Volume shows how much of a coin changed hands in each period — the bars along the bottom of the chart. It tells you how much conviction is behind a price move.
A price rise on high volume means lots of buyers genuinely committed money — the move is more likely to continue. A rise on low volume is weaker and more likely to fade.
Volume spikes often mark turning points. A huge burst of selling after a long fall can signal 'capitulation' — the last frightened sellers giving up, often near a bottom.
A useful rule: price tells you what happened, volume tells you whether to believe it.
Key points to remember
- Volume = how much was traded
- Big moves on big volume are more trustworthy
- Moves on low volume often fade
- Volume spikes can mark turning points