What Is Trading Volume?

Volume is an important measure of interest in an asset and of market liquidity. In high-volume markets, large orders affect the price less and the difference between buy and sell prices (spread) is generally narrower. For low-volume assets, even relatively small trades can cause sharp price moves. Volume can be tracked separately for spot, futures, and decentralized exchanges; data aggregator sites show them combined.

In technical analysis, trading volume is used to confirm the strength of price moves. A breakout that comes with high volume is considered more meaningful than a move on low volume. For example, a resistance level being broken with volume far above average is interpreted by many analysts as a sign of strong participation.

In the crypto market, volume data should be approached with caution. Some platforms can artificially inflate volume through fake trades in which the same party trades with itself (wash trading). For this reason, data compiled from different sources and on-chain data are evaluated together instead of the data of a single exchange.