Encrybit Report Shows Volume Chart Is Most Important Technical Trading Tools For Traders
There are several cryptocurrency traders in the market, from very different countries. All of them have different analytical tools to evaluate whether the the market will go down and up. However, according to a recent survey, the volume chart is one of the most important trading tools for cryptocurrency traders.
In general, traders use these tools in the same chart they trade the assets they like. And volume indicator is, most of the time, present in the charts. Encrybit, the company that conducted the survey, asked 26 questions to traders from 161 different countries.
One of the questions made was related to the technical indicator investors use the most. The answer showed that 31% of the respondents used the volume chart. 15% said they mostly use the SMA and 13% the EMA. Price action was selected by 12% of the individuals answering the survey. The rest was divided between RSI, MACD, Bollinger Bands, Pivot Points, ATR and ADX.
Volume charts show the volume of a specific coin in a specific timeframe. This tool allows traders to define their next move when it is combined with a chart. Nonetheless, new users and traders could not understand how this tool works if they do not know some tactics.
An important tip that experts give on the matter is the following:
“If the volume is rising, the market is rising. A price rise or drop over a little volume change is a weak signal. Whereas price rise or drop over a large volume change is a strong signal.”
Additionally, a considerable number of traders (62%) mentioned that they have been trapped in a false breakout. Sometimes, volume changes during a breakout that might be just a trap.
The tool allows users to realize when to enter or leave the market when the volume changes.
The survey reads as follows:
“Those answers shown us that traders have the tendency to look at the volume chart as first sign of he price reverse/community sentiment about a coin/token and then look at the moving averages in order to consolidate the prediction, which usually is follower by the position making of the trader.”
The survey asked 26 questions about the cryptocurrency market in general. One of the most interesting ones was related to the number of platforms traders use to operate. 57% of the participants use more than three exchanges to trade.
This situation happens because there is a lack of trading pairs in several exchanges and there is low liquidity. This is a big problem for traders that need to move between platforms to find the best options for the tokens and virtual currencies they want to exchange.