What does currency circle volume ratio mean?

The currency circle volume ratio measures the purchasing power and selling pressure in the market. The calculation method is: buyer's trading volume/total trading volume or seller's trading volume/total trading volume, multiplied by 100. A high volume ratio indicates a bullish trend and a low volume ratio indicates a bearish trend. This indicator helps identify trends, confirm breakouts, determine overbought/oversold conditions, and time trades. However, it also has some limitations, such as noise, subjectivity, and latency, and therefore needs to be used in conjunction with other tools.

Coin volume ratio: an indicator that measures market purchasing power and selling pressure

Coin volume ratio, also known as trading volume ratio or trading volume ratio, is a technical indicator used to measure the cryptocurrency market The relationship between buying power and selling pressure. It shows the amount of cryptocurrency bought or sold as a percentage of the total trading volume during a specific period.

Calculation method

Coin circle volume ratio = (buying volume/total trading volume) x 100 or (selling volume/total trading volume) x 100

Usually, the buyer’s trading volume refers to buying a specific Cryptocurrency trading volume, while sell-side volume refers to the volume of sales of a specific cryptocurrency.

Explanation

The coin volume ratio can be used to determine market trends and momentum.

• High Volume Ratio: When the percentage of buyer’s trading volume relative to the total trading volume is high, it indicates that the market is bullish and buyers are actively entering the market.
• Low Volume Ratio: When the percentage of seller volume relative to the total volume is high, it indicates that the market is bearish and sellers are dominating the market.

Applications

Coin Circle Volume Ratio can be used in the following ways:

• Identifying Trends: High volume ratios are usually associated with uptrends, while low volume ratios are usually associated with downtrends.
• Confirmed Breakout: When the price breaks through the resistance or support level, if it is accompanied by a high volume ratio, it indicates that the breakthrough is more reliable.
• Judge overbought/oversold: Extremely high volume ratio may indicate that the market is overbought, while extremely low volume ratio may indicate that the market is oversold.
• Trading timing: Volume ratio can help traders determine the most appropriate trading timing, such as buying when the volume is relatively high and selling when the volume is low.

Limitations

It should be noted that the currency circle volume ratio is not a perfect indicator. Some limitations include:

• Noise: Market sentiment and other factors can cause volume ratios to fluctuate.
• Subjectivity: What constitutes a high or low volume ratio depends on the trader’s judgment.
• Delay: Volume ratios are calculated based on historical data and therefore may not immediately reflect current market conditions.

Despite its limitations, the coin volume ratio is still a valuable tool for analyzing the cryptocurrency market. By combining other technical indicators with fundamental analysis, traders can improve the accuracy of their trading decisions.

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