Indicators · Price and activity · live Bitcoin example
Trading volume explained: how to read the volume bars
Price tells you where the market went. Volume tells you how many people came along. A big move on heavy volume has a crowd behind it; the same move on light volume might be just a few traders. Volume is the only common indicator that is not made from the price itself.
What Bitcoin’s volume says right now
Worked out from real Bitcoin candles and refreshed every 30 minutes. It describes what already happened – not what will happen next.
Volume here is from the exchange feed that supplies our candles, so it is one slice of all Bitcoin trading. The pattern (busier or quieter than usual) matters more than the exact number.
Volume on the live Bitcoin chart
The live Bitcoin chart with only volume on. Each bar is how much was traded during that candle: green on up candles, coral on down candles.
What is volume?
Volume is the amount traded during one candle. For Bitcoin it is usually counted in coins (for example 25,000 BTC in a day); for stocks in shares; for futures in contracts. Each trade has a buyer and a seller, so volume does not show “more buyers than sellers” – it shows how active the market was.
On a chart, volume sits under the price as bars. Tall bar: lots of trading. Short bar: a quiet period. The colour usually just follows the candle – green if the candle closed up, red (or coral here) if it closed down.
Volume is useful because it shows conviction. When many traders are willing to buy at higher and higher prices, the rise is backed by real activity. When the price creeps up while volume dries up, fewer people are joining in.
Volume also spikes at emotional moments: big news, liquidations, panic selling or a breakout everyone was waiting for. Those spikes often mark important candles worth remembering.
Where it comes from: The idea that volume should confirm the trend goes back to Charles Dow’s market writing around 1900. Joseph Granville made volume famous as an indicator with On-Balance Volume (OBV), introduced in his 1963 book “Granville’s New Key to Stock Market Profits”.
How volume is measured
Raw volume is just counted by the exchange. The useful part is comparing it with what is normal.
- Average volumeSum of last 20 volumes ÷ 20What a normal candle looks like lately.
- Relative volumeToday ÷ average1.0 = normal, 2.0 = twice as busy, 0.5 = half as busy.
- OBVUp day: + volume. Down day: − volumeA running total that shows whether up or down days carry more volume.
| 20-day average volume | 30,000 BTC |
|---|---|
| Today’s volume | 45,000 BTC |
| Relative volume = 45,000 ÷ 30,000 | 1.5× (busy) |
| OBV yesterday | 100,000 |
| Today closed up on 45,000 | OBV = 145,000 |
| Tomorrow closes down on 20,000 | OBV = 125,000 |
OBV’s exact number does not matter – only its direction. If OBV keeps rising while the price goes sideways, more volume is happening on up days, which some traders read as quiet buying.
How to read volume
The pictures are simple example shapes, so the idea is easy to see. Real charts are messier.
A breakout candle with a very tall volume bar: many traders took part in the move. Example drawing, not real data. Volume confirms a breakout
When the price pushes through an important level on much higher volume than usual, many traders took part. Breakouts on thin volume fail more often, because few traders stand behind them.
Price keeps rising while each volume bar gets smaller: fewer traders are joining the move. Example drawing, not real data. Fading volume in a trend
A rally where each new high comes on less volume is losing participants. It does not mean the rally ends tomorrow, but it is a sign the move may be getting tired.
Climax volume
A huge volume spike after a long fall – often with a long lower wick – can mark panic selling. A huge spike after a long rise can mark a buying frenzy. Extremes in volume often come near extremes in emotion.
Quiet before the storm
Very low volume for many candles usually means the market is waiting. Combined with narrow Bollinger Bands, it often comes before a bigger move.
Common mistakes beginners make
Almost everyone makes these at first. Knowing them saves a lot of frustration.
- Thinking green volume means buyers wonEvery trade has a buyer and a seller. Green just means the candle closed up. Volume measures activity, not who “won”.
- Comparing exchangesEach crypto exchange reports its own volume. One exchange may show ten times more than another for the same hour. Stick to one source.
- Trusting every crypto volume numberSome smaller exchanges have been accused of fake “wash” trading. Big, regulated exchanges are more reliable.
- Reading the unfinished candleThe current candle’s volume is still growing. Judge it when the candle closes.
Settings most people use
The numbers in brackets you see on charts – explained in plain words.
- Average20 candlesThe usual window for “normal” volume. Some traders use 50.
- Spike1.5× to 2× the averageA common rule of thumb for “heavy” volume.
- OBVNo settingsOBV is a running total. Many traders add a 20-candle average to it.
How to use volume (for beginners)
Six small steps. None of them tells you to buy or sell – they help you read the chart.
- 1Find the averageLook at the last 20 bars. What does normal look like?
- 2Spot the spikesWhich candles had unusually tall bars? Check what the price did then.
- 3Check breakoutsWhen price breaks a level, is the volume bar bigger than usual?
- 4Watch the trendIs volume growing or shrinking as the trend continues?
- 5Wait for the closeJudge a candle’s volume once it has finished.
- 6Combine with levelsVolume means most at support and resistance levels.
See volume on other markets
Indicators work the same way on crypto, gold, currencies and stocks. Open any live Kumo chart and press the button.
Learn next
These go well together with this lesson.
Volume FAQ
What is trading volume?
The amount of an asset traded in a period, such as one day. For Bitcoin it is usually counted in BTC; for stocks in shares. It shows how active the market was.
Is high volume good or bad?
Neither. High volume means many traders took part. On a rise it shows strong participation; on a fall it shows heavy selling. The direction of the price tells you which.
What does low volume mean?
Fewer traders were active. Moves on low volume are often less reliable, and long low-volume periods often come before bigger moves.
Why does Bitcoin volume differ between websites?
Because each site adds up different exchanges. Some show one exchange, some add many, and some count futures too. Compare volume only within the same source.
What is On-Balance Volume (OBV)?
A running total that adds the day’s volume when the price closes up and subtracts it when the price closes down. Traders watch its direction to see whether up or down days carry more volume.
What is relative volume?
Today’s volume divided by the average volume of recent candles. A reading of 2 means twice as busy as usual.
All indicator lessons
Free, plain-word lessons, each with a live Bitcoin example.
- Support and resistanceThe price “floors” and “ceilings” where buyers or sellers stepped in before.
- Moving averages (SMA vs EMA)A smooth line through the price that shows which way the trend is going.
- RSIA 0–100 score of how hard a market has been bought or sold lately.
- EMA 200The famous long-term trend line: above it the big picture is up, below it down.
- MACDTwo averages chasing each other – it shows when a move speeds up or slows down.
- Bollinger BandsA stretchy band around the price that shows normal and unusual moves.
- Stochastic oscillatorWhere today’s price sits inside its recent high–low range, from 0 to 100.
- Ichimoku cloudThe Japanese “cloud” chart – Kumo’s namesake – showing trend, levels and momentum at once.
Written by
Alex Wu
Crypto, DeFi, perps and FX · driven by data
Alex designed the Kumocast model behind these signals, sets its rules, reviews its accuracy record and updates the methodology whenever the model changes. Signals are refreshed every 30 minutes with live market data.