4 Ways that Bitcoin Trading Volumes Impact Crypto Trading Strategies 1

4 Ways that Bitcoin Trading Volumes Impact Crypto Trading Strategies

Cryptocurrency
Crypto Industry
Trading
• Digitex
April 7, 2021

The Bitcoin trading volume is a crucial indicator for both cryptocurrency investors and traders.

According to a CoinDesk Markets survey, trading volume was ranked as the top indicator traders “couldn’t live without,” scoring 38% among all poll respondents.

Currently, the 24-hour BTC trading volume is standing at nearly $73 billion, which is up by 8% since the last day. 

4 Ways that Bitcoin Trading Volumes Impact Crypto Trading Strategies 2

But what is the Bitcoin trading volume, what does it tell us about the market, and how does it impact crypto trading strategies Let’s explore the answers to the above questions together in this article!

Bitcoin Trading Volume Explained

The Bitcoin trading volume measures how much BTC has been traded on cryptocurrency exchanges in a certain period of time (the most common timeframe is 24 hours).

For Bitcoin derivatives trading, the volume provides data about the number of futures or options contracts changing hands between buyers and sellers.

When buyers and sellers reach an agreement at a certain price for a trading pair (e.g., BTC/USD), the exchange facilitating the trade records the transaction and uses that data to calculate the trading volume for the digital asset.

For example, suppose Alice sells 1 BTC to Bob at $60,000. In that case, the facilitating exchange records a volume of either $60,000 or 1 BTC for the BTC/USD trading pair based on the currency the service uses for denominating it.

How Does the Bitcoin Trading Volume Impact Crypto Trading Strategies?

Whether you are day trading crypto or holding digital assets for the long-term, you can use the Bitcoin trading volume to gather valuable insights about the market.

For that reason, the Bitcoin trading volume has an impact on crypto trading strategies and the financial decisions of users.

Traders can use volumes to discover the following crypto trading signals:

  1. Confirm trends: During a bull market, a high trading volume with great enthusiasm from buyers is crucial to keep pushing prices upwards. For that reason, it’s usually a bullish signal when both the volume and the price are increasing. On the other hand, when a digital asset’s price is surging, but its trading volume is decreasing, it is a warning sign of an upcoming potential reversal.
  2. Exhaustion moves: Monitoring the trading volume is also an excellent way to identify exhaustion moves. Featuring a sharp move into any direction as well as a significant volume growth, an exhaustion move can indicate a trend’s potential end.
  3. Price reversals: After excessive price movements in either direction, a significantly high volume paired with minor changes in the price can indicate that a reversal is imminent, in which the asset’s value will move in the opposite direction.
  4. Dead projects: While there are over 9,100 cryptocurrencies present on the market, not all of them have active projects behind them. Monitoring the current and historical trading volume of a cryptocurrency is an excellent way to limit your risks by filtering out dead coins with very low daily volumes.

Closing Thoughts

When investing for the long term or day trading crypto, incorporating the Bitcoin trading volume in your strategy helps you discover crucial market trends and gather signals that support you to make the right decisions.

For that reason, it’s essential to adjust your crypto trading strategy to include the Bitcoin trading volume as part of your fundamental and technical analysis.

In the meantime, be sure to leverage your new digital asset trading strategies at the next-generation futures trading platform Digitex to trade crypto for free while enjoying the benefits of a robust exchange solution.

Also, you shouldn’t forget to check out DGTX, Digitex’s native exchange token, which you can buy now with a credit card

 

April 7, 2021
Cryptocurrency
Crypto Industry
Trading

4 Ways that Bitcoin Trading Volumes Impact Crypto Trading Strategies

Digitex
4 Ways that Bitcoin Trading Volumes Impact Crypto Trading Strategies 3

The Bitcoin trading volume is a crucial indicator for both cryptocurrency investors and traders.

According to a CoinDesk Markets survey, trading volume was ranked as the top indicator traders “couldn’t live without,” scoring 38% among all poll respondents.

Currently, the 24-hour BTC trading volume is standing at nearly $73 billion, which is up by 8% since the last day. 

4 Ways that Bitcoin Trading Volumes Impact Crypto Trading Strategies 4

But what is the Bitcoin trading volume, what does it tell us about the market, and how does it impact crypto trading strategies Let’s explore the answers to the above questions together in this article!

Bitcoin Trading Volume Explained

The Bitcoin trading volume measures how much BTC has been traded on cryptocurrency exchanges in a certain period of time (the most common timeframe is 24 hours).

For Bitcoin derivatives trading, the volume provides data about the number of futures or options contracts changing hands between buyers and sellers.

When buyers and sellers reach an agreement at a certain price for a trading pair (e.g., BTC/USD), the exchange facilitating the trade records the transaction and uses that data to calculate the trading volume for the digital asset.

For example, suppose Alice sells 1 BTC to Bob at $60,000. In that case, the facilitating exchange records a volume of either $60,000 or 1 BTC for the BTC/USD trading pair based on the currency the service uses for denominating it.

How Does the Bitcoin Trading Volume Impact Crypto Trading Strategies?

Whether you are day trading crypto or holding digital assets for the long-term, you can use the Bitcoin trading volume to gather valuable insights about the market.

For that reason, the Bitcoin trading volume has an impact on crypto trading strategies and the financial decisions of users.

Traders can use volumes to discover the following crypto trading signals:

  1. Confirm trends: During a bull market, a high trading volume with great enthusiasm from buyers is crucial to keep pushing prices upwards. For that reason, it’s usually a bullish signal when both the volume and the price are increasing. On the other hand, when a digital asset’s price is surging, but its trading volume is decreasing, it is a warning sign of an upcoming potential reversal.
  2. Exhaustion moves: Monitoring the trading volume is also an excellent way to identify exhaustion moves. Featuring a sharp move into any direction as well as a significant volume growth, an exhaustion move can indicate a trend’s potential end.
  3. Price reversals: After excessive price movements in either direction, a significantly high volume paired with minor changes in the price can indicate that a reversal is imminent, in which the asset’s value will move in the opposite direction.
  4. Dead projects: While there are over 9,100 cryptocurrencies present on the market, not all of them have active projects behind them. Monitoring the current and historical trading volume of a cryptocurrency is an excellent way to limit your risks by filtering out dead coins with very low daily volumes.

Closing Thoughts

When investing for the long term or day trading crypto, incorporating the Bitcoin trading volume in your strategy helps you discover crucial market trends and gather signals that support you to make the right decisions.

For that reason, it’s essential to adjust your crypto trading strategy to include the Bitcoin trading volume as part of your fundamental and technical analysis.

In the meantime, be sure to leverage your new digital asset trading strategies at the next-generation futures trading platform Digitex to trade crypto for free while enjoying the benefits of a robust exchange solution.

Also, you shouldn’t forget to check out DGTX, Digitex’s native exchange token, which you can buy now with a credit card

 

Latest News

A Basic Guide on How to Trade Futures 5

A Basic Guide on How to Trade Futures

Digitex Futures
Trading
• Sarah Rothrie
August 1, 2019

There was a time, not too long ago, when the only way to learn how to trade futures was by throwing yourself into a trading pit and just doing it. But traders today have a much better chance of success right out of the box. Why? Because the power of the internet means that longtime traders have the platforms to share their experiences and help beginners learn to trade futures – and win. Armed with a solid futures market education, even the newest of newbies can quickly start buying and selling alongside the top futures traders. 
In this article, we’ll walk through the basics of futures contracts and why futures are an excellent option for profitable trading. We’ll also cover the various futures markets, the art of choosing a trading platform and strategy, the benefits of investing in futures, and the mistakes to avoid for profitable futures trading. 

Futures Market Education 101 – About Futures

At the most basic level, a futures contract is a simple agreement to trade an asset at a defined point in the future, for an agreed price. In the first instance, futures emerged as a means of hedging against price fluctuations in the commodities markets. The first futures contracts were based on the agricultural markets, enabling farmers and their buyers to fix prices for harvests before the growing season started and protect against later market fluctuations.
Although commodities markets are still used by traders wanting to hedge on price, modern futures markets rely heavily on speculators. Speculators don’t want to take custody of the underlying asset; instead, they trade on price fluctuations. 
The presence of speculators created the futures markets as they exist today, in which futures contracts cover all kinds of assets beyond commodities. Futures are traded against stocks, indices, foreign currencies, and most recently, cryptocurrencies. 
Futures trading use margin and leverage to enhance the opportunity for profits. By borrowing funds from a broker or an exchange, you can magnify the potential for profits, although it also increases the risk exposure if the markets go against your trade.
Available leverage can vary widely between markets. For example, in the stock markets, leverage is limited to 2x, while in forex markets, it can be significantly higher.  In cryptocurrency futures markets, you can trade with up to 100x leverage. 
If you can learn how to trade futures successfully, they offer fantastic opportunities to make big money compared to other financial products or derivatives. For example, when trading options, there is better loss protection because you pay an up-front premium on an option. However, while options may offer less risk, futures offer a far greater potential for profitability. 
So now that we know all the basics of futures, how do you decide which futures to trade? 

Markets Overview – Which Are the Best Futures to Trade? 

Obviously, deciding on the best futures to trade will depend on the trader. Choosing which markets you want to enter will mean you need to determine your risk appetite and your available resources for trading.  You’ll also need to think about how much time you have for trading each day, which includes time spent on market analysis and evaluation of your results. 
For the beginner individual investor, cryptocurrencies provide some of the best futures trading opportunities. A single BTC or ETH can be split down into tiny increments, so there are very low barriers to entry.
Digitex will be the world’s first commission-free futures trading platform, making it viable to adopt a strategy of scalping profits from multiple lower-value trades. Furthermore, crypto exchanges don’t rely on profit-siphoning brokers, although most of them with the sole exception of Digitex do charge fees. 
The cryptocurrency markets are volatile, which is bad news for long-term investors. But it’s fantastic news for short-term traders in futures contracts, who can use leverage to magnify gains from the volatility. 
Among the rest, forex futures also offer some comparable benefits to cryptocurrency futures, in that you can trade with high leverage and some currencies are volatile enough to provide significant gains. Stocks and indices tend to be far less volatile and offer lower leverage. 

Which is the Best Futures Trading Platform? 

Once you’ve decided which type of markets you want to trade, then the next step is deciding where to trade futures. Many finance websites regularly provide detailed futures trading systems review for all the major platforms. 
However, here are the major points to consider when choosing a futures trading system:

Availability of product

There’s no point in choosing a platform only to find out it doesn’t sell what you want to buy.

Fees and commissions

These will directly eat into your profits. So, the lower the fees, the better your chances of turning a profit. 

User interface

Especially for a beginner, it should be relatively intuitive and easy to use. More advanced traders may appreciate access to more charts and technical analysis tools.

Customer service 

If something goes wrong, or if you get locked out of your trading account, shoddy customer service is the difference between a good trading day and a terrible trading day. 

Security 

If the platform gets hacked, your funds may be at risk. Particularly in the cryptocurrency space, high-profile exchange hacks are all too common. Make sure your chosen exchange places the highest emphasis on fund security.
More often than not, choosing a trading platform means making a trade-off on one or more of these points. At Digitex, we are taking pride in building an exchange that excels on every single one of these criteria.
When Digitex launches, it will be the only free futures trading system where you don’t pay a per-trade commission. That alone puts it in pole position for becoming the best futures trading platform. 
But there’s lots more. Users will have access to our intuitive, one-click ladder trading interface. And we’re currently in the process of setting up a world-class back office to ensure that traders can focus on one thing – trading. 

How to Trade Futures Successfully – Mistakes to Avoid

We will soon publish a post on trading strategies and choosing the best futures trading system that goes into far more detail about specific approaches. So, until then, here are some general tips on how to day trade futures online. 

Failing to Manage Your Emotions

Trading psychology is a topic all by itself. But it’s a fact that if you don’t manage your emotions effectively, you run the risk that they’ll eventually get the better of you.
It’s natural to feel fear if you hear bad news about the markets or think it’s worth hanging onto a position to wring a few more dollars out of it. But basing trading decisions on these feelings is a sure-fire route to losing money.
To successfully day trade futures online, stick to your plan, and leave the emotions out of it. As you learn to trade futures will get easier with experience. 

Deviating from Your Plan

So you’ve created a plan, tested and tested again and now you’re on the live markets. A few losing trades in, and it’s inevitable that you’ll start to question your plan.
While it makes sense in some situations to revisit a plan, especially if new information comes in, don’t feel you need to deviate from a tried and tested plan just because the market has a wobble. If you’re confident that you’ve done your research and testing correctly, hold your nerve and stick to the plan. 

Not Protecting Yourself

If you’re trading longer-term then you should always have a stop-loss in place for every trade. Unless you’re superhuman, it’s impossible to monitor the markets at all times. Especially in the world of cryptocurrency, where trading goes on 24/7, often at a breakneck speed.
A stop-loss will mean that even if the markets perform unexpectedly, you won’t be stuck in a losing position while you’re asleep. But conversely, there’s also danger in taking your eye off the markets. 

Taking Your Eye off the Markets

Although you can’t possibly watch the markets 24/7, top futures traders always keep an eye on the big picture and stay abreast of the news. Make sure you hone your analytical skills, learn to read charts and use technical tools, and if you incorporate all of this into your trading plan, you’ll start to see more good days than bad ones. 
So hopefully, by now, you’ll feel you know enough of the basics to start planning your entry to the futures market! Being a full-time trader is demanding and it’s not always easy to develop futures trading strategies that work, but it’s incredibly rewarding. 
Only DGTX holders will be able to trade on the Digitex Futures exchange, as all trades will be denominated in DGTX tokens. You can buy tokens from one of our exchange partners, or via the Digitex Treasury. Buying from the Treasury is trustless and instant, meaning there’s no price slippage. 

August 1, 2019
Digitex Futures
Trading

A Basic Guide on How to Trade Futures

Sarah Rothrie
A Basic Guide on How to Trade Futures 6

There was a time, not too long ago, when the only way to learn how to trade futures was by throwing yourself into a trading pit and just doing it. But traders today have a much better chance of success right out of the box. Why? Because the power of the internet means that longtime traders have the platforms to share their experiences and help beginners learn to trade futures – and win. Armed with a solid futures market education, even the newest of newbies can quickly start buying and selling alongside the top futures traders. 
In this article, we’ll walk through the basics of futures contracts and why futures are an excellent option for profitable trading. We’ll also cover the various futures markets, the art of choosing a trading platform and strategy, the benefits of investing in futures, and the mistakes to avoid for profitable futures trading. 

Futures Market Education 101 – About Futures

At the most basic level, a futures contract is a simple agreement to trade an asset at a defined point in the future, for an agreed price. In the first instance, futures emerged as a means of hedging against price fluctuations in the commodities markets. The first futures contracts were based on the agricultural markets, enabling farmers and their buyers to fix prices for harvests before the growing season started and protect against later market fluctuations.
Although commodities markets are still used by traders wanting to hedge on price, modern futures markets rely heavily on speculators. Speculators don’t want to take custody of the underlying asset; instead, they trade on price fluctuations. 
The presence of speculators created the futures markets as they exist today, in which futures contracts cover all kinds of assets beyond commodities. Futures are traded against stocks, indices, foreign currencies, and most recently, cryptocurrencies. 
Futures trading use margin and leverage to enhance the opportunity for profits. By borrowing funds from a broker or an exchange, you can magnify the potential for profits, although it also increases the risk exposure if the markets go against your trade.
Available leverage can vary widely between markets. For example, in the stock markets, leverage is limited to 2x, while in forex markets, it can be significantly higher.  In cryptocurrency futures markets, you can trade with up to 100x leverage. 
If you can learn how to trade futures successfully, they offer fantastic opportunities to make big money compared to other financial products or derivatives. For example, when trading options, there is better loss protection because you pay an up-front premium on an option. However, while options may offer less risk, futures offer a far greater potential for profitability. 
So now that we know all the basics of futures, how do you decide which futures to trade? 

Markets Overview – Which Are the Best Futures to Trade? 

Obviously, deciding on the best futures to trade will depend on the trader. Choosing which markets you want to enter will mean you need to determine your risk appetite and your available resources for trading.  You’ll also need to think about how much time you have for trading each day, which includes time spent on market analysis and evaluation of your results. 
For the beginner individual investor, cryptocurrencies provide some of the best futures trading opportunities. A single BTC or ETH can be split down into tiny increments, so there are very low barriers to entry.
Digitex will be the world’s first commission-free futures trading platform, making it viable to adopt a strategy of scalping profits from multiple lower-value trades. Furthermore, crypto exchanges don’t rely on profit-siphoning brokers, although most of them with the sole exception of Digitex do charge fees. 
The cryptocurrency markets are volatile, which is bad news for long-term investors. But it’s fantastic news for short-term traders in futures contracts, who can use leverage to magnify gains from the volatility. 
Among the rest, forex futures also offer some comparable benefits to cryptocurrency futures, in that you can trade with high leverage and some currencies are volatile enough to provide significant gains. Stocks and indices tend to be far less volatile and offer lower leverage. 

Which is the Best Futures Trading Platform? 

Once you’ve decided which type of markets you want to trade, then the next step is deciding where to trade futures. Many finance websites regularly provide detailed futures trading systems review for all the major platforms. 
However, here are the major points to consider when choosing a futures trading system:

Availability of product

There’s no point in choosing a platform only to find out it doesn’t sell what you want to buy.

Fees and commissions

These will directly eat into your profits. So, the lower the fees, the better your chances of turning a profit. 

User interface

Especially for a beginner, it should be relatively intuitive and easy to use. More advanced traders may appreciate access to more charts and technical analysis tools.

Customer service 

If something goes wrong, or if you get locked out of your trading account, shoddy customer service is the difference between a good trading day and a terrible trading day. 

Security 

If the platform gets hacked, your funds may be at risk. Particularly in the cryptocurrency space, high-profile exchange hacks are all too common. Make sure your chosen exchange places the highest emphasis on fund security.
More often than not, choosing a trading platform means making a trade-off on one or more of these points. At Digitex, we are taking pride in building an exchange that excels on every single one of these criteria.
When Digitex launches, it will be the only free futures trading system where you don’t pay a per-trade commission. That alone puts it in pole position for becoming the best futures trading platform. 
But there’s lots more. Users will have access to our intuitive, one-click ladder trading interface. And we’re currently in the process of setting up a world-class back office to ensure that traders can focus on one thing – trading. 

How to Trade Futures Successfully – Mistakes to Avoid

We will soon publish a post on trading strategies and choosing the best futures trading system that goes into far more detail about specific approaches. So, until then, here are some general tips on how to day trade futures online. 

Failing to Manage Your Emotions

Trading psychology is a topic all by itself. But it’s a fact that if you don’t manage your emotions effectively, you run the risk that they’ll eventually get the better of you.
It’s natural to feel fear if you hear bad news about the markets or think it’s worth hanging onto a position to wring a few more dollars out of it. But basing trading decisions on these feelings is a sure-fire route to losing money.
To successfully day trade futures online, stick to your plan, and leave the emotions out of it. As you learn to trade futures will get easier with experience. 

Deviating from Your Plan

So you’ve created a plan, tested and tested again and now you’re on the live markets. A few losing trades in, and it’s inevitable that you’ll start to question your plan.
While it makes sense in some situations to revisit a plan, especially if new information comes in, don’t feel you need to deviate from a tried and tested plan just because the market has a wobble. If you’re confident that you’ve done your research and testing correctly, hold your nerve and stick to the plan. 

Not Protecting Yourself

If you’re trading longer-term then you should always have a stop-loss in place for every trade. Unless you’re superhuman, it’s impossible to monitor the markets at all times. Especially in the world of cryptocurrency, where trading goes on 24/7, often at a breakneck speed.
A stop-loss will mean that even if the markets perform unexpectedly, you won’t be stuck in a losing position while you’re asleep. But conversely, there’s also danger in taking your eye off the markets. 

Taking Your Eye off the Markets

Although you can’t possibly watch the markets 24/7, top futures traders always keep an eye on the big picture and stay abreast of the news. Make sure you hone your analytical skills, learn to read charts and use technical tools, and if you incorporate all of this into your trading plan, you’ll start to see more good days than bad ones. 
So hopefully, by now, you’ll feel you know enough of the basics to start planning your entry to the futures market! Being a full-time trader is demanding and it’s not always easy to develop futures trading strategies that work, but it’s incredibly rewarding. 
Only DGTX holders will be able to trade on the Digitex Futures exchange, as all trades will be denominated in DGTX tokens. You can buy tokens from one of our exchange partners, or via the Digitex Treasury. Buying from the Treasury is trustless and instant, meaning there’s no price slippage. 

Latest News