You are looking at volume wrong. Make two changes
Hey - You are looking at volume all wrong. Make two changes
When looking at crytocurrency or stock over a long term, the volume bars are not very helpful because the price has changed by too much for them to be meaningful. The volume bars show the quantity of the coin traded, not the value (dollar value) of the trades. A 1000 quantity bar in 2013 represents $10,000 in value. The same 1000 bar in 2024 represents $70,000,000 in value. That is a 7,000 X difference and yet the volume bars are the same height.
To improve the chart, make these two changes
1) Use Logarithmic scale
Right click on the price scale and select LOGARITHMIC instead of REGULAR
2) Use volume bars that are based on value ($$$) instead of quantity
To do this, add the "Total Dollar Volume" indicator by RevelTrades to the chart.
Or - experiment with some other indicators that have "volume" and "dollar" in the indicator name.
This works well for flat / FIAT currency based pairs such as BTC/USD but wont make much sense for pairs based on other cryptocurrency like BTC/ETH
Now the volume bars represent how much money was spent, rather than the quantity that was traded, so $10m traded appears as the same bar height in both 2012 and 2024
The top chart shows the old way, with quantity based volume bars in regular scale.
The bottom chart shows the new way with value based volume bars in logarithmic scale
Some of the Dollar Volume indicator draw the volume bars in the bottom section and others draw it higher up on the chart. Use the one that you prefer
If you found some other indicators that help to understand volume over a long term period, please let us know in the comments
Happy trading
When looking at crytocurrency or stock over a long term, the volume bars are not very helpful because the price has changed by too much for them to be meaningful. The volume bars show the quantity of the coin traded, not the value (dollar value) of the trades. A 1000 quantity bar in 2013 represents $10,000 in value. The same 1000 bar in 2024 represents $70,000,000 in value. That is a 7,000 X difference and yet the volume bars are the same height.
To improve the chart, make these two changes
1) Use Logarithmic scale
Right click on the price scale and select LOGARITHMIC instead of REGULAR
2) Use volume bars that are based on value ($$$) instead of quantity
To do this, add the "Total Dollar Volume" indicator by RevelTrades to the chart.
Or - experiment with some other indicators that have "volume" and "dollar" in the indicator name.
This works well for flat / FIAT currency based pairs such as BTC/USD but wont make much sense for pairs based on other cryptocurrency like BTC/ETH
Now the volume bars represent how much money was spent, rather than the quantity that was traded, so $10m traded appears as the same bar height in both 2012 and 2024
The top chart shows the old way, with quantity based volume bars in regular scale.
The bottom chart shows the new way with value based volume bars in logarithmic scale
Some of the Dollar Volume indicator draw the volume bars in the bottom section and others draw it higher up on the chart. Use the one that you prefer
If you found some other indicators that help to understand volume over a long term period, please let us know in the comments
Happy trading
Comment:
Link to the Total Dollar VOlume indicator by @RevelTrades
Comment:
I didnt say much about using Logarithmic scale so here is some info:
Regular scale uses the same increment in each step on the vertical price axis
100, 200, 300, 400 etc
Log scale uses larger increments (x 10) in each step
100, 1000, 10000, 100000 etc
Log Scale is useful when viewing prices over a long period of time (6+ years for crypto, 25+ years for stock) where the price has had a large change over that time.
Regular scale uses the same increment in each step on the vertical price axis
100, 200, 300, 400 etc
Log scale uses larger increments (x 10) in each step
100, 1000, 10000, 100000 etc
Log Scale is useful when viewing prices over a long period of time (6+ years for crypto, 25+ years for stock) where the price has had a large change over that time.
This is what it looks like with the top chart in regular scale and the bottom chart in log scale
i.ibb.co/ccyq9w6/image.jpg