Volume shows how much money stands behind a move. Here is what relative volume is, why a volume spike at a level is one of the best entry triggers, and how to tell a strong breakout from an empty one.
How many coins or contracts traded during a candle.
Relative volume
The current candle's volume compared with the average of the last N candles, e.g. 20.
Signal
A spike at least 1.5 times above average at a key level.
No spike
If there's no spike, it's better to skip the trade at the level.
What volume is
Price shows where the market moved; volume shows how seriously. A rally on low volume means few participants and a weak move. A rally on high volume has money behind it.
The absolute number says little: it differs between coins and times of day. Comparing is more useful: relative volume is the current candle's volume divided by the average volume of the last 20 candles.
Why a volume spike is a good trigger
Stops and limit orders cluster at important levels and round numbers. When price reaches them, they all fire at once and the chart shows a volume spike. If price reverses sharply after such a spike, the stops have been taken and a big player has built a position against the move.
Price dipped below the previous low on a volume spike three times the average — and turned up. Illustrative data.
How to use it
01
Mark the key level
A previous low or high, a round number, a range edge.
02
Add the 20-candle average volume
That's your baseline for "normal".
03
Wait for a spike at the level
At least 1.5 times the average, ideally 2–3 times.
04
Watch the reaction
A spike plus price returning beyond the level — a stop sweep and reversal. A spike plus price holding — a strong breakout.
05
No spike, no trade
A breakout on ordinary volume often turns out empty.
Volume pairs well with footprint (cluster) charts: they show what made up the spike — new positions opening, positions closing or liquidations.
Common mistakes
Looking at absolute volume
Without comparing to the average, volume numbers mean nothing.
Treating every spike as a signal
A spike matters at a level. In the middle of a move it may just be news.
Ignoring volume on breakouts
A breakout without volume is a common trap. Strong moves start with rising volume.
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