9 Best Crypto Volume Indicators – How Do They Help

What are the best crypto volume indicators? A crypto volume indicator is actually a volume-price trend indicator. When you use one of these volume indicators you will be able to see the differences in the volumes of trades over time.

This information will in turn help you to determine the strength and potential of the current trend with respect to a specific crypto coin.

Typically, the results displayed by the crypto volume indicators are based on the demand and supply of security and the exact balance between the two.

There are two specific aspects that you will come to know when you use these volume indicators such as:

  • The percentage change in price which will indicate the demand or supply of a particular security with respect to the prevailing price of it and
  • The volume of trade which will indicate the actual driving force of the current trend to help you in determining the money flow.

And, the most significant aspect of these crypto volume indicators is that you will be offered with a set of most recent data that will be more relevant than a 10-year old data set.

All these will help you to know the interest and behavior of the people, the trend of the market and the potential to make higher profitability while trading your crypto assets.

9 Best Crypto Volume Indicators

Best Crypto Volume Indicators

Most of the crypto charting software available today will come with a volume-price trend indicator. There are some that will offer the best technical analysis while others may offer confluent signals.

At this point you should remember that some of the crypto volume indicators may come with some faults. Check out swing trading tips.

For example, it may not show how you will go through after purchasing if the indicator shows ‘spoof trading.’ There may be exchanges that put out trade volumes incorrectly as well.

Therefore, choose one of the best volume indicators and the one that works best for you because what may work for someone may not work in your favor.

Here is a list of top nine crypto volume indicators that will help you a lot in this aspect.

1. On Balance Volume – Common and Most Popular

OBV or On-Balance Volume is one of the most popular crypto volume indicators that is most widely used by crypto traders and investors.

This indicator will show the collective volume matched with the price against each crypto coin.

Created by Joe Granville, the working process and calculations are not very difficult to understand. For example, if the closing price of a specific crypto coin today is higher than what it was yesterday, the formula used is:

OBV = previous OBV + today’s trading volume

On the other hand, if the price is lower than what it was earlier, the formula to use in that case is:

OBV = previous OBV – today’s trading volume.

The main benefit of using On Balance Volume indicator is that it will allow you to confirm the current market trend of trading crypto assets along with the price movements.

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It will also allow you to know about the potential reversal if and when there is a change in the direction.

2. Accumulation/Distribution Line – Indicates Accumulated and Money Flow Volume

Accumulation/Distribution Line, commonly known as ADL, is the best indicator to know the volume accumulated in your account along with the money flow volume.

Once again, it is not very difficult to understand and it works almost like the On Balance Volume indicator.

However, if you want to know the accumulated or distributed volume, you will first need to know the money flow volume based on the periods of the specific volume traded. The formula for this is:

Money Flow Volume = ((Close – Low) – (High – Close)) / (High – Low)

Once you have the value, add it to the preceding A/D to know what the current accumulated or distributed volume is.

If you see the ADL going up, it will indicate the upward trend of price. This is when most of the traders will make a purchase of cryptocurrency.

On the other hand, if the price shows a steady decline, it will indicate a downward trend.

If there is any divergence indicated in the ADL and price movements, it will indicate that a change in trend is underway.

3. Money Flow Index – Easy to Use

Money Flow Index or MFI is a very good crypto volume indicator to use if you want to measure the purchasing and selling pressure. This index is very much similar to Relative Strength Index but it deals with the volume specifically.

This index is very easy to use and understand even by a beginner in crypto trading because there are no formulas to deal with.

MFI basically is a line that ranges between 0 and 100. When there is a rise indicated in the line, consider it to be an indication of the rise in buying pressure.

On the other hand, if there is a fall noted in the MFI, it signifies an increased selling pressure.

According to the experts, you should be very careful when the value of MFI is over 80. This indicates that the market is overbought. This means that there can be a probable downturn in the price of the crypto coins.

On the other hand, if the value is below 20, then it indicates that the market is officially oversold. This is a strong signal for the price making a significant upward turn eventually.

4. Chaikin Oscillator – Measures Momentum of ADL

You can also use the Chaikin Oscillator which is a very good indicator to accurately measure the momentum of the accumulated and distributed line overall.

This is indicated by a line drawn by the indicator which actually fluctuates between the negative and positive values.

However, there is a small calculation made in order to form this line which is:

ADL Momentum = The shorter-term exponential moving average of ADL – The longer-term exponential moving average of ADL.

If this value is high and positive, it indicates a high purchasing pressure due to high ADL momentum. However, if it is high and negative it will signify higher selling pressure in spite of the fact that it also indicates a high ADL momentum.

Since differences in ADL momentum occur before a change in the market trend, it is very important to understand these changes in ADL momentum to be a successful crypto trader.

5. Chaikin Money Flow – Quantifies Buying and Selling Pressure Changes

Chaikin Money Flow or CMF is a good crypto volume indicator to use if you want to measure the Money Flow Volume for a specific time.

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This is a very useful metric that will help you to easily quantify the pressure changes while buying and selling crypto coins.

It will indicate the total value but usually will represent within a scale ranging between 1 and -1. If the value is 1, it will indicate a higher buying pressure and alternatively, if it is -1, it will indicate a high selling pressure.

In addition to that, this volume indicator will also enable you to predict the changes in the crypto market trends in the future. This will, in turn, help you to make more productive crypto trading decisions.

6. Ease of Movement – A Good Secondary Indicator

Ease of Movement is actually an oscillator. The two extremes of this oscillator are the positive and negative values and it fluctuates within these extremes.

If the positive value is higher, it will indicate a higher EOM. This means that the price of the crypto coins is moving upward even when there is a low change in trading volume.

And, if the value is highly negative, it will indicate a decrease in the price of the coins with low volume changes.

However, in both the situations, you can expect to have a significant reversal due to the low volume. Anything in between the two extremes of this volume indicator should be considered as the moving average.

Still, with its useful features the Ease of Movement indicator should be used as your secondary indicator.

This means that you should use it along with different other chart patterns and technical indicators to have better and more accurate results.

7. MACD – For Exponential Moving Average

The MACD formula will help you to know the Exponential Moving Average or EMA for a long period. This indicator calculates the trend and momentum of the market using a formula which is:

26-period EMA – 12-period EMA based on the closing prices.

If the value is positive, it will indicate an upside momentum and if the MACD value is negative it indicates downside momentum.

However, if it moves upwards in order to cross the single line, it will indicate the bullish cross.

This is actually the signal for a good time to make a purchase. On the other hand, if it moves downwards, crosses the single line, and moves further downward, it indicates a bearish cross.

This indicates the time to sell your crypto coins.

8. RSI – Indicates the Strength and Weakness of Crypto Coins

RSI or Relative Strength Index is a good crypto volume indicator to use that will tell you all about the strength and weakness of a crypto asset.

This is based on the recent fluctuations in the price depending on whether these assets are oversold or overbought.

The formula used to calculate it is:

RSI = 100 – 100 / (1 + RS)

Here RS is the value obtained when the average of periods of closing price is divided by the average of periods when the prices go down.

And, the number of periods usually used in this case is 14 though it entirely depends on the trader as to what number of periods to use.

When the calculated value of RS is below 30, this indicates that the particular crypto coin is oversold.

And, on the other hand, if the RS value is more than 70, it indicates that the coin has been overbought.

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9. Bollinger Bands – Three Different Bands

Finally, it is the Bollinger Bands that you can use to judge crypto volume. It will also help you to identify the movements in the price of a crypto asset.

However, this is determined within a band having upper and lower bandwidth through which the price fluctuates, or stays in the middle. These are calculated in the following ways:

  • Upper band – SMA over 20 days + (Standard deviation of price over 20 days x 2)
  • Middle band – Simple Moving Average or SMA over 20 days
  • Lower band – SMA over 20 days – (Standard deviation of price over 20 days x 2).

If the price of a particular crypto asset moves out of this bandwidth it indicates a price reversal which is about to happen.

How Do Crypto Volume Indicators Help?

With the use of a crypto trading volume indicator, you will be able to make most accurate and productive investment decisions.

For example, if you see that the price is falling, you can increase the volume of crypto purchase and trading to reap the maximum benefit.

And, on the other hand, if the price of the crypto assets falls, you can decrease the volume if you intend a buyback.

In addition to that, the crypto volume indicators will also help you in a lot of other ways such as:

  • You will be able to assess the current trend of the market and be wary about the probable reversals. Remember, only a significant change in volume is to be considered to be a strong signal.
  • You will also come to know about the exhaustion moves in the market due to the rise or fall in prices of crypto assets. Here, a steep rise in price along with a notable rise in volume indicates the probable end of the prevailing trend.
  • You can even know about the bullish signs. This is when the volume increases with a price fall and if there is an increase in the price later on, there is a lower move back. If the price in such a situation does not fall below the earlier low but the volume diminishes, it is considered as a bullish sign.
  • The crypto volume indicators will also tell you about the volume history as well as the volume-price reversals. If there is a significant change in volume due to little price difference, this indicates that a reversal is on the way and the price will change direction soon.

In short, with the help of different chart patterns as indicated by the different volume indicators you will be able to know the initial breakouts as well as the false breakouts of price and volume of a particular crypto coin.

Conclusion

While trading, you will need to know the exact volume or the amount of digital assets put on trade.

Therefore, it is important to analyze the volume precisely. These crypto volume indicators will help you a lot in conducting such analysis.