Volume
Volume is the market's foot traffic. The same 1% rise feels different in a bustling shop versus an empty one — volume puts a number on that bustle. For example, if a Bitcoin 1-hour candle usually sees around 1,000 BTC change hands and one hour suddenly prints 5,000 BTC, five times the usual crowd showed up.
Let's clear up the thing beginners trip over most. For a trade to happen, a buyer and a seller must pair up — exactly. So 'high volume = lots of buyers' is wrong. If 5,000 BTC traded, someone bought 5,000 BTC and someone sold 5,000 BTC, simultaneously. Volume by itself says nothing about direction; it only says interest and participation were high.
That's why traders pair volume with price direction. Price rising on expanding volume reads as 'a rally built on real money coming in' — more trustworthy, goes the thinking — while price creeping up on thin volume gets side-eyed as a weak move. But that's folk wisdom; where price actually went afterward is something you count from historical data.
Crypto volume has one peculiar habit. When a liquidation cascade hits — leveraged positions being force-closed in a chain — volume explodes within minutes. Those trades weren't made because anyone wanted to buy; they were forced. Direction right after tends to be unusually erratic.
In short, volume is a thermometer for 'how much money is riding on this move.' Keep in mind that it's not a compass pointing a direction, and it becomes genuinely useful background for reading a chart.
What the data actually shows
Barobara takes 'volume suddenly spiking above normal' as a signal and publishes the complete count of what price actually did next. Volume exploding on a rising candle is in the volume spike + green candle record; exploding on a falling candle, in the volume spike + red candle record. Fair warning: in most stretches, up and down cases come out close to a coin flip. These numbers are a distribution of what happened, not a prediction that it happens again.
Common misconceptions
"A volume explosion means a big rally is coming?" Volume shows the size of the move and the level of interest — not the direction. Volume explodes at euphoric tops when the last buyers pile in, and it explodes just the same when panic selling floods out.
"High volume means lots of people are buying?" Every fill pairs a buy and a sell in exactly equal size. Volume of 100 means 'someone who bought 100 met someone who sold 100' — it doesn't tell you which side won.
FAQ
Q. Is it bad to trade when volume is low?
With thin volume, even your own order can push the price (slippage), and it gets harder to fill at the prices you want. On a heavily traded market like Bitcoin this barely matters at retail size, but on thin altcoins the effective cost can jump sharply.
Q. Can I trade off the volume indicator alone?
Volume measures participation, not direction, so on its own it's a weak basis for buying or selling. Barobara's historical records show price after a volume explosion went up about as often as down. Realistically it works best as background context alongside other information.