Trading volume

Volume is measured by summing the value of every trade that executes in the window, across every exchange or just one, depending on the source. It's closely tied to liquidity: an asset that trades a lot generally has tighter spreads and less price impact per order.

For example, a $1,000 market order on an asset with only $50,000 of daily volume represents 2% of that day's entire trading activity and can move the price noticeably, while the same $1,000 order on an asset with $1,000,000,000 of daily volume is a rounding error.

A common mistake is treating a sudden volume spike as a trend signal by itself. Volume confirms that a price move had real participation behind it, but a spike with no accompanying price change usually just means a large trade happened, not that a new trend started.