The question a lot of NFT beginners ask while trading NFT on any NFT marketplace is “what is volume traded NFT?”.
If you are trading your NFT on Opensea, you will be familiar with the term “volume traded”, but your inability to understand the term makes you come up with the mind-boggling question, what is volume traded NFT?
In this article, you will learn volume traded NFT meaning and other related terms that will help you understand the NFT volume in order to make a proper investment.
Opensea volume traded meaning is what you can’t really know by yourself while on the Opensea marketplace, that is why we have written this article to help you understand what volume traded mean on OpenSea.
We’ll define volume traded NFT meaning, show you how to read it on a chart, and explain how some NFT investors use volume to confirm trends.
Volume traded, also known as trading volume, is the total quantity of ETH that belongs to a given NFT collection traded on a daily basis. The breakdown of this volume traded NFT meaning is in the subheading below.
What does volume traded mean on OpenSea?
In nft, the volume traded is expressed in Ethereum (ETH). ETH is the basic unit that describes the value of an NFT collection. This means that an ETH of an nft represents partial ownership of that NFT collection.
What does volume traded mean nft and how does it relate with Ethereum?
Volume traded is the quantity of nft that trades between buyers and sellers. In summary, the volume traded is the total number of ETH exchanged in all transactions of a given NFT collection.
Volume is measured on a trade-by-trade basis, totaled over a given period of time, and even calculated across an entire market.
To better understand volume traded NFT meaning, below is an example.
If a buyer purchases 100 ETH of nft and sells 50 ETH of that same nft. Another buyer then buys 200 ETH of that same nft and sells 100 ETH to another buyer.
In this situation what is volume traded NFT?
The volume traded NFT of the above example would be 350, this is because 100 ETH of nft were traded, 50 ETH of nft were traded, and 200 ETH of nft were traded.
This means the total sales of NFT traded which include secondary sales and the initial sales.
Countless transactions just like this take place during the trading day which is recorded on the volume traded chart or indicator.
Volume Traded Chart
When asking questions about what is volume traded NFT, you need to also know about the volume traded chart.
The volume traded chart also known as the volume traded indicator is data of the market activity and liquidity of a given NFT collection.
It demonstrates how active the NFT market is, by keeping track of all these transactions and totals the number of ETH traded over any given period of time, which makes it easy for buyers and sellers to communicate and execute transactions.
If you don’t know what is volume traded NFT, it will be difficult to understand this.
The volume traded figures may be reported as frequently as once every hour throughout one trading day.
However, NFT volumes that are reported on an hourly basis are usually estimated. Similarly, the volume of NFT trade reported at the end of a trading day may also be estimated.
The only time the actual figures are made available is until the following day. That is why it may be difficult for beginners to evaluate the volume traded if they don’t know what is volume traded NFT.
If you click on a single volume indicator (just like the image above), you will see individual sub-transactions and you can also see sort of how it’s been going on daily and how much there’s been on each transaction.
Volume traded chart is always high when a given NFT collection is traded more actively. Similarly, when an NFT collection is traded less actively, its traded volume chart is said to be less.
The traded volume indicator is usually displayed at the bottom of the NFT chart as a histogram. Each bar of the histogram shows the total volume traded for a given time period.
Hence, knowing what is volume traded nft and how to study the volume traded chart will help you make great nft investments
How To Study Volume Traded Chart
Proper studying of the volume traded chart will help you understand how the market of a given NFT collection is going, which enables wise investment decisions.
When you click on the traded volume of an NFT collection, it shows you the average price sold, the traded volume, and the number of sales at a given time period (usually recorded daily).
For instance, if you are looking at a daily chart, each bar of the volume histogram represents the total volume traded per day.
This means that volume traded is often averaged over time, particularly during the daily time period. This is called average daily volume.
Some investors compare today’s volume to the average daily volume over a number of days in the past. Investors typically use 20 or 30 days to calculate average daily volume, although any historical range can be used.
Comparing today’s total volume to the 20 days average for example can help an investor judge the validity of a move in the price of an NFT collection.
Some investors who use technical analysis believe that moves at price on higher-than-average volume are more valid than moves on lower-than-average volume.
For example, if an NFT collection breaks above resistance on higher-than-average volume, some investors believe that this is confirmation and the NFT collection is more likely to continue higher.
The theory is that prices moved higher with the support of many investors buying, which is what the higher-than-average volume reveals. Therefore, higher-than-average volume lends credibility and can help confirm price moves.
Conversely, price moves on lower-than-average volumes are thought to be less credible because they lack the participation of many investors.
Some investors might view a break above resistance on lower-than-average volume with skepticism, thinking the break might be false because it lacked participation.
Just like with stocks and other securities in the stock market, some investors define and apply volume in the same way in the features market.
The important point to remember is that volume in options is typically not used to confirm trends in an underlying NFT collection. But that’s how it’s applied in NFT and futures, which makes the volume an important aspect of technical analysis.
The volume reveals how many investors participate when an NFT collection changes in price. And the more participation, generally the more credible the move.
The above article is about your question of what is volume traded nft, and we hope it will help you understand volume traded NFT meaning.
Key points to summarize the question of what is volume traded NFT:
- NFT volume traded refers to the quantity of ETH that belongs to a given NFT collection traded on a daily basis.
- Volume traded figure is said to be high when a given NFT collection is traded more actively and vice versa.
- A higher volume traded is the symbol of better order execution and higher liquidity.
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