CVD(Cumulative Volume Delta)
Last updated
Last updated
CVD is an indicator used to analyze the balance of buying and selling pressure in the market. It accumulates the volume difference between buy and sell orders over a given time period.
In simple terms, CVD reflects the "market order" buying and selling strength during a specific trend.
CoinKarma features CVD because its LIQ-related indicators are based on bid (buy) and ask (sell) orders from the spot order book—essentially composed of "limit orders." However, when "market orders" consistently drive price movement in one direction during a trend, they can deplete most of the "limit orders," causing LIQ-related data to show excessive extension.
This section focuses on comparing CVD with instances of LIQ overextension to demonstrate how CVD can filter out such scenarios.
Example: In cases where Overall LIQ red bars appear excessively (as marked by the yellow boxes), prices often continue to reach new highs. Observing the CVD during these periods reveals strong market buying activity, which consumes a significant amount of sell (ask) limit orders. This depletion leads to LIQ overextension.
By analyzing CVD, traders can identify these scenarios and avoid taking short positions during such periods.
