Liquidity and volatility 

Now, we will explore how trading volume is connected to liquidity and volatility, which are important factors that can impact your trading. 
 

High levels of liquidity are typically associated with increased trading volume. This simplifies the process of entering or exiting trades without experiencing slippage, which occurs when the price of the asset changes due to your trade. 
 

Volatility: Increased trading volume spikes usually come before heightened volatility. Even though it presents the opportunity for substantial gains, especially in unstable markets such as cryptocurrencies, it also raises the level of risk.