Analyzing Average Trading Sizes Across Centralized Exchanges

Changes in market structure spur investor enthusiasm and drive trading activity in a sort of psychological epidemic. The contagion amplifies the market sentiment, which becomes a reliable tool for anticipating potential price movements. In order to understand macro structures and gauge the market sentiment, variation in traders’ trading sizes is an interesting metric to look at.

Determination of the position size for a trader or an investor largely depends on macroeconomic volatility, capital availability, risk appetite, conviction, asset maturity, etc. The market participant usually decides their position size by deciding a satisfactory point between profit maximization and loss minimization. All the factors mentioned above funnel into changes in the market sentiment.