TL;DR
Trading volume is the total value of tokens traded over a period (usually 24 hours), indicating how actively a token is being bought and sold.
High volume means a token is actively traded with good liquidity — you can buy and sell easily without major price impact. Low volume means thin liquidity and potential difficulty exiting positions. Volume also validates price movements: a 50% price increase on high volume is more sustainable than the same increase on low volume. For memecoins, volume typically spikes during the initial pump and dies quickly after.
24h volume relative to market cap tells you the token’s trading intensity. A token with $1M market cap and $500K daily volume is very actively traded (50% turnover). A token with $1M market cap and $5K volume is relatively dead. Compare volume trends: increasing volume suggests growing interest, declining volume suggests fading momentum. Sudden volume spikes often precede or accompany major price moves.
Wash trading — a single entity trading with themselves to inflate volume — is common in crypto. It makes a token look more popular and liquid than it is. Signs of wash trading: consistent, mechanical volume patterns; volume from a small number of wallets trading back and forth; volume that doesn’t affect price. On-chain transparency makes wash trading detectable on Solana by analyzing the actual wallets generating volume.