Written by Sections in this article
Orderbook heatmap is a graphical representation of historical orderbook snapshot. Each price level and its amount of pending orders is visualized as a blue rectangle, the brighter color the more limit orders.
With it, you can graphically observe the interaction between the order book and the price. Watch in real time how limit orders of all sizes appear and vanish and to determine important levels, pay close to attention to large limit orders.
Minimum volume filter
To filter out unnecessary noise, try to increase ‘min volume’ cut-off which hides every volume below this amount. ‘Min volume’ can be adjusted by either the slider or by value - see the little ‘S’ button on the left side of ‘min volume’ slider.
Every market has its own ideal heatmap settings, re-adjust opacity and min. volume to your own settings.
Colormap
The last option of OB heatmap is Colormap. Currently there are 2 colormap available,
- plain blue gradient
- temperature gradient
Temperature gradient enhances the visibility of large volume areas transitioning from blue-violet-red-orange-yellow from large to extremely large limit orders respectively.
HOTKEY:
B = orderbook heatmap precision
TIPS:
Pay attention not only to the largest orders levels but also to empty zones on the chart. These zones are often great areas for finding price spikes. As well as using strong levels for reversal zones, practice trading breakout zones and combine both approaches.
