The heatmap is a visual representation of the limit orders put into the order book. On the right side of the vertical timeline is the current order book. On the left side of the vertical timeline is the position of the order book in the past. This information is recorded as a color-coded map – offering a great way to analyze heat map stocks, futures, etc.
The heatmap is not a trading “system,” nor an indicator. It doesn’t tell you when to buy or sell. It simply provides accurate information about what market participants are doing. To the extent that inaccurate information leads to bad trades, Bookmap’s heatmap can allow you to eliminate this problem. This can lead to a more profitable trading business.
However, the heatmap does not interpret market data for you. In our educational materials, we provide theories as to what order book information “means” in one context or another. But ultimately, you must decide how to trade based on the information Bookmap gives you.
A good analogy for trading with Bookmap is real-time multiplayer games. If you play online poker, for example, you can choose to pay attention to other players’ behavior. You can pay attention to whether a player bets or folds in this or that circumstance. You may still misinterpret why the player is betting or folding, but at least you have more information than you would if you only paid attention to your own cards.
The heatmap displays true and non-aggregated market depth data with a precision of up to the pixel resolution of your monitor. This allows you to see what the other players are doing. This should be better than not being able to see their actions.
