Heatmap - Advanced

Overview:

Whilst generic candlestick based charts may show when the price changed previously, the TradingLite Heatmap may often show crucially, where and why the price may change into the future.

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Although it is not recommended to base your trading methodology solely upon the information available via the TradingLite Heatmap, it can often provide a solid foundation with which to accompany or confirm, other forms of technical analysis.

The greater the time spent analysing Heatmap data, the often subtle and nuanced behaviours of order-flow within the Order Book may be revealed, and as a result, further your understanding of the intricate characteristics of each market.


Methodology:

As briefly explained in our Getting Started and Heatmap Basics guide, the TradingLite Heatmap is a visual representation of the limit orders within the pair’s Order Book. This is updated in real-time for the current candlestick.

At the end of the candle’s life, a colour sensitive ‘snapshot’ of the Order Book is recorded. These ‘snapshots’ are then shown for each previous candle that is within view on your chart. Collectively, these previous ‘snapshots’ create an overlaid visualisation of Heatmap, enhancing the traditional price chart.

Given that all orders within the Order Book are limit orders, the TradingLite Heatmap can also be considered as a historical record/visualisation of liquidity changes, which could be incorporated within your trading approach.

Heatmap blocks above the current price show Limit Sell orders, whilst blocks beneath the current price show Limit Buy orders.

The colour of each block within the TradingLite Heatmap is assigned based upon the total value of orders at that particular price point. See Heatmap settings for further information.


Heatmap Block Values

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When you zoom in enough on the heatmap, you'll notice that there will be values displayed in each one of the blocks. These value units are shown in Heatmap Dropdown Popup.


Heatmap Settings:

To fully appreciate the TradingLite Heatmap, and to ensure it is providing you with the greatest utility possible for your analysis, configuration of the various Heatmap settings is crucial:

Intensity Scales:

Intensity Slider

The intensity scales allow a greater degree of granularity/sensitivity in the visualisation of the Heatmap.

  • The first scale (left) allows you to quickly select the minimum unit value of the Heatmap. This will remove low value orders from the Heatmap data.
  • The second scale (right) allows you to quickly select a maximum percentage of the peak unit value.

Dropdown:

The dropdown, which accompanies the sliders, allows the ability to finely tune the minimum and peak unit values.

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This dropdown also displays the pair’s contract details. This includes the value of one unit, in addition to the HD/SD Heatmap block size.


HD/SD Heatmap Block Size:

Selection between HD and SD individual block size of the Heatmap.

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For example:

BTC/XBT-USD pairs:

  • SD = $10
  • HD = $2

The dropdown will provide the HD/SD parameters set for each pair. The primary benefit of a lower block size/incremental value (HD) being selected, is that the Heatmap will provide the location of limit orders/liquidity within the Order Book with 5 x greater accuracy than the standard SD option.

(Note: HD/SD Selection is only available on Early Access + / Gold subscription plans.)


Extend Heatmap:

The Heatmap can be Extended which can be used will help identify the current supply/demand liquidity pools, with greater clarity.

To extend the Heatmap:

  • Click Indicators
  • Select 'Heatmap'
  • Select the desired value from 'Extend Heatmap'

Theme Customisation:

By selecting a custom theme for the Heatmap (Layer Settings > Customize Theme), you have the ability to select from a variety of different colour styles, to aid in your graphical interpretation of the chart.

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Additional Notes:

Heatmap Shortcut:

Quickly show/hide the TradingLite Heatmap by pressing the ‘H’ key on your keyboard.

Heatmap Lens Shortcut:

Quickly show/hide the TradingLite Heatmap Lens by pressing the ‘L’ key on your keyboard.

Quick Tip:

Press ‘K’ to show the list of shortcuts.


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