What is a Heatmap?

A heatmap is a data visualization technique that displays numerical data using color-coding to represent different values. In cryptocurrency trading, heatmaps are used to visualize various market metrics, including volume, price action, and liquidation levels.

Applications in Trading

Market Overview

• Shows relative performance across multiple assets
• Highlights market sector trends
• Identifies correlated price movements

Order Book Visualization

• Displays concentration of orders at different price levels
• Shows potential support and resistance zones
• Helps identify large orders and market walls

Liquidation Analysis

• Visualizes clusters of liquidation levels
• Helps predict potential cascade effects
• Shows market risk concentration areas

Reading Heatmaps

Color Interpretation

• Warmer colors (red) typically indicate higher values
• Cooler colors (blue/green) typically indicate lower values
• Color intensity shows relative importance

Common Patterns

• Clusters indicate areas of interest
• Gradient changes suggest transition zones
• Blank areas show gaps in data or activity

Related Terms

• Order Book
• Liquidation
• Market Depth
• Technical Analysis