Definition
A heatmap is a graphical representation that uses color intensity to show how values change across a set of data points, such as prices, volumes, or liquidity levels. In trading, it typically displays where activity is more concentrated, with stronger colors indicating higher values and lighter colors indicating lower values. This makes it easier to see patterns or clusters in market data at a glance.
In crypto markets, a heatmap can be applied to different types of trading information, including price levels, trade volume, or liquidity. It does not change the underlying data, but presents it in a way that highlights areas of relative strength or weakness. The concept is purely visual and is used to summarize complex numerical information into an easy-to-scan color layout.
Context and Usage
Within trading interfaces, a heatmap is often layered on top of an Order Book or similar market display to show where orders or liquidity are more heavily concentrated. Darker or brighter color zones can indicate higher Liquidity Depth at specific price levels, while paler zones suggest thinner liquidity. This provides a quick visual cue about how values are distributed without needing to read every number.
Heatmaps can also be used over time, for example to show how trading activity or liquidity changes during different periods of the day or across multiple days. In all cases, the core idea remains the same: the heatmap is a concept for mapping numerical values to colors so that patterns, clusters, and concentrations in trading data become more immediately visible.