Ever wondered where the big players in the market are placing their orders? Price charts alone don’t tell the full story, but a heatmap does. It’s a tool that visually shows where buy and sell orders are stacked, helping traders spot key liquidity zones in real time.

Unlike traditional price charts, which only show past price movements, a heatmap gives insight into live order flow. It shows how limit orders appear, disappear, or are executed. This allows traders to see where large market participants are placing orders and how those orders affect price action.

In this guide, we’ll break down what a heatmap is, how it works, and how you can use it to sharpen your trading decisions.

What Is a Heatmap?

A heatmap is a visual representation of the current order book, displaying the placement and size of limit buy and sell orders at specific price levels. Instead of looking at raw numbers in a Level 2 order book, a heatmap color-codes the data, making it easier to identify key liquidity zones at a glance.

It helps traders see:

• Where large buy and sell orders are sitting.
• How liquidity providers are positioning themselves.
• Whether orders are being added, removed, or absorbed.

A heatmap doesn’t predict price direction — it simply reveals the presence of liquidity and how it reacts as price interacts with those levels.

That’s how a heatmap looks in a real trading environment. It provides a live view of market liquidity, order flow, and executed trades, all in one place.

You might be wondering what these bubbles represent and how to interpret the different colors and sizes.

We’ll break down each part so you can easily understand how to read a heatmap, what it tells you about the market, and how to use it to make better trading decisions.

Breaking Down the Heatmap: Understanding Each Component

When you look at a heatmap, you’ll notice Volume dots, colored zones, and side panel data. Each of these elements gives traders key insights into market activity. Let’s break them down one by one so you know exactly what you’re looking at and how to use this information in your trading.

Volume dots: What Do They Represent?

Volume dots (also known as trade dots) on a heatmap visually represent executed market orders. They help traders see where buying and selling activity is happening in real time, providing insight into market aggression and liquidity absorption.

Green Volume dots → Indicate aggressive buying, meaning traders are using market orders to lift the ask price.

Red Volume dots→ Indicate aggressive selling, meaning traders are using market orders to hit the bid.

Larger Volume dots → Show high volume trades — bigger traders are stepping in.

Smaller Volume dots → Represent lower trade volume, meaning fewer contracts or shares were exchanged.

Each dot is a snapshot of executed trades at a specific price and time. When you hover over a dot, you can see detailed trade data, including:

• The total number of contracts traded.
• Were they executed at the bid or ask?
• The exact price level where the trades took place.

A large red volume dot appears, showing aggressive selling. The annotation highlights that someone just sold eight lots at the bid price. This indicates strong selling pressure at that moment.

A large green volume dot appears, showing aggressive buying. The annotation notes that someone bought 33 lots at the ask. This signals strong buying interest.

These volume dots help traders spot areas where large market participants are taking action, confirming whether liquidity is getting absorbed or if aggressive buyers/sellers are pushing the price in a certain direction.

Heatmap Colors

On a heatmap, different colors represent liquidity levels, making it easier to spot where large buy and sell orders are sitting in the market. The darker and more intense the color, the stronger the liquidity at that price level.

However, just because you see liquidity doesn’t mean the price will react exactly as expected. Liquidity can be pulled, absorbed, or aggressively hit, so it’s important to watch how price interacts with these levels rather than blindly buying or selling just because a level appears on the heatmap.

Heatmap Color Zones and What They Indicate

Red & Dark Orange → High liquidity zones, where large resting orders are stacked. These are key areas of potential resistance (above price) or support (below price).

Yellow & Light Orange → Moderate liquidity zones, showing a decent concentration of orders but less aggressive compared to deep red areas.

Blue & Light Blue → Low liquidity zones, where fewer resting orders exist, allowing price to move more freely with less friction.

The intensity of these colors depends on your software settings, but the information remains the same: Deeper colors signal stronger liquidity, while lighter colors indicate areas with less market interest.

When using a heatmap, two important tools help traders understand the market’s liquidity and order flow: COB (Current Order Book) and SVP (Session Volume Profile). These provide insights into where orders are sitting and where the most volume has been traded throughout the session.

Current Order Book (COB)

The COB (Current Order Book) shows real-time limit buy and sell orders waiting to be executed. It helps traders see where buyers and sellers are positioned at different price levels before a trade happens.

What COB Tells You:

• Above the current price → Resting sell limit orders.‍
• Below the current price → Resting buy limit orders.

Since limit orders can be canceled or adjusted, COB is constantly changing, and traders need to monitor how these levels behave as price approaches them.

Session Volume Profile (SVP)

The SVP (Session Volume Profile) tracks where the most trading volume has occurred throughout the session, showing which price levels had the highest activity.

What SVP Tells You:

• The price level where the most volume has traded during the session is often a key area where price consolidates or revisits.
• Areas where a lot of volume was traded, which can act as strong support or resistance.
• Areas with little volume, where price tends to move quickly since there isn’t much interest.

SVP helps traders identify key areas of interest based on actual trading activity rather than just where orders are sitting. Combining it with COB gives a clearer picture of how liquidity and executed volume interact, helping traders make better decisions.

Let’s take a look at this image and break down what it’s telling us.

1 - Liquidity Pulled (Orders Removed)

There were resting sell limit orders, but as the price approached, those orders were pulled away and never executed. This suggests spoofing or a lack of real selling interest, making it easier for the price to push through.

2 - Resting Sell Liquidity (Sellers Sitting)

This area shows active sell limit orders waiting to be filled. If the price moves up, it may act as resistance as sellers are positioned to sell. However, just because liquidity is sitting there now doesn’t mean it will hold — these orders can be absorbed, pulled, or aggressively hit by buyers, leading to different price reactions.

3 - Current Price (Live Trading Activity)

This marks the current market price, where buy and sell orders are actively being executed. The bubbles represent trade size and aggressiveness — red for selling and green for buying.

Large bubbles indicate high-volume trades, showing where buyers or sellers are stepping in aggressively.

4 - Resting Buy Liquidity (Buyers Sitting)

This is a buy liquidity zone where buyers have placed limit orders. If the price moves down, it may act as support as buyers absorb the selling pressure. However, similar to sell liquidity, these orders could be pulled, absorbed, or aggressively hit by sellers, leading to a breakout instead of a bounce.

Spotting Fake vs. Real Liquidity on a Heatmap

A heatmap shows us market liquidity, revealing areas where large limit orders are sitting. However, not all orders are meant to be executed. Some liquidity is fake, designed to manipulate traders by creating the illusion of supply or demand.

So, how can we identify fake vs. real liquidity?

Fake Liquidity

Fake liquidity consists of orders that appear on the order book but are removed before the price reaches them. These orders give the impression of strong support or resistance but are never intended to be filled. They are commonly used by large traders and algorithms to manipulate market sentiment.

On the heatmap, fake liquidity often appears as large yellow or red zones that vanish when the price approaches. Price tends to move through these areas without hesitation because the expected buy or sell orders never get executed. If you observe liquidity constantly shifting or disappearing as the price gets close, it is likely fake.

Let’s look at an example.

Liquidity is sitting at 5707, appearing as a strong level, and you can see on the COB that limit orders are stacked at this price. Now, let’s see what happens when the price reaches this zone.

When the price reaches 5707, the liquidity gets taken out and is now sitting at 5713.

You can still see on the heatmap where the previous liquidity was sitting, but it was never executed.

This is a clear example of fake liquidity, where orders are placed to create the illusion of supply or demand but are removed before execution. That’s how you spot spoofing and liquidity manipulation in the order book.

Real Liquidity

Real liquidity represents genuine buying or selling interest where traders are willing to execute large orders. These orders remain in place and influence price action when they are filled.

On the heatmap, real liquidity is visually identifiable by strong bands of yellow or red that stay in place as the price moves toward them. When the price reaches these levels, it reacts by either stalling, bouncing, or reversing, showing that real orders are being executed. Unlike fake liquidity, real liquidity does not disappear or shift away.

Let’s look at an example.

You can see we have limit orders sitting at this level, appearing as a strong liquidity zone. Let’s see what happens when the price reaches this area.

Now, as the price reaches this zone, the orders remain in place, confirming that they are real and not being removed. Instead of price running through the level, we see a reaction, indicating absorption. The red bubbles show executed sell orders, proving that liquidity at this level was real and actively traded.

This is how you identify real liquidity, where large orders are actually executed rather than disappearing before the price reaches.

By visually analyzing liquidity on the heatmap, traders can avoid being misled by false order book activity and focus on real supply and demand zones. Fake liquidity often disappears before execution, while real liquidity remains at key levels and leads to visible market reactions.

Heatmap Trading Setups

Using a heatmap, traders can identify key setups based on how price interacts with liquidity zones and executed trades. Below are some of the most common setups to look for:

Absorption

Absorption happens when a large number of aggressive buy or sell orders (market orders) hit a level with strong liquidity, but the price fails to break through. This suggests that limit orders at that level are absorbing the market orders.

This can lead to two outcomes:

• Price reverses as aggressive traders get trapped.
• Price eventually breaks through once all the liquidity is absorbed.

Now, before you assume every pause in price movement is absorption, you need to confirm it with key signals. Absorption isn’t just price slowing down — it’s a battle between aggressive traders and resting liquidity.

If you’re not watching volume, liquidity zones, and delta, you might mistake normal market movement for absorption.

So, where should you look for absorption?

Where to Look for Absorption

Key Support & Resistance Levels - Absorption often happens at major support and resistance levels where large traders place orders.

High Liquidity Zones - Since Bookmap shows liquidity in real time, absorption is often found in areas with large resting orders.

Delta Divergence – If the delta shows heavy buying or selling pressure, but the price remains unchanged, it signals absorption — aggressive traders are being overpowered by passive limit orders.

Absorption on the Buy Side

• Occurs when large buy limit orders absorb aggressive sell market orders.
• Seen on the heatmap as strong liquidity zones below the price that does not break despite heavy selling.
• Large red volume dots appear as sellers aggressively hit the bid, but the price fails to move lower.
• Delta shows strong selling pressure, but the price remains stable or even starts moving up.

This means aggressive sellers are being absorbed by resting buy orders, often leading to a reversal or bounce from the support level.

Absorption on the Sell Side

• Happens when large sell limit orders absorb aggressive buy market orders.
• Seen on the heatmap as strong liquidity zones above the price that hold firm despite heavy buying.
• Large green volume dots appear as buyers aggressively lift the ask, but the price fails to move higher.
• Delta shows strong buying pressure, but the price doesn’t break resistance and starts dropping instead.

This indicates that buyers are being absorbed by resting sell orders, often leading to a price rejection and reversal.

Exhaustion

Exhaustion occurs when aggressive buyers or sellers push the price in one direction but fail to sustain momentum. It signals that the market is running out of participants willing to continue buying or selling at the same pace, leading to a stall or potential reversal.

On a heatmap, exhaustion is visible when the price reaches a level and struggles to break through despite strong buying or selling pressure. This happens because there aren’t enough new traders stepping in to continue the move.

Exhaustion can happen on both the buy side and the sell side, and understanding it helps traders avoid chasing moves that are running out of steam.

Exhaustion on the Buy Side (Buyer Exhaustion)

• It happens when aggressive buyers push the price higher, but momentum fades as buying interest dries up.
• This is seen on the heatmap when the price moves into a low liquidity area (lighter colors) yet fails to keep rising.
• Large green volume dots appear as buyers aggressively lift the ask, but the price barely moves or even starts dropping.
• Delta shows strong buying pressure, yet the price struggles to break higher or reverse instead.

This suggests that buyers have exhausted their strength, and there aren’t enough new buyers stepping in to push the price further. When this happens, sellers often take control, leading to a pullback or reversal.

Exhaustion on the Sell Side (Seller Exhaustion)

• It happens when aggressive sellers drive the price lower, but selling momentum fades as sell orders dry up.
• This is seen on the heatmap when the price moves into a low liquidity area (lighter colors) yet fails to continue dropping.
• Large red volume dots appear as sellers aggressively hit the bid, but the price stalls or starts moving up.
• Delta shows strong selling pressure, yet the price stabilizes or reverses instead of breaking lower.

This signals that sellers are running out of steam, and there aren’t enough new sellers willing to keep pushing the price down. When this happens, buyers often step in, leading to a bounce or reversal.