How to Trade via Bookmap: a Detailed Step-By-Step Guide
Hello there, trader!
This is the guide that explains the basics of Bookmap – a trading platform which provides you with the most transparent way to watch the market. The article consists of four parts:
First off, what is Bookmap? It’s a trading software that visualizes liquidity (the order book) in an easy to understand manner. You can see data, which was previously unseen: the evolution of the order book, every order on the market, in addition to algo activity. It opens a lot of new ways to see patterns and make profits in trading, which we will cover in this and the following articles.
In addition to its fundamental features, Bookmap has a lot of other capabilities, which really make a trader’s life easier.
- Debrief your trading sessions with replay mode. It allows you to constantly improve your skills, learning from your failures and successes
- Trade Futures, Equities, and Crypto
- Use our proprietary indicators, like Iceberg & Large Lot tracker, Imbalance in order Book, etc
- Learn from our educational materials on order flow trading
- Connect to Bookmap educator partners and study how they use Bookmap
Note*: You can skip this section if you have already installed Bookmap.
Note**: the next two sections are also available in video format:
If you have watched the video, you can go straight to educational links after watching. If not, please continue reading.
Before you start, here are some important notes:
- After signing up, you will get to a page with your login and password. Also, you will receive an email with instructions
- Bookmap is not a data provider or broker, which means you will have to connect to one first. You can choose from the list of connectivity partners on our site
- If you just want to check out Bookmap functions, you can use the Free / Digital plan
- If you’re interested in trading Crypto, make sure you select Digital / Digital+
- If you’re interested in Futures or US stocks, subscribe to Global or Global+ plan. Go to the packages page
- If you wish to get data for Futures, Bookmap supports many providers, however, we recommend Rithmic / dxFeed [to support Futures soon] as only they support full, in-depth data
- If you desire a US Equities Market Depth data feed, visit this page
Here are the four steps to get you up and running:
- Install Bookmap. Here is the link to the latest beta version. If you have problems with installing, this video will help you. If you want to get an in-depth tour on the Bookmaps interface, download the User Guide.
- Copy your license key from the portal or intro email. Launch Bookmap, insert the license key.
- Choose the mode in which you will run Bookmap. There are three:
- After launching Bookmap, click on “Connections => Configure” in the upper menu bar. Add all the connectivities you need, enter your data provider credentials, click “OK.” Click “Connections” again and choose data providers you want to connect. After that, click on “Add Button” and pick a symbol you want to subscribe. That’s all, you are ready to work with Bookmap. If you need a more detailed explanation on how to connect to data feeds, watch this video.
Now let’s dive into Bookmap’s key features.
How does Bookmap differ from other trading platforms? It’s simple. We have a blackjack and… Just kidding. Mainly, because of its three key features:
- Heatmap — See Market Depth or passive orders at all price levels. This allows you to see the distribution of liquidity in the market, spot algo activity and therefore find better entries & exits.
- 3D Volume Bubbles — clearly see the volume traded and aggressor side on the chart.
- Historical best bid/ask.
You can see them in the picture below. Yes, it looks scary at first glance, but when you get into it — it becomes simple and insightful.
Let’s walk through step by step, and make it more familiar.
If we turn these elements off, we will see only a candlestick chart. The problem? It is aggregated data for a certain period. We can’t see what’s going on inside a candle. It’s a black box inside which could be anything. Maybe even a Lambo 😀
However, if we turn on historical best bid & offer, you could notice a difference. You see what really occurred with the price between two candles. This info is crucial for you as a trader because it helps you make better-informed decisions.
Still, a lot of data is missing. Why? Because we don’t have the volume in a candlestick chart. If we turn on the volume bubbles, we can see where that volume is transacting. Also, we can feel the buying and selling pressure on this market.
We see how bulls show interest and change the direction of the market. These are important areas to understand, and the candlestick chart is completely lacking in it. It’s better to leave candles where they should be – in the XIX century.
Look at the video below, to see how Bookmap displays the data. We can zoom in on this little cluster, so we can look at micro-second levels. We can see the market events that happened in millions and billions of seconds.
Now you know how historical best & offer and Volume Bubbles work, so we can move on to the third key Bookmap element – Heatmap. It visualizes DOM, adding a third dimension to trading charts.
A Depth of Market (DOM) is the auction where traders put orders on different price levels. In Bookmap, you can see it on the right menu – COB (Current Order Book). Numbers on the COB column are contracts. In the «green» zone there’s the auction on the bid, and in the «red» zone — auction on the offer.
Actually, the DOM is great. You can see and understand where larger levels of liquidity or lack of liquidity is present. The problem with a DOM is that these numbers are constantly changing. You have to memorize it and ask yourself a lot of questions. How well was their behavior? Did they add liquidity? Did they pull liquidity? How much? What about the areas around it? Did they add higher liquidity? Or did they step back and provide liquidity at lower levels?
You will have to answer all of these questions. It’s pretty tedious to answer all that in the DOM, and then remember it over a long period of time. It’s probably better to assign this job to the machine and then skim the margins.
Bookmap is made right for that. We turned DOM data into the Heatmap. If you look at the Heatmap, found to the left of COB, you will note painted areas of high liquidity. When the numbers change, the Heatmap changes, and you can understand the behavior of traders.
Take a look at the striations in 6966 level. You can see the adding and pooling of liquidity. Also, you can understand the level, looking at the color scale of Heatmap. When it’s darkly colored, there’s very little liquidity. When it’s blue or white, there’s more of it. Orange is a level of high liquidity.
If you zoom out, you can see longer-term liquidity. So you don’t have to memorize it. Simply note it, and see if they stay in the book later on. You then see everything right in front of you.
We can also start determining the intent of traders in that auction. Did they stay in the book? Did they pool? Did they actually trade? This offers tremendous insight into understanding the intent of larger players providing liquidity. Observing Market Makers is an underrated free lunch, and now you can have it too.
A lot of traders say that they don’t look at liquidity, because there’s a lot of fake liquidity. Actually, there are. However, in the picture below you can see a good example of it not being fake. This, for example, is real liquidity. There are 743 contracts here, and they stayed in the book and traded. This is a fact.
Understanding the Heatmap is not really so hard. Watch this 8-minute video to get information on how Heatmap helps to differentiate between real and fake liquidity:
The Heatmap opens up a whole new world of opportunities in trading. You can watch the dynamics of market liquidity, spot patterns of exhaustion/absorption, track icebergs and algo, detect order book flipping and many more. You could learn how to do it with the help of the educational materials we listed in the last section.
Conclusion: if Bookmap was a bit smarter, it could have found life on Mars. However, we decided to leave it to a chap Elon and concentrated on creating the most advanced and convenient trading software. Have we succeeded or not? Download the trading platform to check it.
Now let’s see what we’ve got next.
Install Bookmap if you haven’t done so already. If you want to try it out first, there’s a free version with connectivities to GDAX and dxFeed delayed data feed. However, we recommend using Bookmap Global+ to fully experience the main advantages of the trading software. Now you can start trading via Bookmap. We encourage educating yourself in parallel. We divided educational materials into stages to ease the onboarding process.
1) Watch the first part of Bookmap educational course. We made it available for free. In this video you will learn the basics of reading and using market microstructure in trading. Watch here:
2) Study an article written by our CTO, which meticulously explains how to use the Heatmap in trading. Must read: http://bit.ly/2HPT8mT
3) The interview with our CEO, in which he talks about Bookmap’s story and explains its key features: http://bit.ly/2rtRkX9
For those who have already learned the basics of Bookmap:
4) How Bookmap helps traders answer five “WHY?” questions they often ask themselves. Read the article: http://bit.ly/2Fjog8U
5) Why visualization is important in trading and how the Heatmap helps with it: http://bit.ly/2IoI7cx
6) A crash course in risk-management trading. Read: http://bit.ly/2wJJfCR
7) A list of recommended books on trading: http://bit.ly/2vslzSJ
For advanced Bookmap Users:
8) Check out the recording of our live order flow analysis, it will help you spot patterns in Market Depth to find new ways to make profits in trading.
9) We conducted a joint webinar with one of the most renowned futures traders in the world – FT71. Watch it: https://youtu.be/Yvz2v6d_-Rc
There were a series of webinars with experienced traders. To watch them all, click here.
Whom to follow:
2) @ttwatrader. One of the most active Bookmap traders, who consistently shares his experience.
3) @FuturesTrader71. One of the most known futures traders in the world. Often uses Bookmap and shares his trading sessions live.
4) @Serg_bond_me. CTO of Bookmap. He shares his thoughts on trading, market phenomena and, from time to time, pictures of his marvelous cat. Enjoy!
Join rooms & groups of traders that use Bookmap:
- Algo quant group – a trading room of Luis Recabarren, the hero of one of our interviews.
- Off The Chart Trading – a group of ~3000 traders, moderated by Bret Bossenbery.
The Trading Depth project – interviews with traders to read:
#1 Interview with Walter Lesicar, the Trade-To-Win Futures Trader
#2 Interview with Luis Recabarren, a Private Equity Manager and a Trader
#3 Interview with Bret Bossenberry, Futures, Options, and Stock Trader
#4 Interview with Jason Ramus, Futures, Stocks, and Options Trader & Analyst
#5 BitScalp Takes Us on a Journey of Trading Bitcoin, Since the Darknet
#6 Jason from the OTG Giving a Number 1 Advice for Traders
#7 Interview with Del the Trader about Day Trading Stocks and Active Traders Community
#8 Riding the Order Flow in Indian Markets with Dean Market Profile
#9 Applying Mixed Strategy to Digital Currencies by Koning Karel
#10 FuturesTrader71 – A Tale of A Calm Mastermind (FT71)
#11 Watching Stocks Fly Like SpaceX with Ryan Mallory
#12 Carlos Martinez and Deep Diving in Futures
#13 Joseph Gasperoni, Small Cap Stocks and a Family Business
#14 Matt Davio – Heating Moneyball Before It Was Cool
#15 Madaz Money – Off the Charts!
Video to watch:
- Video playlist with all Bookmap features and components
- Selected Bookmap webinars, that explain platform details and the advantage of trading US equities with dxFeed
Note that we will be updating this section. Save it to your Bookmarks to see the new sources for education.
You’ve learned about the most fundamental features of Bookmap and got a list of links to study. But remember that practice is the best teacher, so don’t hesitate to start. We’d appreciate if you share your review on Bookmap after using it for some time.
We wish you a most profitable life, trader.