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Heat maps provide an effective, visual summary of information because they synthesize data and then they present it in pictorial form. A heat map’s main advantage as a presentation tool over a spreadsheet is that it allows for a large volume of data to be communicated almost instantly.

Once you hover to any section of the heat map, you will be able to view a quick chart as well as the percentage move an asset has made throughout the day. You can get a lot of information from heat maps extremely quickly.

The interesting part about heat maps is the fact that they originated as 2D displays of the values within a data matrix, where the larger values were represented by a dark gray or black square and smaller values had a lighter square.

A heat map is essentially a data visualization method through which you are shown data in color. It is a graphical representation of data in two dimensions through the usage of colors to demonstrate different factors. Heat maps can be a helpful visual way of perceiving information. On the other end of the spectrum, however, this information is selective, and it clouds the big picture. A heat map is used only when preliminary information is required. You can consider a heat map to be a method of visualization that showcases a specific data point or dataset, and has specific use cases. Heat maps are used for data analysis and can involve a high level of optimization in order to deliver as much data to the viewer as possible.

Think of a heat map along the lines of a data-driven paint based on numbers on a canvas that is overlaid on an image. An image is divided into a grid and in each square, the heat map allows the relative intensity of the values to be captured by your eye tracker by assigning each value a color presentation.

How Are Heat Maps Used?

Heat maps are ways through which you can determine where liquidity is in the market and how the liquidity providers are behaving. It is a way to determine where the actual orders in the market are made. The heat map is essentially a visual representation of the limit orders that are put into the order book.

There are different kinds of heat maps, and many have different color schemes which can be used to illustrate the heat map. This gives perceptual advantages and disadvantages.

For example, rainbow color maps are often used due to the fact that people can perceive more shades of color than they can of gray, which increases the amount of detail that is perceivable by a specific image.

Keep in mind that heat maps are used in various forms of analytics, like showing prices of an asset like on CoinMarketCap; however, they are also used with the intention of showcasing user behavior on specific web pages or website templates. In fact, heat maps can even be used to showcase where users have clicked on a page, or how far they have scrolled, or are used to display the results of different tests.

Within business architectures, professionals use heat maps to identify the level of performance the different divisions in the company have, to set investment priorities and to highlight areas of concern. The benefits here include enhanced communication, high engagement and the ability to derive valuable insights from vast data sets.

Heatmaps, at times, can even be misleading due to the fact that they involve large quantities of data that might not include all of the required information to make an accurate assumption about a specific trend.

Heat maps show certain situations that occurred but will not provide you with insight into why the situation occurred or what any of the factors involved were when the situation occurred, or what the forecast for the future might be like. They are often made before all of the data on a specific topic is released in an attempt to provide some preliminary analytics for viewers.