Many day traders grapple with the constant challenge of identifying support and resistance levels, spotting fake outs, or gauging the strength of price moves. Standard price charts show past action, even if that past was just a minute ago. But there's an alternative that offers more information: Bookmap, a real-time market visualization tool available on the thinkorswim® platform that gives traders a dynamic view of liquidity, order flow, and price action.
Bookmap pulls in data from current buy and sell activity, offering a clearer and more current picture of market activity than standard price charts. It maps the real-time data from the current market-maker order books.
These insights are drawn from Nasdaq Level II price data and can be invaluable to a trader's research process, especially in volatile markets. Because it's integrated into thinkorswim, traders don't have to leave the trading platform to use Bookmap.
Some day traders find this information crucial to their strategies. Because Bookmap charts look different from traditional candlesticks and bars; however, it does take some time to learn how to read them to pinpoint information that supports a particular trading style.
Using Level II quotes
Bookmap uses Level II price data, which is the order book for stocks, options, and futures and includes the best bid and ask prices from market makers and other market participants. This gives traders keen insight on how much liquidity is behind given price levels.
Level II price data is available on thinkorswim (app and desktop platforms). On the desktop version, it is on the left side of the screen. On the gadget menu (see below for how to access), select Switch gadget and then select Level II. The screenshot below shows Level II data for Tesla (TSLA).
Source: thinkorswim platform
For illustrative purposes only. Past performance does not guarantee future results.
In this example, Tesla has an average bid price of $ 344.11 and an ask price of $344.23. One market maker, CHXE (NYSE Chicago, halfway down the table), has 10 orders with a bid price of $343.60 and an ask of $344.80.
A price chart of Telsa captured at the same time shows the stock is approaching potential support just below $344. The large order—being placed with CHXE below the average bid—suggests these traders think the price could be poised to fall through this level.
Source: thinkorswim platform
For illustrative purposes only. Past performance does not guarantee future results.
Bookmap shows more market detail
Bookmap combines the underlying's price data with Level II order book information to display volume pressure in terms of both number of orders and number of shares being ordered. This helps clarify technical support and resistance levels, and many traders find it easier to look at a combined chart than to review the Level II data and candlesticks separately.
Instead of candlesticks, the Bookmap chart shows dots, with the size of each dot illustrating the volume of that trade. High and low prices appear as the top and bottom of each dot, and the closing price is indicated by the point where the next dot connects. Upticks are green, downticks are red, and right-clicking on each dot pulls up relevant volume data.
Additionally, order data appears as a heat map on the chart, showing the price levels that have volume behind them on a spectrum from black (little to no volume) to dark red (considerable volume). Areas of high liquidity might indicate potential support or resistance.
Source: thinkorswim platform
For illustrative purposes only. Past performance does not guarantee future results.
How to access Bookmap
Bookmap appears under the Charts tab on thinkorswim, but it is not available in paperMoney®. With the Bookmap trial version, traders have access to Bookmap charts for two different equity symbols each month. The full thinkorswim version costs $39.99 per month and includes data for all stock, ETF, and futures symbols. Contact Schwab trading services at 888-245-6864 if you do not see the button to access the Bookmap trial on the Charts tab.
Bottom line
Looking at Level II order book data in parallel with price charts can give traders insight on the forces behind different support and resistance levels. The optional Bookmap tool on thinkorswim converts this data to visual information, which some traders find easier to understand. Learn more at Bookmap.com.
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