Stock Heatmap: The Ultimate Guide for Beginners (2023)
How to use the Stock Heatmap on TradingView to find new investment opportunities across global equity markets including US stocks, European stocks, and more.
Step 1 - Open the Stock Heatmap
Click on the "Products" section, located at the top center when you open the platform. Then click on "Screeners" and “Stock” under the Heatmap section. Members who use the TradingView app on PC or Mac can also click on the "+" symbol at the top of the screen and then on "Heatmap - stocks".
Step 2 - Create a Heatmap with specific stocks
Once the Heatmap is open, you have the capabilities to create a Heatmap based on a number of different global equity markets including S&P 500, Nasdaq 100, European Union stocks, and more. To load these indices, you must click on the name of the current selected index, located at the top left corner of the screen. In this example, we have the S&P 500 heatmap loaded, but you can load any index of your choice by opening the search menu and looking for the index of your choice.
Step 3 - Customize the Stock Heatmap
Traders can configure their Heatmap to create highly custom visualizations that’ll help discover new stocks, insights, and data. In this section, we’ll show you how to do that. Keep on reading!
The SIZE BY: Button changes the way companies are sized on the chart. If we click on "Market Cap" in the top left corner of the Heatmap, we can see the different ways to configure the heatmap and how the stocks are sized. By default, "Market Cap" is selected with the companies, which means a company with a larger market capitalization will appear bigger than companies with smaller market capitalizations. Let’s look into the other options available!
Number of employees: It measures the size of the squares based on the number of employees in the company. The larger the square size, the more employees it has relative to the rest of the companies. For example, in the S&P 500, Walmart has the largest size with 2.3 million employees. If we compare it to McDonalds, which has 200,000 employees, we can see that Walmart's square size is 11 times larger than McDonalds. This data is usually updated on an annual basis.
Dividend Yield, %: If you choose this option, you will have the size of the squares arranged according to the annual percentage dividend offered by the companies. The higher the dividend, the larger the size of the square. It is important to note that companies with no dividend will not appear in the heatmap when you have chosen to arrange the size by Dividend Yield, %.
Price to earnings ratio (P/E): It is a calculation that divides the share price with the net profit divided by the number of shares of the company. Normally the P/E of a company is compared with others in its own sector, i.e. its competitors, and is used to find undervalued investment opportunities or, on the contrary, to see companies that are overvalued in the market. Oftentimes a high P/E ratios indicate that the market reflects good future expectations for these companies and, conversely, low P/E ratios indicate low growth expectations. Going back to heatmaps, it will give a larger square size to those companies with higher P/E ratio over the last 12 months. Companies that are in losses will not appear in the heatmap as they have an undetermined P/E.
Price to sale ratio: The P/S compares the price of a company's shares with its revenue. It is an indicator of the value that the financial markets have placed on a company's earnings. It is calculated by dividing the share price by sales per share. A low ratio usually indicates that the company is undervalued, while a high ratio indicates that it is overvalued. This indicator is compared, like the P/E ratio, to companies in the same sector and is also measured over the most recent fiscal year. A high P/S indicates higher earnings expectations for the company and therefore could also be considered overvalued, and vice versa, companies with a lower P/S than their competitors could be considered undervalued.
Price to book ratio: The P/B value measures the stock price divided by the book value of its assets, although it does not count elements such as intellectual property, brand value or patents. A value of 1 indicates that the share price is in line with the value of the company. High values indicate an overvaluation of the company and below, oversold. Again, as in the P/E and P/S Ratio, it is recommended to compare them with companies of the same sector. Regarding the heatmaps, organizing the size of the squares by P/B gives greater size to companies with high values and it is measured by the most recent fiscal year.
Volume (1h, 4h, D, S, M): This measures the number of shares traded according to the chosen time interval. Within the heatmaps comes by default the daily volume, but you can choose another one depending on whether your strategy is intraday, swing trading or long term. It is important to note that companies with a large number of shares outstanding will get a higher trading volume on a regular basis.
Volume*Price (1h, 4h, D, S, M): Volume by price adjusts the volume to the share price, i.e. multiplying its volume by the current share price. It is a more reliable indicator than volume as some small-cap stocks or penny stocks with a large number of shares would not appear in the list among those with the highest traded volume. Also available in 1-hour, 4-hour, daily, weekly and monthly time intervals.
COLOR BY:
In this area we will be able to configure how individual stocks are colored on the Heatmap. If you’re wondering why some stocks are more red or green than others, don’t fret, as we’ll show you how it works. For example, click on the top left of the Heatmap where it says "Performance D, %" and you’ll see the following options:
Performance 1h/4h/D/S/M/3M/6M/YTD/Year (Y), %: This option is the most commonly used, where we choose the intensity of the colors based on the performance change per hour, 4 hours, daily, weekly, monthly, in 3 or 6 months, in the current year, and in the last 12 months (Y). Tip: this feature works in unison with the heat multiplier located at the top right of the Heatmap. By default, x1 comes with 3 intensity levels for both stocks in positive and negative, as well as one in gray for stocks that do not show a significant change in price. This takes as a reference values below -3%/-2%/-1% for stocks in negative or above +1%/+2%/+3% for stocks in positive and each of the levels can be turned on or off independently.
As for how to configure this parameter, you can use the following settings according to the chosen intervals. For 1h/4h intervals, multipliers of: x0.1/x0.2/x0.25/x0.5 are recommended.
For daily heat maps, the default multiplier would be x1. And finally, for weekly, monthly, 3 or 6 months and yearly intervals, it is recommended to increase the multiplier to x2/x3/x5/x10.
Pre-market/post-market change, %: When this option is selected, you can monitor the changes before the market opens and the after hours trading (this feature is not available in all countries). For example, if we select the Nasdaq 100 pre-market session change, we will see the day's movements between 4 a.m. and 9:30 a.m. (EST time zone). Or, if we prefer to analyze the Nasdaq 100 post-market, we will have to choose that option; this would cover the 4 p.m. to 8 p.m. time zone. For heatmaps in after-hours trading we recommend using very low heat multipliers (x0.1; x0.2; x0.25; x0.5).
Relative volume: This indicator measures the current trading volume compared to the trading volume in the past during a given period and it measures the level of activity of a stock. When a stock is traded more than usual, its relative volume increases. Consequently, liquidity increases, spreads are usually reduced, there are usually levels where buyers and sellers are fighting intensely and where an important trend can occur. The possible strategies are diverse. There are traders who prefer to enter the stock at very high relative volume peaks, and others who prefer to enter at low peaks, where movements tend to be less parabolic in the short term. In the stock heatmap, relative volume is identified in blue colors. Heat multipliers of x1, x2 or x3 are usually the most common for analyzing the relative volume of stocks. Let's do an example: Imagine that we want to see the most unusual movements in today's Nasdaq 100 after the market close. We select the color by Relative Volume and apply a default heat multiplier of x1. Then, in order to be able to see only those stocks that stand out the most, we uncheck the numbers 0; 0.5; 1 at the top right of the screen. After this, we will have reduced the number of stocks to a smaller group, where we will be able to see chart by chart what has happened in them and if there is an interesting opportunity for trading.
Volatility D, %: It measures the amount of uncertainty, risk and fluctuation of changes during the day, i.e., the frequency and intensity with which the price of an asset changes. A stock is usually referred to as volatile when it represents a very high volatility compared to the rest of the chosen index. Volatility is usually synonymous with risk, since the price fluctuation is greater. For example, we want to invest in a stock with dividends on the US market, but we are somewhat averse to risk. To do so, we decide to look for a stock with a high dividend yield with low volatility. We select the index source "S&P 500 Index", then size by "Dividend yield, %" and color by "Volatility D, %". Now, we deactivate the heat intensity levels higher than 2%, but higher than 0% (those that do not suffer movement, usually have low liquidity). From the list obtained, we would analyze the charts of the 10 companies that offer us the best dividend.
Gap, %: This option measures the percentage gap between the previous day's closing candle and the current day's opening candle, i.e. the difference in percentage from when the market closes to when it opens again.
GROUP BY:
Here you can enable or disable the group mode. By default all stocks are grouped by sector, but if you select ‘No group’, you will see the whole list of companies in the selected index as if it were a single sector. It is ideal for viewing opportunities at a general level, you can sort directly by dividend percentage and see the companies in the index with the best dividend from highest to lowest or, for example, the best yielding stocks by market capitalization size.
Another important note is that when you have chosen to group stocks by sector, you can zoom in on a specific sector by clicking on the sector name. Doing so, you will be able to analyze the assets of that sector in more depth.
TOGGLE MONO SIZE:
Here you can split all the stocks in the selected index completely equally in size, while still respecting the order of the chosen configuration. That is, if we have toggled the mono size by market cap, all the stocks will have the same square size with the first ones being the ones with the largest capitalization, from largest to smallest.
FILTERS:
One of the most interesting settings, where it allows you to filter certain data to eliminate "noise" and have a selection of interesting stocks according to the chosen criteria. It is important to note that in filters we can see in each of the parameters where most of the stocks are located by vertical lines of blue color. It is especially useful in indexes where all stocks of a certain country are included, for example, the index of all US companies. Making a good filter will help you find companies in a heatmap with very specific criteria. The parameters are the same as those found in the SIZE BY section, i.e. market cap, number of employees, dividend yield, price to earnings ratio, price to sales ratio, price to book ratio, and volume (1h/4h/D/W/M).
Primary listing: When you work on an index with stocks that may be, for example, from another country or not traded within the main market, they will be categorized outside the primary listing.
STYLE SETTINGS:
Here you can change the content of the inner part of the heatmap squares:
Title: The company symbol or ticker (e.g., AAPL - Apple Inc.).
Logo: The company logo.
First value: Shows you the value you have chosen in the COLOR BY section (performance 1h/4h/D/S/3M/6M/YTD/Y, pre-market and post-market change, relative volume, volatility D, and gap).
Second value: You can choose between the current price of the asset or its market cap.
These values are also available when you hover your mouse over one of the stocks and hold it over its square for a few seconds.
SHARE:
On TradingView, we can easily share our trading analysis and our heatmaps! You can download your Heatmap as images or you can copy the link to share it across social networks like Facebook,Twitter, and more.
If you made it this far, thanks for reading! We look forward to seeing how you master the Heatmap and all it has to offer. We also want to hear your feedback!
Leave us your comments below! 👇
- TradingView Team
Step 1 - Open the Stock Heatmap
Click on the "Products" section, located at the top center when you open the platform. Then click on "Screeners" and “Stock” under the Heatmap section. Members who use the TradingView app on PC or Mac can also click on the "+" symbol at the top of the screen and then on "Heatmap - stocks".
Step 2 - Create a Heatmap with specific stocks
Once the Heatmap is open, you have the capabilities to create a Heatmap based on a number of different global equity markets including S&P 500, Nasdaq 100, European Union stocks, and more. To load these indices, you must click on the name of the current selected index, located at the top left corner of the screen. In this example, we have the S&P 500 heatmap loaded, but you can load any index of your choice by opening the search menu and looking for the index of your choice.
Step 3 - Customize the Stock Heatmap
Traders can configure their Heatmap to create highly custom visualizations that’ll help discover new stocks, insights, and data. In this section, we’ll show you how to do that. Keep on reading!
The SIZE BY: Button changes the way companies are sized on the chart. If we click on "Market Cap" in the top left corner of the Heatmap, we can see the different ways to configure the heatmap and how the stocks are sized. By default, "Market Cap" is selected with the companies, which means a company with a larger market capitalization will appear bigger than companies with smaller market capitalizations. Let’s look into the other options available!
Number of employees: It measures the size of the squares based on the number of employees in the company. The larger the square size, the more employees it has relative to the rest of the companies. For example, in the S&P 500, Walmart has the largest size with 2.3 million employees. If we compare it to McDonalds, which has 200,000 employees, we can see that Walmart's square size is 11 times larger than McDonalds. This data is usually updated on an annual basis.
Dividend Yield, %: If you choose this option, you will have the size of the squares arranged according to the annual percentage dividend offered by the companies. The higher the dividend, the larger the size of the square. It is important to note that companies with no dividend will not appear in the heatmap when you have chosen to arrange the size by Dividend Yield, %.
Price to earnings ratio (P/E): It is a calculation that divides the share price with the net profit divided by the number of shares of the company. Normally the P/E of a company is compared with others in its own sector, i.e. its competitors, and is used to find undervalued investment opportunities or, on the contrary, to see companies that are overvalued in the market. Oftentimes a high P/E ratios indicate that the market reflects good future expectations for these companies and, conversely, low P/E ratios indicate low growth expectations. Going back to heatmaps, it will give a larger square size to those companies with higher P/E ratio over the last 12 months. Companies that are in losses will not appear in the heatmap as they have an undetermined P/E.
Price to sale ratio: The P/S compares the price of a company's shares with its revenue. It is an indicator of the value that the financial markets have placed on a company's earnings. It is calculated by dividing the share price by sales per share. A low ratio usually indicates that the company is undervalued, while a high ratio indicates that it is overvalued. This indicator is compared, like the P/E ratio, to companies in the same sector and is also measured over the most recent fiscal year. A high P/S indicates higher earnings expectations for the company and therefore could also be considered overvalued, and vice versa, companies with a lower P/S than their competitors could be considered undervalued.
Price to book ratio: The P/B value measures the stock price divided by the book value of its assets, although it does not count elements such as intellectual property, brand value or patents. A value of 1 indicates that the share price is in line with the value of the company. High values indicate an overvaluation of the company and below, oversold. Again, as in the P/E and P/S Ratio, it is recommended to compare them with companies of the same sector. Regarding the heatmaps, organizing the size of the squares by P/B gives greater size to companies with high values and it is measured by the most recent fiscal year.
Volume (1h, 4h, D, S, M): This measures the number of shares traded according to the chosen time interval. Within the heatmaps comes by default the daily volume, but you can choose another one depending on whether your strategy is intraday, swing trading or long term. It is important to note that companies with a large number of shares outstanding will get a higher trading volume on a regular basis.
Volume*Price (1h, 4h, D, S, M): Volume by price adjusts the volume to the share price, i.e. multiplying its volume by the current share price. It is a more reliable indicator than volume as some small-cap stocks or penny stocks with a large number of shares would not appear in the list among those with the highest traded volume. Also available in 1-hour, 4-hour, daily, weekly and monthly time intervals.
COLOR BY:
In this area we will be able to configure how individual stocks are colored on the Heatmap. If you’re wondering why some stocks are more red or green than others, don’t fret, as we’ll show you how it works. For example, click on the top left of the Heatmap where it says "Performance D, %" and you’ll see the following options:
Performance 1h/4h/D/S/M/3M/6M/YTD/Year (Y), %: This option is the most commonly used, where we choose the intensity of the colors based on the performance change per hour, 4 hours, daily, weekly, monthly, in 3 or 6 months, in the current year, and in the last 12 months (Y). Tip: this feature works in unison with the heat multiplier located at the top right of the Heatmap. By default, x1 comes with 3 intensity levels for both stocks in positive and negative, as well as one in gray for stocks that do not show a significant change in price. This takes as a reference values below -3%/-2%/-1% for stocks in negative or above +1%/+2%/+3% for stocks in positive and each of the levels can be turned on or off independently.
As for how to configure this parameter, you can use the following settings according to the chosen intervals. For 1h/4h intervals, multipliers of: x0.1/x0.2/x0.25/x0.5 are recommended.
For daily heat maps, the default multiplier would be x1. And finally, for weekly, monthly, 3 or 6 months and yearly intervals, it is recommended to increase the multiplier to x2/x3/x5/x10.
Pre-market/post-market change, %: When this option is selected, you can monitor the changes before the market opens and the after hours trading (this feature is not available in all countries). For example, if we select the Nasdaq 100 pre-market session change, we will see the day's movements between 4 a.m. and 9:30 a.m. (EST time zone). Or, if we prefer to analyze the Nasdaq 100 post-market, we will have to choose that option; this would cover the 4 p.m. to 8 p.m. time zone. For heatmaps in after-hours trading we recommend using very low heat multipliers (x0.1; x0.2; x0.25; x0.5).
Relative volume: This indicator measures the current trading volume compared to the trading volume in the past during a given period and it measures the level of activity of a stock. When a stock is traded more than usual, its relative volume increases. Consequently, liquidity increases, spreads are usually reduced, there are usually levels where buyers and sellers are fighting intensely and where an important trend can occur. The possible strategies are diverse. There are traders who prefer to enter the stock at very high relative volume peaks, and others who prefer to enter at low peaks, where movements tend to be less parabolic in the short term. In the stock heatmap, relative volume is identified in blue colors. Heat multipliers of x1, x2 or x3 are usually the most common for analyzing the relative volume of stocks. Let's do an example: Imagine that we want to see the most unusual movements in today's Nasdaq 100 after the market close. We select the color by Relative Volume and apply a default heat multiplier of x1. Then, in order to be able to see only those stocks that stand out the most, we uncheck the numbers 0; 0.5; 1 at the top right of the screen. After this, we will have reduced the number of stocks to a smaller group, where we will be able to see chart by chart what has happened in them and if there is an interesting opportunity for trading.
Volatility D, %: It measures the amount of uncertainty, risk and fluctuation of changes during the day, i.e., the frequency and intensity with which the price of an asset changes. A stock is usually referred to as volatile when it represents a very high volatility compared to the rest of the chosen index. Volatility is usually synonymous with risk, since the price fluctuation is greater. For example, we want to invest in a stock with dividends on the US market, but we are somewhat averse to risk. To do so, we decide to look for a stock with a high dividend yield with low volatility. We select the index source "S&P 500 Index", then size by "Dividend yield, %" and color by "Volatility D, %". Now, we deactivate the heat intensity levels higher than 2%, but higher than 0% (those that do not suffer movement, usually have low liquidity). From the list obtained, we would analyze the charts of the 10 companies that offer us the best dividend.
Gap, %: This option measures the percentage gap between the previous day's closing candle and the current day's opening candle, i.e. the difference in percentage from when the market closes to when it opens again.
GROUP BY:
Here you can enable or disable the group mode. By default all stocks are grouped by sector, but if you select ‘No group’, you will see the whole list of companies in the selected index as if it were a single sector. It is ideal for viewing opportunities at a general level, you can sort directly by dividend percentage and see the companies in the index with the best dividend from highest to lowest or, for example, the best yielding stocks by market capitalization size.
Another important note is that when you have chosen to group stocks by sector, you can zoom in on a specific sector by clicking on the sector name. Doing so, you will be able to analyze the assets of that sector in more depth.
TOGGLE MONO SIZE:
Here you can split all the stocks in the selected index completely equally in size, while still respecting the order of the chosen configuration. That is, if we have toggled the mono size by market cap, all the stocks will have the same square size with the first ones being the ones with the largest capitalization, from largest to smallest.
FILTERS:
One of the most interesting settings, where it allows you to filter certain data to eliminate "noise" and have a selection of interesting stocks according to the chosen criteria. It is important to note that in filters we can see in each of the parameters where most of the stocks are located by vertical lines of blue color. It is especially useful in indexes where all stocks of a certain country are included, for example, the index of all US companies. Making a good filter will help you find companies in a heatmap with very specific criteria. The parameters are the same as those found in the SIZE BY section, i.e. market cap, number of employees, dividend yield, price to earnings ratio, price to sales ratio, price to book ratio, and volume (1h/4h/D/W/M).
Primary listing: When you work on an index with stocks that may be, for example, from another country or not traded within the main market, they will be categorized outside the primary listing.
STYLE SETTINGS:
Here you can change the content of the inner part of the heatmap squares:
Title: The company symbol or ticker (e.g., AAPL - Apple Inc.).
Logo: The company logo.
First value: Shows you the value you have chosen in the COLOR BY section (performance 1h/4h/D/S/3M/6M/YTD/Y, pre-market and post-market change, relative volume, volatility D, and gap).
Second value: You can choose between the current price of the asset or its market cap.
These values are also available when you hover your mouse over one of the stocks and hold it over its square for a few seconds.
SHARE:
On TradingView, we can easily share our trading analysis and our heatmaps! You can download your Heatmap as images or you can copy the link to share it across social networks like Facebook,Twitter, and more.
If you made it this far, thanks for reading! We look forward to seeing how you master the Heatmap and all it has to offer. We also want to hear your feedback!
Leave us your comments below! 👇
- TradingView Team
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