Unlock the Secrets of Order Blocks: Trade like Banks with this Straightforward Guide
Title: Understanding Order Blocks: A Profitable Trading Strategy
Introduction:
In the world of retail trading, it’s common for traders to enter buy positions based on price movements, only to see the market move against them. This often happens because financial institutions and smart money traders strategically place order blocks to manipulate the market and take advantage of retail traders. Understanding order blocks and how to identify them can give traders an edge in the market. In this article, we will explore what order blocks are, how to identify them, and the rules for valid order blocks. Additionally, we will discuss a profitable order block trading strategy.
Section 1: What are Order Blocks?
Order blocks are areas where smart money traders, such as financial institutions and big banks, enter large buy or sell orders. These blocks create liquidity, which is necessary for significant price movements in the market. When price breaks through an order block, it indicates that smart money has entered the trade, leading to a potential market shift.
Section 2: How to Identify Order Blocks
Identifying order blocks involves a three-step process:
Step 1: Find a Drastic Price Move
Look for sharp price movements that indicate an inefficiency in the market. These moves are often caused by smart money entering the trade with large orders. Mark the high and low of the candle before the move to identify the order block zone.
Step 2: Check for Inefficiency and Gap
To determine if an order block is valid, there must be an inefficiency created by a gap between the candle before the move and the candle after the move. This gap represents the liquidity created by smart money. If there is no gap, the order block is invalid.
Step 3: Look for Breakoff Structure
Valid order blocks must create breakoff structures. In an uptrend, price will not move up in a straight line but will retrace and create higher highs and higher lows. Each time price breaks the previous high, it forms a breakoff structure. Valid order blocks will have breakoff structures associated with them.
Section 3: Rules for Valid Order Blocks
To determine if an order block is valid, three rules must be met:
Rule 1: Presence of Inefficiency
There must be a gap between the candle before the move and the candle after the move, indicating an inefficiency created by smart money entering the trade.
Rule 2: Breakoff Structure
Valid order blocks must create breakoff structures. Each time price breaks the previous high, it forms a breakoff structure.
Rule 3: One-Time Use
Order blocks are a one-time use. If price touches or mitigates the order block, it becomes invalid. Look for unmitigated order blocks for valid trading opportunities.
Section 4: Profitable Order Block Trading Strategy
The profitable order block trading strategy involves identifying market shifts, inefficiencies, and valid order blocks. Once a valid order block is identified, traders can wait for price to retest the block before entering a trade. The strategy can be applied to both bullish and bearish scenarios, depending on the market shift.
Section 5: Frequently Asked Questions (FAQs)
FAQ 1: How can I backtest the order block trading strategy?
To backtest the order block trading strategy, use historical price data and apply the rules for identifying valid order blocks. Test the strategy on different time frames and market conditions to assess its effectiveness.
FAQ 2: Can the order block strategy be applied to cryptocurrency trading?
Yes, the order block strategy can be applied to cryptocurrency trading. The concept of order blocks and market manipulation applies to all financial markets, including cryptocurrencies.
FAQ 3: How long does it take to master the order block trading strategy?
Mastering the order block trading strategy requires practice and experience. It may take several months or even years to become proficient in identifying valid order blocks and executing trades effectively.
Conclusion:
Understanding order blocks and how they influence market movements can give traders an edge in the retail trading world. By identifying valid order blocks and applying a profitable trading strategy, traders can increase their chances of success. However, it is essential to backtest the strategy and adapt it to individual trading styles and market conditions. With practice and dedication, traders can harness the power of order blocks and trade with the smart money.
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When i am looking for HH HL Can i change the marker to line graph instead of candlestick to see HH , HL clearly please?
You're very good brother, God bless 🙏
do you mean the CHoCH by market shift?
My trading routine is to wake up at 6 AM feeling tired, then 6AM 30 min later, ish, I trade for half an hour (right now training account), then I always watch a video from Brad Goh, every god damn workday morning. This video was great, it taught me something I didn't know before. I just follow the "FREE Trading Course (life changing)" playlist.
I have a question about liquidity, I thought liquidity is when you have cash ready to buy things instead of assets and investments, what is liquidity in the forex market? How can a market have liquidity?
nice and informative video. please kindly clarify, a MITIGATED OB and BROKEN OB which should be left on the chart because u made reference to the fact dat an OB shouldonly be used once and removed fom d chart den redraw and d market changes, txks
Learnt allot from the way you presented – Really helps and works. Thank you.
👌👍💐
Pls sir, what is your name? Pls I want to follow you in all platform
And how much can I pay for mentor ship?
I learnt new things
Brother time ⏲️ ferem
Thank you for sharing
bro im beginner on these but evreyone can see that you're a genius , new follower ❤
VERY VERY GOOD TIPS. THANKS
The most honest forex teacher. I'm commenting after years of live trading experience.
Thankyou so much🙏 ive learned alot and i can’t wait to apply this strategy on my chart on Monday🙏✅. I wish all of the trader here and out there the best of luck
Thank you mate! Very informative. 🙂
I appreciate your intellect … people will always attack a succeeding guy
You are good. Share more for us to be good traders also.
I really love your teaching style 😅 teaching with change of voice to keep us exciting 😅❤
Thank you for your sharing,
May all being happy 😇
Isn’t order block just supply and demand ???
Love it 📢🤜🏽🤛🏽
Thanks bro. you are awesome.
You just gave me more understanding, thanks a lot
Best video….
Great
thank you so much for they way you explain things, i never understood until i found you. just so simple and organized. THANK YOU
Think you brother…..❤❤❤❤❤❤ I love you 😍
Hello bro I wanna a video related volume
you want to start free discord sir
I love your videos ❤❤🎉
Pls how can I be part of the tribe 😢
You are actually really honest and very good with your teaching style. This is the first time I will understand order blocks. Thank you for this video.
the example on rule 2 had no inefficiency though?
Yo ….man that is for the video…I've been using this strategy for some time now and it doesn't seem to be working out….. please tell me if there's something I'm doing wrong…like one of the common mistakes made while using this strategy
Bro Can you add subtitles for upcoming videos to clear understanding
His English isn’t fluent but I enjoyed it more than most
Another vid about how to master Order blocks
Best explanation of Order blocks