Order Blocks - A-Z Guide Episode 1
Summary
TLDRThis video introduces the concept of order blocks in trading, explaining how institutions use large orders to influence market prices. It emphasizes the importance of understanding premium and discount arrays, identifying support and resistance levels, and recognizing patterns in price action. The presenter encourages viewers to study order blocks, focusing on their formation, mean thresholds, and the probability of their holding or failing, to develop an intuitive trading edge without seeking a 'Holy Grail' of guaranteed success.
Takeaways
- 📈 The video introduces the concept of order blocks, which are significant areas of trading activity often involving large orders from institutions.
- 🤔 Order blocks can initially be confusing, but it's normal to have questions and doubts that will likely be answered in later videos.
- 💡 The presenter emphasizes the importance of understanding both the logic behind order blocks and the context in which they occur.
- 🛑 Institutions often buy on down candles and sell on up candles due to the size of their orders requiring opposite action to the current price movement.
- 📉 For a bullish order block, the criteria include coming off support, breaking the high of the down candle, and respecting the mean threshold (50% of the candle's body).
- 📈 A bearish order block is identified by coming off resistance, breaking the low of the up candle, and respecting the mean threshold.
- 🔍 The mean threshold is crucial as it helps determine if an order block will hold; a close below this threshold could indicate a failure.
- 📊 Order blocks can consist of multiple consecutive candles and are not limited to single candles.
- 🚫 Not every order block will hold, and understanding this is part of working with probabilities in trading.
- 📚 The video encourages viewers to study order blocks on their own charts to develop an intuition and edge in trading.
- 🔑 Mastery of the basics is highlighted as essential for successful trading, and the A to Z guide is intended to help both beginners and advanced traders.
Q & A
What is the main focus of the first technical video in the A to Z guide?
-The main focus of the first technical video is on order blocks, explaining the concept of premium and discount arrays and how to identify and use order blocks in trading.
What is a premium array in the context of trading?
-A premium array refers to a situation where the price is high, indicating that it is more likely to sell off. Traders looking for lower prices would use a premium array.
What is a discount array and how should traders act in a discount situation?
-A discount array is when the price is low, suggesting that it might be a good time to buy. In a discount situation, traders are advised to buy in discount and sell in premium.
Why do institutions buy on down candles and sell on up candles?
-Institutions buy on down candles and sell on up candles because they have large orders that cannot be executed instantly like retail traders. They need to do the opposite of what the current price is doing to get into the market without causing significant price movements.
What criteria must a bullish order block meet to be considered valid?
-A bullish order block must come off of support, break the high of the down candle, and then return to that order block. Additionally, the mean threshold, which is 50% of the candle bodies, should not be disrespected (i.e., the price should not close below it).
What is meant by 'mean threshold' in the context of order blocks?
-The mean threshold refers to 50% of the bodies of a certain candle within an order block. It is important because if the order block is to hold, the price should not close below this threshold.
Can an order block consist of multiple consecutive candles?
-Yes, an order block can consist of multiple consecutive down candles or up candles. When there are multiple consecutive candles, they are considered as one big order block.
What is a 'fair value gap' mentioned in the script and why is it important?
-A 'fair value gap' is a term mentioned in the script that seems to refer to a specific type of price gap that verifies the support or resistance level. It is important because it helps in identifying the top of the wick or the body of the candle to use when determining the order block.
Why is it important for traders to study order blocks on their own charts?
-Studying order blocks on individual charts helps traders to train their brains and eyes, developing their own intuition and edge in the market. It allows them to understand which order blocks hold and which fail, enhancing their trading skills.
What is the significance of mastering the basics in trading according to the video?
-Mastering the basics is crucial because it forms the foundation of successful trading. Even advanced traders can sometimes overlook simple steps, and mastering these basics helps in applying them consistently for better trading results.
Why shouldn't traders expect every order block to hold or every mean threshold to guarantee success?
-Traders should not expect every order block to hold because trading involves probabilities, not certainties. Even when the mean threshold is respected, an order block might fail, and vice versa. Understanding this helps traders to manage expectations and risks better.
Outlines
📚 Introduction to Order Blocks
The speaker introduces the concept of order blocks, which are large orders placed by institutions that can't be executed instantly due to their size. They explain that these blocks are crucial for understanding market movements, particularly the behavior of institutional buyers and sellers. The video aims to clarify the basics of order blocks, emphasizing the importance of recognizing premium and discount arrays, which are strategies for buying low and selling high, respectively. The speaker encourages viewers to write down their questions, as they will likely be addressed in subsequent videos.
📉 Understanding Bullish and Bearish Order Blocks
This paragraph delves into the specifics of identifying order blocks, focusing on the criteria that make up a bullish order block. The speaker explains that a bullish order block should come off support, break the high of a down candle, and then see a return to that block, indicating a potential buying opportunity. The concept of 'mean threshold' is introduced, which is 50% of the candle's body, and should not be breached for the order block to hold. The importance of context and the alignment with market bias is also highlighted, with examples provided to illustrate the points.
📈 Analyzing the Dynamics of Order Blocks
The speaker continues the discussion on order blocks, this time focusing on bearish order blocks. They describe the conditions that make an up candle a bearish order block, such as coming off resistance, breaking the low, and respecting the mean threshold. The paragraph emphasizes the probabilistic nature of order blocks, noting that not every block will hold but understanding these patterns can give traders an edge. The speaker also touches on the importance of studying price action and developing one's own intuition and edge through personal analysis.
🔍 Spotting High-Probability Order Blocks
In the final paragraph, the speaker encourages viewers to study and focus on order blocks, emphasizing the need to understand why certain candles hold as order blocks and others do not. They highlight the importance of recognizing patterns, such as support and resistance levels, and the role of mean threshold in determining the strength of an order block. The speaker also warns against the pursuit of a 'Holy Grail' in trading, reminding viewers that trading involves probabilities and that even with a solid understanding of order blocks, there will still be losses. The goal is to increase the odds in one's favor through diligent study and practice.
Mindmap
Keywords
💡Order Block
💡Premium and Discount
💡Support and Resistance
💡Bullish and Bearish
💡Mean Threshold
💡Fair Value Gap
💡Candlestick
💡Breakout Traders
💡Rejection
💡Mastering the Basics
Highlights
Introduction to the concept of order blocks in trading, which are significant for institutional trading strategies.
Explanation of premium and discount arrays and their relation to buying and selling strategies based on price levels.
The importance of recognizing order blocks for identifying institutional behavior in the market.
How institutions use opposite price action to enter the market, buying on down candles and selling on up candles.
Criteria for identifying a bullish order block, including coming off support and breaking the high of the down candle.
The concept of mean threshold and its significance in evaluating the strength of an order block.
The role of support and resistance levels in the formation and validation of order blocks.
Differentiating between high and low probability order blocks and the importance of context in their formation.
The significance of the wick in an order block, especially when it overlaps with a fair value gap.
How to spot bearish order blocks by looking for up candles coming off resistance and breaking lows.
The process of identifying and validating order blocks through price action and mean threshold respect.
The importance of mastering the basics in trading and applying them consistently for success.
The reality that not every order block will hold, emphasizing the probabilistic nature of trading.
The role of personal bias in the interpretation of order blocks and its impact on trading decisions.
Encouragement for traders to study order blocks on their own charts to develop their intuition and edge.
The caution against seeking a 'Holy Grail' in trading and the importance of understanding probabilities.
Final thoughts on the significance of order blocks in making profitable trading decisions.
Transcripts
hello everyone hope you're doing all
right and welcome to this first video
well not actually the first but the
first technical video on the A to Z
guide so in the beginning this first
video is on order blocks in the
beginning you will have questions you
will have doubts on certain topics
etc etc this is completely normal write
those questions done and they will
likely get answered later on in the
videos alright so I wanted to start with
order blocks first off we are going over
every BD array what is PD
premium and discount array premium
obviously being if price is high it's in
a premium and we are more likely to sell
off
and if we are in a discount for example
here discount low prices we want to buy
in discount we want to sell in premium
so when I refer to a PD Ray I refer to a
premium and discount array if I'm
looking for lower prices I'm looking to
if I'm looking for lower prices I want
to use a premium array and if I'm
looking for higher prices I want to use
a discount array alright so the first PD
array I wanted to discuss is an order
block now the theory behind order blocks
obviously in the name order block there
are orders inside that block whose
orders are inside that block think of
Institutions think of central banks
institutions have such large orders they
can't just simply press buy and sell
wherever they want like weekend as
retail institutions need to do the exact
opposite of what price is currently
doing to get into the mark so for
example and by the way every up candle
right here is white and every down
candle is bluish black so institutions
are buying Down Candles simply because
their orders are so large they can't buy
on up candles institutions Buy on Down
Candles why for every buyer there needs
to be a seller for every seller there
needs to be a buyer if we know there are
willing sellers right here who is buying
those sell orders institutions what do
we create when institutions are buying
those sell orders order blocks alright
so let's get into it how can we actually
spot an order block again some things
might be a little bit confusing because
obviously it's the first video so go in
with an open mind and don't expect to
growth every single thing right now so
we just explained the basics and the
logic behind an order block of course if
you have a different logic and that
logic works for you please go ahead and
use a logic my logic might not be for
you and that's completely fine if you
have a different logic and you want to
use a different logic that's completely
fine I'm not here to I'm not here to
force a logic down your throat or
anything My Philosophy Etc I said in the
intro video everyone needs their own
logic what makes sense to them everyone
is a unique individual so everyone needs
their own unique logic their own unique
view on the market so again if my logic
doesn't suit your logic stick to your
own logic perfect be fine alright so if
we know institutions are buying in Down
Candles and selling in up candles then
Up and Down Candles would be order
blocks right correct so so let's go over
a few criteria that an order block needs
to have if we are looking for a bullish
order block and note that down a bullish
order block we want to see a down candle
a down candle that fits the criteria
area is a bullish order block a bullish
order block needs to come off of support
it needs to break the high of the down
candle then that creates a bullish or
block if it then returns to that order
block we can possibly buy of course not
Financial advice and then here you can
see the fourth is empty empty stands for
mean threshold mean threshold is 50 of
the order block and it's only the bodies
of the candle not the Wicks the bodies
of the candle 50 of that is mean
threshold so whenever I refer to mean
threshold it's 50 of the bodies of a
certain candle all right now let's look
at some different order blocks for
example these two Down Candles an order
block doesn't have to be one single
candle it can be but if there's multiple
consecutive Down Candles or multiple
consecutive up candle it is one big
order block so these two consecutive
Down Candles
are one order block is it coming off of
a previous support yes we have a fair
file you get right here now you might
not know what a fair value Gap is
currently so if you don't know write
that down we'll get into it in a later
video so these two Down Candles is one
order block we are coming off of a
previous support level this verify Gap
if this is the if this is the order
block what's the second thing we need we
need the high to get broken what's the
high of this or block since we can
basically see this as a one big order
block this is the high now the next
thing we need is a return a return and a
new push away this is the very basics of
an order bug but the basics are
important for you to master people like
to skip the basics and this is why I
said this A to Z guide is also for
advanced Traders why Advanced Traders a
lot of the times forget
these simple steps and they are
essentially ahead of themselves and they
forgot to master the basics what makes
someone a master is when they Master the
simple Basics and they apply them on a
consistent basis master the basics and
you will Master trading alright so we
have one two three support level high
gets broken we have a return perfect
then the fourth one the empty the mean
threshold the mean threshold would be
this right here now this is a little bit
Advanced now why is the mean threshold
important and why did I even mention it
if this order block does want to hold I
wouldn't want to see the main threshold
aka the 50 of this or block get
disrespected disrespected meaning
closing below the mean threshold now for
the open of the order block why did I
take this Wick and not the body of the
candle the wick is overlapping with a
fair value Gap again you might not know
what a favor Gap is right now so write
that down so the top of the week only
the top of the wick is important to me
right here the top of the wick is
overlapping or with a very very Gap
right here
and that's why I take the top of the
wick if this wasn't overlapping with a
verifying app then I would have taken
the body of the candle why well if the
wick wasn't overlapping with a fair
value gap for example we can say let's
pretend that this is the wick right here
and it isn't overlapping with the flag
at the top of the wick then the top of
the wick is not the sensitive area the
top of the wick is already mitigated so
the unmitigated orders are right here in
the body of the candle again remember
what we've gone over a bullish order
block is just Down Candles a bearish
order block is just up candles but again
the context behind them the steps etc
those are important and that's why not
every down candle and not every up
candle is an order block the context
behind them is very important as well as
are they aligned with your bias if you
think price is going higher and if price
is going higher then every up candle is
not a bearish order block and if you
think price is going lower so for
example this up candle if price is in a
bullish movement
this is not a bearish order block now
we've just gone over a bullish order
block let's dive into some bearish
border blocks as well so as you may have
seen right here try to spot all the
bearish order blocks right here and what
makes them a bearish order block alright
so we are pushing lower after coming
above this High AKA this week Above This
high is a sweep of the high what is
basically happening right here breakout
Traders so people with a buy stop that
are buying when the high gets broken
right here will have a stop loss below
this low so price will Target the
opposite side now if we know this and we
are sweeping this High then we have a
bearish bias all the up candles that are
forming when we have bearish buyers will
act as an order block and these up
candles will more than likely hold a lot
of the times this right here
is it coming off of a resistance again
if we're looking at a bearish or block
we want to see it come off of resistance
and we're going to see the low get
broken we're coming off of small fair
value Gap right here we are rejecting
away we are breaking the low and notice
how mean threshold got respected right
here
no candle close above mean threshold
then we have another up candle right
here
this up candle is it coming off of
resistance yes did it break the low off
this up candle yes the low got broken
right here did it return to the ore
block
yes it returned right here did you
respect mean threshold yes it respected
mean threshold
very important for you to understand
not every order block will hold not
every order block where me threshold
gets respected will hold not every order
block where mean threshold gets
disrespected will hold but we have to
think in probabilities
these are the highest probability
conditions these are where the odds are
in our favor and how do we select the
bearish order box right here we take the
bodies why
no fair value Gap overlapping again if
you don't know what a fair value Gap is
write that question down and we'll get
into it later now if we move on here we
have this new order block right new up
candle New Order block low gets broken
a return to the order block the wick
right here empty gets respected
and we see a new rejection away
now what do we create right here a new
bearish order block is it as simple as
this well yes it can be will it always
be as simple as this no an order block
will fill sometime now spotting a high
probability order block and spotting a
low probability order block if something
we'll get into later for you it's
important to now go over your own charts
and seeing which order block holds and
which order block fails by doing this
you will train your own brain you will
train your own eyes you will train your
own intuition which is very important
because then you're developing your own
Edge just by me telling you these steps
will not help you you have to do the
work on your own I'm just giving you the
guidelines to get you to actually start
the work now again this is an order
block why it's coming off of previous
resistance in the form of this order
block the low got broken a return the
return doesn't have to happen for it to
be an Orbach only support and resistance
and the high and low so the first two
steps those two have to happen for it to
be considered an order block all right
now let's take a look at some bullish
order blocks as well alright perfect Can
you spot the bullish order blocks right
here so let's take a look together
right here we have a bullish or block
why we're coming off of some kind of
support right here in the form of a
rejection block write that down then the
high is broken we see a return these are
all consecutive Down Candles so this is
one big order block mean threshold would
be right here I mean threshold gets
respected
what happens after we create a new or
the block right here a new bullish order
block
why it's coming off of previous support
in the form of this bullish order block
then we create this new order block
right here
then we create a new order block right
here
and here we create a new order block
this order block builds and we have a
big rejection to the downside and then a
continuation up
now what does this create
some form of New Order block right
now what happened here this order block
gets respected mean threshold gets
disrespected and we still continue
higher we had this order block fail main
threshold gets disrespected right here
what is happening the market is wrong
surely I'm doing something wrong right
no not every order block will hold like
I said not every time the main threshold
will get disrespect and the order Buck
will fail but we are working with
probabilities and that's what a lot of
people forget a lot of people forget
that we aren't working with
probabilities so after our loss after
something doesn't work once or even
twice they will look for the next best
thing something that will guarantee them
100 win rate and that's why a lot of
people got into smart money Concepts and
into ICT in the first place right A lot
of people got into smart money Concepts
into ICT why because they thought it was
the answer to everything and in some way
the market isn't random but if you are
seeking for that just be very conscious
of the fact that you might be searching
for the Holy Grail because why a lot of
people got into ICT and smart money
Concepts in the first place is because
they thought it was the Holy Grail and
let me tell you it isn't and you will
still take glasses and things will still
fail alright let's continue right here I
just want to touch on this last little
order block right here this order block
right here
do we take the wick or the open of the
order block
there is a referral Gap right here but
the top of the wick isn't overlapping
with the forfeit so
take the body study this price action
that's coming up study this price action
on your own until Friday I want you to
study and focus on order blocks so
Wednesday and Thursday focus on order
blocks order blocks order blocks order
blocks which down candles are holding
which up candles are holding why are
they holding what's happening beforehand
on which time frame are they dip me
threshold get disrespected did it get
respected what happened are we very high
are we high in premium are we low in
discount
what is happening notice the patterns
Etc use the journal that was provided in
the intro video
and note all your discoveries if you
truly master or blocked then I want to
thank you and that's the end of the A to
Z guide for you because order blocks
alone could make you profitable on that
note I'll see you in the next video on
Friday and I want to thank you for being
here alright thank you
thank you
[Music]
Weitere ähnliche Videos ansehen
Order Blocks Explained: 3 Best Strategies Revealed
Order Blocks - Explained in 6 Minutes
ICT Forex - Market Maker Series Vol. 2 of 5
Perfecting LTF Orderblock Entries With CRT - Candle Range Theory - ICT Concepts
Boot Camp Day 20: Order Blocks
The Best Order Block for Entering Profitable Trades in Smart Money trading technique.
5.0 / 5 (0 votes)