How To Trade Order Blocks | Trading Strategy

Summary

This video explains how to trade using the order block strategy, which helped the creator achieve over 300% in profits. It covers the concept of bullish and bearish order blocks, emphasizing the importance of large-bodied candles with smaller wicks for high-probability trades. The video also discusses retracement opportunities, fair value gaps, and entry points when price returns to an order block. Real-life examples are provided, demonstrating how to identify these setups, place stop-losses, and target higher price levels for maximizing profits. The strategy aims to shift traders’ approaches and boost their trading success.

Takeaways

• 😀 Order block strategy has proven to yield over 300% in profits, revolutionizing trading for those who understand it.
• 😀 A bullish order block is identified by a down-close candle that has taken out liquidity. When price closes above the high of this candle, it becomes a valid order block for a long trade.
• 😀 A bearish order block is identified by an up-close candle that has taken out liquidity. When price closes below the low of this candle, it becomes a valid order block for a short trade.
• 😀 High-probability order blocks are larger-bodied candles with small wicks. Candles with small bodies and large wicks are typically lower probability, used mainly in clear market trends.
• 😀 When the market retraces to an order block, a new price leg is often created, which can also provide trade opportunities.
• 😀 In a bullish scenario, bearish candles tend to resist the price, while in a bearish market, bullish candles act to support the price movement.
• 😀 Fair value gaps are essential in identifying points of interest (POIs) in trading. Once price trades above a down-close candle in a bullish market, this becomes a potential entry point.
• 😀 Even if an order block has large wicks, if it falls within a fair value gap, it can still be considered a valid order block for trading.
• 😀 When entering a trade using order blocks, set the stop loss below the swing low and target higher price levels to maximize profits.
• 😀 After a market structure shift (e.g., from a bearish to a bullish trend), order blocks can serve as new support areas, presenting trading opportunities.
• 😀 The video emphasizes learning the strategy to increase trading success and encourages sharing it with others who could benefit from the knowledge.

Q & A

What is the core concept of the order block strategy discussed in the video?

The core concept of the order block strategy is identifying specific price patterns, called order blocks, which can signal potential entry points for trades. These patterns are based on significant price movements that create support or resistance levels for future price action.

What defines a bullish order block?

A bullish order block is a down-close candle that has taken out liquidity, followed by price closing above the high of that candle. This makes the order block valid for a potential long position when the price retraces back to this area.

What defines a bearish order block?

A bearish order block is an up-close candle that has taken out liquidity, followed by price closing below the low of that candle. This makes the order block valid for a potential short position when the price retraces back to this area.

What are the key characteristics of a high-probability order block?

A high-probability order block typically has a larger body compared to its wicks. This indicates stronger market sentiment. Candles with small bodies and large wicks tend to have lower probabilities, but they can still be useful in trending markets.

How can order blocks be used when the market is trending?

In trending markets, order blocks formed between trend movements can be used to enter trades. For example, after a trend reversal, the order block can act as a potential point of support or resistance, allowing traders to place trades in the direction of the trend.

What is a fair value gap and how does it relate to order blocks?

A fair value gap occurs when price moves sharply, creating a gap between two price points, often between a bullish and bearish candle. Once price retraces into this gap, it can act as a point of interest, where traders look for order blocks to validate trade opportunities.

What should a trader do if they miss an original order block trade?

If a trader misses the original trade, they can still find opportunities as the market often retraces back to an order block. New price legs formed during this retracement can create additional order blocks that support or resist price, presenting further trade possibilities.

How do bearish candles interact with price during a bearish order block setup?

In a bearish order block, bearish candles should typically push the price lower. These candles resist upward price movements, confirming the bearish bias and providing opportunities for short trades when price retraces to this order block.

Why is it important to have a large body compared to the wicks of the candle in a bullish or bearish order block?

A larger body indicates strong market sentiment, whether it's a bullish or bearish move, which makes the order block more likely to succeed in future price action. Smaller bodies with large wicks suggest indecisive movement, making the order block less reliable.

What should a trader do once the price trades into an order block?

Once the price trades into an order block, the trader should wait for a confirmation, such as the price moving in the direction of the order block (up for bullish, down for bearish), before entering the trade. The stop loss should be set at the swing low or high, and the target should be set at the next level of price resistance or support.