I Found a Secret To Orderblocks

Summary

This video focuses on how to identify the best orderblock to trade, using the inducement strategy. The strategy highlights the importance of liquidity and imbalance in determining strong zones on a chart. It contrasts the concept of inducement zones, which look appealing but are weak, with true zones that have a higher chance of holding. By analyzing market structure and using backtesting, the video shows how to spot the most profitable entry points and avoid common mistakes. It also emphasizes the power of following professional analysts through copy trading for better results.

Takeaways

• 😀 Identifying the best orderblock to trade can be a challenging decision with multiple options available on the chart.
• 😀 Weak orderblocks can cause price to break through, leading to losses, while waiting for lower zones might cause missed opportunities.
• 😀 The inducement strategy is a method developed to pinpoint the strongest orderblock with the highest probability of success.
• 😀 A clear market direction (like a bullish trend) will create higher highs and higher lows, leading to multiple potential zones to trade from.
• 😀 Inducement zones are misleading areas that appear attractive to retail traders but are weak and often fail to hold.
• 😀 Liquidity and imbalance are key factors in determining whether an orderblock is an inducement zone or a true zone.
• 😀 An imbalance is an untested area that price will naturally want to revisit, often indicating a weak zone that might get broken.
• 😀 Institutions drive price movement, and a true orderblock can be identified by observing institutional involvement and price action.
• 😀 The inducement strategy helps avoid zones with imbalances below them, which are likely to be broken before price reaches the true zone.
• 😀 After identifying the strongest orderblock using the inducement strategy, it's essential to confirm with a structural shift on a lower timeframe, such as the 15-minute chart.
• 😀 A successful trade example shows how using the inducement strategy, along with proper entry and risk management, can lead to profitable outcomes, with real-life profits shared through copy trading.

Q & A

What is the main problem traders face when using multiple orderblocks?

The main problem traders face is deciding which orderblock to trade, as multiple orderblocks can appear on the chart, but not all of them are reliable. Choosing the wrong one can lead to significant losses.

What is the concept of an inducement zone in trading?

An inducement zone is a weak zone that looks appealing to traders but is actually a trap. Price may return to this zone, tricking traders into entering, only for the price to break through and continue in the opposite direction.

What does the term 'imbalance' mean in the context of this trading strategy?

Imbalance refers to an area on the chart that has not been tested by price yet. It often draws price toward it, as it creates an opportunity for liquidity to be filled, which influences price movement.

How can traders identify a true zone from an inducement zone?

A true zone is stronger and supported by institutional orders, whereas an inducement zone is weaker and often marked by an imbalance below it. Traders can identify the true zone by analyzing price behavior and looking for signs of structural strength.

Why is liquidity important in this strategy?

Liquidity is important because it indicates where significant institutional orders are placed. The true zone, where institutional orders are located, tends to provide stronger support, making it more likely to hold price compared to inducement zones.

What happens when price breaks through an inducement zone?

When price breaks through an inducement zone, it typically moves toward a true zone, where price is more likely to hold. The inducement zone essentially acts as a trap, leading traders to enter too early or in the wrong direction.

How does a trader use a lower time frame to confirm a trade in the true zone?

After identifying a true zone on a higher time frame, traders can switch to a lower time frame (like the 15-minute chart) to look for confirmation, such as a break in structure (from downtrend to uptrend), before entering the trade.

What role do stop losses and take profits play in executing a trade using this strategy?

Stop losses are set below the most recent low to limit potential losses, while take profits are set at the previous high. This helps to manage risk and lock in profits once the price moves in the desired direction.

What was the author's experience with copy trading, and how does it relate to this strategy?

The author tested a copy trading service where they followed a top-performing analyst with an 86% win rate. By copying the analyst's trades, the author turned $50,000 into $160,000, showcasing the effectiveness of following expert strategies, which complements the precision needed in choosing the right zones.

How does understanding orderblocks and inducement zones help traders in the long run?

Understanding orderblocks and inducement zones helps traders make more informed decisions by identifying the strongest trading opportunities. This increases the probability of success and reduces the likelihood of falling into traps set by weaker, less reliable zones.