Perfecting LTF Orderblock Entries With CRT - Candle Range Theory - ICT Concepts
Summary
TLDRThis video delves into the concept of order blocks in CRT (Candlestick Reversal Trading), explaining their formation, importance, and how to use them for low time frame entries. It emphasizes the need for a logical framework in trading and provides a refined definition of order blocks as candles that purge or fill liquidity. The video illustrates how to identify valid order blocks and offers practical examples to demonstrate their role in generating high-probability trading entries. It also discusses the decision-making process for using the body or wick of a candle as an order block, advocating for a logical approach rather than pattern trading.
Takeaways
- 📊 Order blocks are crucial in trading as they can provide low time frame entries and are identified by their ability to purge or fill liquidity.
- 🔍 The definition of an order block according to the video is a candle or sequence of candles that purges liquidity by taking out a previous higher low or fills liquidity when price closes above or below it.
- 🛑 Two core concepts of order blocks are purging liquidity, which involves taking out highs or lows, and filling liquidity by testing or reacting to previous order blocks.
- 📈 Order blocks can be identified by observing if the price closes above or below the entire candle, including the wick, or just the body of the candle.
- 📝 It's important to use a refined, objective, and logical definition of order blocks to increase the probability of successful trades.
- 🤔 The choice between using the body or the wick of a candle as an order block depends on the price action and how it closes in relation to the candle's open, high, and low.
- 📉 Purging liquidity involves the price moving past a previous low or high, effectively taking out the liquidity at those levels.
- 💧 Filling liquidity is demonstrated when a candle tests or reacts to an existing order block, indicating a key level of support or resistance.
- 📌 Valid order blocks are characterized by either purging or filling liquidity, but not necessarily both.
- 📝 The video emphasizes the importance of pattern trading and using sound logic to increase the effectiveness of trading strategies.
- 🎓 The speaker credits Romeo and Sham for their influence on the understanding and teaching of order blocks within the CRT (Candlestick and Reaction Trading) methodology.
Q & A
What is the main focus of the video script provided?
-The video script focuses on explaining the concept of order blocks in the context of CRT (Candlestick Reversal Trading) and how they can be used for trading entries, particularly on lower time frames.
What is an order block according to the refined definition provided in the script?
-An order block is defined as a candle or sequence of consecutive candles that purges liquidity in the form of a previous higher low or fills liquidity. It forms when the price closes above or below these candles.
Why is it important to correctly identify an order block in trading?
-Correctly identifying an order block is important because it helps traders to find high-probability trading entries and can increase profitability by providing a logical framework for trading decisions.
What are the two core concepts of an order block as per the script?
-The two core concepts of an order block are that it must either purge liquidity by taking out above the highs or below the lows, and it must fill liquidity in the form of filling or testing previous order blocks.
How can an order block be identified on a price chart?
-An order block can be identified by looking for a candle or sequence of candles that purges or fills liquidity, and then observing if the price closes above or below these candles, which would confirm the order block.
What is a model one entry in the context of the script?
-A model one entry refers to a trading entry that occurs when the price retests and reacts off a valid order block, providing a potential entry point for a trade.
Why is it not always necessary for an order block to both purge and fill liquidity to be considered valid?
-An order block does not need to perform both functions of purging and filling liquidity to be valid. It only needs to fulfill one of these aspects to be considered a valid key level for trading decisions.
What is the significance of the price closing above or below an order block?
-When the price closes above or below an order block, it signifies that the order block has been validated and can be used as a reference key level for future price reactions.
How does the script differentiate between using the body or the wick of a candle for an order block?
-The script suggests using the body of the candle as the order block if the price closes just above or below the open of the candle, and using the whole candle including the wick if the price closes beyond the open, high, or low of the candle.
What is the advice given in the script for choosing between using the body or the wick of a candle for an order block?
-The advice given is to use proper objective logic and reasoning based on the price action. If the wick is significantly smaller than the body, use the body; if the wick is significantly larger, use the wick as the order block.
How can traders apply the knowledge of order blocks to their trading strategy in lower time frames?
-Traders can apply the knowledge of order blocks to identify high-probability entry points in lower time frames, which can lead to more accurate and profitable trades.
Outlines
📈 Introduction to Order Blocks in Trading
The video script introduces the concept of order blocks in the context of the CRT (Candlestick Reversal Techniques) trading strategy. It emphasizes the importance of order blocks for identifying low time frame entries. The speaker provides a refined definition of an order block, which is a candle or sequence of candles that purges or fills liquidity at a previous high or low. The script clarifies that a valid order block is formed when the price closes above or below these candles, which can then be used as a reference for future price reactions. The video promises to teach viewers how to identify and utilize order blocks effectively, with the aim of increasing trading profitability.
📉 Core Concepts and Examples of Order Blocks
This paragraph delves into the core concepts of order blocks, explaining why they are significant in trading. It outlines two main aspects: the need for an order block to purge liquidity by moving beyond previous highs or lows, and the importance of the price closing above or below the order block to validate it. The script provides several examples to illustrate how order blocks form and how they can lead to explosive price movements. It also discusses the difference between order blocks that purge liquidity and those that fill it, using examples of both scenarios to demonstrate how traders can identify valid order blocks and use them for entry points in their trades.
🔍 Deciding Between Body and Wicks of Candles for Order Blocks
The final paragraph addresses the practical question of whether to use the body or the wicks (highs and lows) of candles when identifying order blocks. It presents two scenarios to guide this decision: using the body if the price closes just above or below the open, and using the entire candle, including the wicks, if the price closes beyond both the open and the high or low. The script offers examples for each scenario and suggests that the choice between using the body or the wicks can depend on their relative lengths or the trader's style. The video concludes by encouraging viewers to apply these concepts to lower time frames for more effective trading entries and to share their progress on social media.
Mindmap
Keywords
💡Order Block
💡Purging Liquidity
💡Filling Liquidity
💡Model One Entry
💡Candlesticks
💡Pattern Trading
💡Key Level
💡Retest
💡Fair Value Gap
💡High Probability
💡Price Action
Highlights
Introduction to the concept of order blocks and their importance in trading for low time frame entries.
Definition of order blocks based on analysis and refinement over the years, emphasizing a logical framework for trading.
Explanation of the two core concepts of order blocks: purging and filling liquidity.
Identification of order blocks through the engulfing of candles and subsequent price closure above or below them.
The significance of order blocks as future reference key levels for price reactions.
Differentiation between using the candle body or wick as the official order block based on price action.
Practical examples of how price purges liquidity and forms bullish order blocks for trading entries.
Demonstration of how price reacts explosively to retested bearish order blocks.
Illustration of high probability order blocks that both purge and fill liquidity, leading to strong market reactions.
Examples of order blocks that only fill liquidity and their subsequent price reactions.
The decision-making process for choosing between the candle body or wick as the order block based on price closure.
Guidance on using the length of the wick and body to determine the official order block in trading.
Emphasis on using proper, objective logic and reasoning in trading rather than random pattern trading.
Encouragement to manage risk and engage with the trading community for further learning and application.
Invitation for viewers to share their order block entries on social media for feedback and discussion.
Conclusion summarizing the key points of the video and the practical applications of order blocks in CRT trading.
Transcripts
hello everyone and welcome back to
another CRT YouTube video now this
specific episode is on order blocks and
how we can use them to get our low time
frame entries while trading
CRT we will go over how they are formed
why they are so important how to use it
for a model one entry and most
importantly how you can correctly
identify an order block after watching
this episode I am pretty sure that there
will be no questions remaining on order
blocks but if you do have any feel free
to ask them down below post video you
should be able to differentiate the
different forms of order blocks identify
it and integrate it into your CRT
trading model so let's not get into it
let's begin by clearly defining what an
order block is to help you better
understand this concept over the years
ICT has provided various interpretations
but based on his initial explanation
my own 5 plus years of analysis on the
charts and the specific trading
approaches of Romeo and Sham I have
refined my own definition a lot of
people including ICT will say that an
order block is the last D closed candle
or the last up Clos candle before the
downwards move and this is their
definition this is not however what
myself Romeo and Sham use the reason
being being is that what they are doing
is pattern trading and we like to use
Sound Logic we must seek a logical
framework when trading if you use the
general pattern trading order block
technique it will be low probability a
lot of the time and it will not work for
you and you will miss explosive moves
because of this so how do we solve this
problem we must use the most refined
objective and logical definition that we
can find for an order block so I've
gathered all the data from ICT Romeo and
Sham and this is what I've come up with
so an order block is a candle or
sequence of consecutive candles meaning
that it can be a single candle or
multiple that purges liquidity in the
form of a previous higher low or it
fills liquidity so this is it in its
basic form now when these candles get
engulfed and the the price then closes
above or below it an order block forms
meaning that candle or that sequence of
multiple candles turns into an order
block when the price closes below or
above it now this is exactly how you can
define an order block and the most
refined on objective monor be on proper
logic using this definition alone will
change your whole perspective on order
blocks and definitely increase your
profitability
before continuing I do want to once
again shout out Romeo for teaching me
pretty much everything that I know and
also sham for helping me with video
ideas now let's take a look at the Core
Concepts of order blocks so why are
order blocks so significant and why is
it considered a valid key level the main
reasons that order blocks are considered
valid or because when price closes below
or above an order block price will use
it as a fure reference key level to
react off so the first core concept of
an order block is that it has to purge
liquidity this is the main concept for a
key level so an order block must either
take out liquidity by purging above the
highs or below the lows the second core
aspect that an order block has is that
it fills liquidity in the form of
filling or testing fgs or unmitigated
order blocks so this is the best best
way to actually identify an order block
it does not however need to have both of
these aspects to be considered valid it
only needs one of them now we will be
looking at a few examples of high price
actually purchase liquidity and high
order blocks form so right here you can
see that we've got this range low and
beneath this low lies liquidity we know
that above highs and Below lows lies
liquidity now what happens is the price
comes back down and purges this low
meaning it purges liquidity or takes out
liquidity and it does it with a sequence
of consecutive candles this particular
candle right here is the specific one
that purges the liquidity and takes out
the liquidity meaning it takes out the
low but then also the next two candles
will also play a role in purging the
liquidity so price manages to move above
and close above these candles and we are
only regarding this sequence of candles
that breaks and moves below the low as
an order block and you can see what
happens is the price moves above then
closes above these candles with this
particular candle right here and now
these candles are considered a valid
order block the reason for this is they
have followed the two main important
rules for an order block number one it
is taking out and purging below this low
and then our second aspect is that the
price manages to close above it so this
is valid and you would be waiting for a
r test before entering your long trade
on the retest this is your model one
entry let's move on to the next example
so right here you can see that we've got
this Range High and what happened is
that the price purged that high with
this particular candle this action
indicates that liquidity above the high
was taken now once the price closes
below this candle it marks the creation
of a bearish order block you can see
here that the price closes below it then
retests this bearish order block and
reacted to it explosively causing the
price to expand lower again once again
this was would be a valid model one
entry on the retest so right here first
of all you can see that with this candle
we took out a low to the left
effectively purging liquidity by taking
it out so when the price goes below that
low purges it and then closes above it
it becomes a valid bullish order block
that's exactly what happened price
closed above it came back down to test
it which would be our model one entry
again and then reacted off this area now
what you can also see here is that
before we did test this bullish order
block we formed a low which generated
liquidity below it price then moved down
and took out this low with this
particular candle right here this again
aligns with our definition of an order
block you can see that we took out the
range low and purged the liquidity below
it with this candle not only that but
this candle also tested a previous
existing order block meaning it also
grabed liquidity this candle has done
two things it purged liquidity and
filled liquidity by testing a prior area
so now when price closes Above This
level it becomes a high probability high
quality order block you can see how the
market reacted to this order order block
and expanded exlusively above it this is
an example of a high probability order
block which not only purged liquidity
but also filled it now let's move on to
an example of an order block which only
fills liquidity and let's see how it
looks and how it forms here we can see a
fair value Gap what happened is that
this down closed candle filled the
liquidity in the form of Tes this fvg
notice that this candle performed a
crucial function that needs to occur
before an order block is considered
valid it filled the liquidity
effectively testing the level when the
price closed above the candle it became
a valid order block you can see that the
price then moved lower tested the order
block giving our entry and then reacted
and led to a strong upwards movement
Additionally you can observe another
order block of a similar nature here
this candle tested a previously existing
order block filling the unfilled
liquidity of this untested order block
when the price closed above this candle
it also becomes a valid order block and
the price subsequently tested it and
reacted just as expected so these two
examples on the screen right now did not
Purge any liquidity it just filled it
meaning it is a valid order
block now let's move on to our next
slide and discuss whether we will be
using the body or the Wix for an order
block the simple answer is there is no
black and white answer it really does
just depend on the scenar Ario you have
to decide off how price action forms and
reacts to the order block and only then
can you decide whether the wick or body
of the candle is the official order
block so the two different scenarios we
have are the following one if price
closes just above or below the open of
the candle then you would just use the
body as the order block this is because
price only closes above the open and not
not the wick our second scenario would
be the opposite of the first this is
that the price closes below or above
both the open and the wick or the high
of the candle then in this case you
would use the whole candle as an order
block alongside the Wix now let's take a
look at a few examples so here we can
see that this CLE Purge the liquidity
but then the price managed to actually
close above the low but it only managed
to close above the body or the open of
the candle but not the wick so in this
case you will only choose the body off
this candle as your order block this
will then be your model one entry and
price should then react off it now in
this example you can see that the price
purges liquidity by taking out this CRT
low we then see the price close above
the candle that purges the liquidity but
it only closed above the open not the
high so in this case we again use the
candle body as the order block and not
the wick so in this example here that
was shown earlier in the video we only
choose the body of this candle as the
order block and now you know why you
might have been wondering why I didn't
choose the wick and now you know it's
because price only closed above the open
or the body so here is another example
and in this case price did actually
manage to close above the whole candle
including the wick or the high so here
we would actually use the whole candle
as our valid order block now here is our
final example before I explain a little
more we can see here that the price did
actually manage to close above the wick
at the high so the whole candle would
once again be used as our order block so
this is really how easy it is to
differentiate between the two forms of
different order blocks and tell whether
you want to choose the open or body of
the candle or the entire candle
including the wick to so it is the same
as any of our CRT teachings we use
proper objective logic and reasoning
instead of randomly pattern trading it
another efficient way of choosing
whether to use the body or the Wicks is
by looking at the actual length of them
if the wick is significantly smaller
than the body use the body as the order
block this is even including if the
price has closed above or below the wick
if the wick is significantly larger than
the body use the wick as the order block
you can Implement either approach the
earlier one or the one I have just shown
you it really depends on what suits your
trading style the best do not use both
only choose one now when you implement
this on the lower time frame for your
entries with CRT you will be unstoppable
I hope you have enjoyed this video on
low time frame order block entries
within CRT I also hope that you did take
notes as I will be showing you a few
examples for homework for you to tag me
in on Twitter and show me your entries
happy trading guys always remember to
manage your risk and see you next Sunday
for the next CRT video
[Music]
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