How to Trade Orderblocks (TBM Theories)

Summary

In this episode of TBM Theories, the host explains the concept of order blocks in trading, characterized by sequences of same-colored candles interrupted by a contrasting one. These patterns indicate buying or selling pressure and can provide lucrative trading opportunities. The video details strategies for trading order blocks, emphasizing the importance of identifying powerful trends and using the first test for entry points. Through real-time chart examples, viewers learn to apply these concepts effectively, enhancing their trading methodology. The session concludes with a call to subscribe for more insights and resources for funded trading.

Takeaways

• 😀 Order blocks are defined as a series of candles of the same color with one contrasting candle in between, indicating market sentiment.
• 📈 Trading order blocks is effective when there is a strong trend in the desired direction, enhancing trade reliability.
• 🔍 Confluence with other strategies, such as Delta Divergence, is crucial for successful trading using order blocks.
• 🕒 The five-minute chart is preferred for trading order blocks, balancing detail with the ability to identify trends effectively.
• 📊 The first test of an order block is often the most reliable entry point for traders.
• 🚦 It’s important to set stop losses below the low of the contrasting candle to manage risk effectively.
• 🔄 Identifying a clear bounce from the order block indicates a potential buying opportunity.
• ⏳ While one-minute charts can show frequent order blocks, the five-minute chart provides stronger trend signals.
• ✋ Focus on the body of the candle for entry points, using wicks primarily for setting exit points.
• 🎥 Engaging with more content in the TBM Theories playlist can enhance understanding of advanced trading concepts.

Q & A

What is an order block in trading?

An order block is a sequence of candles of the same color interrupted by a single candle of a different color, indicating potential market reversals.

How can one visually identify an order block?

An order block can be identified by looking for a 'sea' of candles in one color, such as multiple green candles followed by a single red candle, or vice versa.

When is the best time to trade an order block?

The best time to trade an order block is when the trend is strong, and the order block represents a significant point of support or resistance.

What does the phrase 'the first test is the best test' mean in trading?

This phrase suggests that the initial retracement to an order block after a significant price movement is typically the most reliable opportunity to enter a trade.

Which chart timeframe does the presenter prefer for trading order blocks and why?

The presenter prefers the five-minute chart for trading order blocks because it balances the frequency of setups with stronger trend indicators, compared to one-minute charts.

How should traders set stop-loss orders when trading near an order block?

Traders should set their stop-loss orders below the last candle of the order block, typically below the body of the red candle in a bullish setup or above the body of the green candle in a bearish setup.

What are some key indicators to use in conjunction with order blocks?

Traders should look for confluence with other indicators such as Delta divergence, overall market trends, and volume analysis to validate their trading decisions.

What is the significance of using the body of the candle for entry and the wick for exit?

Using the body of the candle for entry provides a clearer signal of market sentiment, while using the wick for exit helps to minimize risk by allowing for some price fluctuation.

Can order blocks be identified on any timeframe?

Yes, order blocks can be identified on any timeframe, but the presenter emphasizes that larger timeframes like the five-minute chart tend to yield more reliable trading signals.

How can new traders effectively learn about order blocks?

New traders can learn about order blocks by studying visual examples, practicing on demo accounts, and subscribing to educational resources like the TBM Theories playlist.