Boot Camp Day 20: Order Blocks

Summary

In this educational video, the speaker introduces the concept of 'order blocks' in trading, explaining their significance and how they function within market trends. The video is part of a boot camp series, focusing on day one with an overview of order blocks, their formation post-liquidity sweep, and their role in retracement plays. The speaker emphasizes the importance of understanding order blocks for strategic trading, promising further insights on spotting them in subsequent sessions. The summary also touches on the importance of avoiding trades during high-impact news events to prevent unnecessary risks.

Takeaways

• 📘 The speaker is introducing a boot camp focused on learning about 'order blocks' in trading.
• 🎯 Order blocks are significant price movements that precede liquidity sweeps and are where orders get filled, causing a shift in market structure.
• 🔑 Understanding order blocks is beneficial for traders as it helps in identifying accumulation areas and potential retracement points in the market.
• 📈 The concept of order blocks is applicable across all time frames, making it a versatile tool for traders.
• 🚫 There is typically only one order block within a trend as it forms from a liquidity sweep and the start of a new trend.
• 🔍 The speaker plans to teach how to spot order blocks in the following days, emphasizing their importance in trading strategies.
• 📉 Order blocks can indicate potential areas where the market may retrace, providing opportunities for re-entry or new trades.
• 📝 The speaker mentions that there will be no homework for this session, focusing instead on understanding the concept of order blocks.
• 🗓 The boot camp includes a series of days dedicated to different aspects of trading, including psychology and practical application of concepts learned.
• ⏰ The speaker warns against trading during high volatility news events, using GBP/JPY as an example of market movement during such times.
• 👋 The session concludes with a reminder for attendees to join the next session, which will cover psychological aspects of trading.

Q & A

What is the main focus of the boot camp being discussed in the script?

The main focus of the boot camp is to learn about order blocks, their significance, and how they can be used in trading strategies.

What is an 'order block' in the context of trading?

An 'order block' is a price range where orders were filled, typically resulting from a move up or down that causes a liquidity sweep, leading to a break of structure in the market.

Why are order blocks beneficial for traders?

Order blocks are beneficial because they provide a visual representation of where orders were filled, allowing traders to anticipate potential retracements and re-entry points in the market.

What is the relationship between order blocks and liquidity sweeps?

Order blocks form as a result of liquidity sweeps, where a move up or down takes out a high or a low, causing orders to be filled and potentially leading to a market structure break.

How does the speaker rank order blocks in terms of retracement play opportunities?

The speaker ranks order blocks as the first point of interest for retracement plays, often providing better entries than liquidity sweeps and break of structure alone.

What is the significance of the number '44' mentioned in the script?

The number '44' appears to be a personal preference or a reference to a specific item or concept, but its significance is not clearly explained in the provided script.

Why is it important to understand the terminology and concepts like order blocks in trading?

Understanding terminology and concepts like order blocks helps traders to better analyze market movements, make informed decisions, and develop effective trading strategies.

How does the speaker plan to cover the topic of order blocks in the boot camp?

The speaker plans to cover the topic over three days: the first day is an overview of why order blocks are useful, the second day is about spotting them, and the third day is about putting the knowledge into practice.

What is the speaker's view on the applicability of order block concepts across different time frames?

The speaker loves the way they trade because the concepts, including order blocks, are applicable across all time frames, from one-minute to larger time frames.

What advice does the speaker give regarding trading during news events?

The speaker advises against trading during news events, as illustrated by the example of GBP/JPY's volatility during PPI and FOMC news, to avoid unnecessary risks.

What is the speaker's approach to teaching the boot camp participants about order blocks?

The speaker's approach involves a step-by-step explanation, starting with the definition and benefits of order blocks, followed by practical examples and strategies for spotting and utilizing them in trading.

Outlines

00:00

📚 Introduction to Order Blocks

The speaker begins a boot camp session focused on 'order blocks', a trading concept. They apologize for an unclear start and dive into discussing the importance of order blocks in trading strategies. The speaker explains that an order block is essentially a price movement that triggers a liquidity sweep, which fills orders and shifts market structure. The first day of the boot camp is dedicated to understanding why order blocks are useful, their benefits, and how they act in the market. The following days will cover how to spot order blocks and integrate the knowledge into trading practices. The speaker expresses excitement for the practical application of these concepts in the market.

05:01

🔍 Understanding and Utilizing Order Blocks

This paragraph delves deeper into the concept of order blocks, explaining their formation and significance in trading. The speaker clarifies that an order block is the initial move that leads to a liquidity sweep, where orders are filled at a specific price range. The market makers may push the price back into this range to fill more orders, making order blocks a valuable tool for retracement trades. The speaker emphasizes that order blocks are the top priority for re-entry points in trading, as they often offer better entry opportunities than the initial liquidity sweep and break of structure. It's also noted that there's typically only one order block per trend, making them unique and important for traders to identify and utilize effectively.

10:03

🚫 Avoiding Trading During High Volatility News

In the final paragraph, the speaker wraps up the session by briefly touching on the importance of avoiding trading during high volatility news events. They use the example of the GBP/JPY pair's movement during a news release, illustrating the significant pip movement that can occur, which can be risky for traders. The speaker advises that understanding when such news events are scheduled can help traders avoid unnecessary risks. They conclude the session by reminding viewers that the next day will cover psychological aspects of trading and hint at the importance of learning from market news events.

Keywords

💡Boot Camp

A 'Boot Camp' in the context of this video script refers to an intensive training program, typically focused on a specific skill set or knowledge area. In this case, the boot camp is about learning trading strategies, with the script indicating a structured series of days dedicated to different aspects of trading education. The term is used to convey the rigorous and focused nature of the learning experience.

💡Order Blocks

Order Blocks are a trading concept discussed in the script, referring to a price range where a significant number of orders are filled, often leading to a change in market direction. They are beneficial for traders as they can indicate potential retracement points or areas of high liquidity. The script explains that an order block is formed by a move that causes a liquidity sweep, and traders can use this understanding to anticipate market behavior.

💡Liquidity Sweep

A 'Liquidity Sweep' is a term used in trading to describe a rapid price movement that occurs when a large order is executed, clearing out the existing orders at a particular price level. In the script, it is mentioned as an event that leads to the formation of an order block, indicating a significant market movement that can trigger further price action.

💡Fair Value Gaps

Fair Value Gaps are mentioned in the script as a trading concept that traders use for retracement plays. While not fully explained in the provided transcript, they generally refer to gaps in the market price that are expected to be filled as the market moves back towards a perceived fair value. The script suggests that they are one of the strategies used alongside order blocks for trading opportunities.

💡Equilibrium

Equilibrium in trading terms is a state where the market is balanced with no significant upward or downward pressure. The script mentions equilibrium as another concept that will be discussed later, implying it is part of the trading strategy series. It is suggested as a tool for retracement analysis, helping traders understand when the market may stabilize after a move.

💡Retracement

Retracement is a key concept in technical analysis, referring to a price movement opposite to the prevailing trend, often seen as a temporary pause before the trend resumes. The script discusses retracements in the context of using order blocks, fair value gaps, and equilibrium to identify potential re-entry points in the market.

💡Market Makers

Market Makers are entities or individuals that facilitate the trading of securities by providing a market with buyers and sellers. In the script, market makers are mentioned in the context of filling orders within an order block, suggesting they play a role in creating the conditions that define an order block and influence subsequent market movements.

💡Break of Structure

A 'Break of Structure' likely refers to a situation in the market where a significant price level or pattern is breached, leading to a change in the market's structure or trend. The script indicates that this event can occur following a liquidity sweep and is a precursor to the formation of an order block.

💡Entry

Entry in trading terms refers to the point at which a trader decides to open a position in the market. The script discusses different types of entries, such as the initial liquidity sweep and break of structure, as well as subsequent entries using order blocks, fair value gaps, and equilibrium for retracement plays.

💡PPI and FOMC

PPI stands for Producer Price Index, a measure of the average prices of goods and services received by domestic producers, while FOMC refers to the Federal Open Market Committee, which is responsible for making monetary policy decisions in the United States. The script mentions these terms in the context of economic news events that can cause market volatility, advising against trading during such events.

💡GBP JPY

GBP JPY is the currency pair representing the value of the British Pound (GBP) against the Japanese Yen (JPY). The script uses this pair as an example to illustrate the volatility that can occur due to economic news events, such as PPI and FOMC announcements, emphasizing the importance of being aware of such events for traders.

Highlights

Introduction to the concept of 'order blocks' in trading and their significance in market movements.

Explanation of how order blocks are formed as a result of liquidity sweeps and the filling of orders.

The importance of understanding order blocks for identifying market entry and exit points.

The role of order blocks in retracement plays and their comparison to other trading strategies like fair value gaps and equilibrium.

Why order blocks are beneficial for traders to anticipate market movements and potential order fills.

The unique characteristic of order blocks being the only formation within a trend due to their connection with liquidity sweeps.

How order blocks can offer re-entry opportunities in the market after a missed initial entry signal.

The potential for better entry points through order blocks compared to liquidity sweeps and break of structure.

The applicability of order block concepts across different time frames in trading.

The distinction between order blocks and other market structures like fair value gaps, emphasizing their unique role in trading strategies.

The anticipation of future lessons on spotting order blocks and their practical applications in trading.

The comparison of order blocks to accumulation areas, highlighting their similar impact on market dynamics.

A cautionary note on the importance of avoiding trading during high-impact news events to prevent unnecessary risk.

An example of market volatility during news events, illustrating the potential pitfalls of trading without awareness.

The emphasis on the practicality of understanding order blocks for everyday trading, especially on lower time frames.

The speaker's personal preference for order blocks as a primary point of interest for retracement plays.

A reminder that the explanation of order blocks is part of a larger trading strategy series, setting expectations for upcoming content.

Transcripts

are you guys ready for another boot camp

day in the in in the learning

all right sorry

Focus

[ __ ] that might get actually I'm not

even monetized hey

I read my set Jay on 4pf on GDK come up

on my block

wait what the [ __ ] this [ __ ] is wrong

on 4pf J full Pockets foe

faux Pockets faux

what's your go-to order Wendy's

why you wear number 44 because I get

that damn Wendy's Fofo

on GDK on crib on BDS

[Laughter]

all right anyways

let's get into it boot camp day number

I don't [ __ ] know anyways we're gonna

learn about order Cox order blocks today

[ __ ]

all right let's actually Focus we're

gonna learn about order blocks today

um per usual with our little building

block series of our

um strategy we are going to you know the

first day is literally just me talking

about why we want to use them

um why they're useful to us you know

usually a quick little overview of uh

why we're using them what they do how

they act um and how they're beneficial

to us in the market and then day two is

how we can spot them and then day three

is putting it all together and um I'm

honestly really excited for day three

because

um after that I mean I'm honestly more

excited for when we can finish up

equilibrium and then we can start

getting into like you know putting

everything together and we're literally

gonna do like three days in a row of

like it's going to be like day one

putting everything together day two

putting everything together day three

putting everything together and it's

literally just gonna be us on the charts

just like you know like look boom boom

boom boom boom Market flowing off of

everything that we just learned

um but yeah with that being said let's

talk about order blocks let's talk about

what they are let's talk about why

they're beneficial to us so

um what is a order block so if you guys

remember

um when we talked about liquidity sweeps

uh remember right in order for there to

be a liquidity sweep right we have to

either take out a high or a low right in

that and by taking out a high there has

to be a move up and by taking out a low

there has to be a move down you know

prior to the you know break of structure

that ends up Shifting the market

structure right and essentially all in

order block is is that move up that

causes the liquidity sweep

you know and then boom when liquidity

gets swept orders get filled right

that's why it's called an order block

because it's literally like boom the

move up

right this is this whole price range

is where the orders were filled and then

in turn right let's say we had like a

like this was the high or something we

sweep this liquidity or whatever and

then we break structure right on this

move up

right here this is where orders were

able to get filled

right so that's that's essentially what

our order block is and and we'll talk

more um in two days about

uh how we can how can how we can spot

them but essentially that move up or

that move down taking out liquidity

where orders are being filled is our

order block okay so why is this

beneficial to us and why would we want

to know you know why we want to use that

because

one it's just beneficial knowing the

terminology and understanding that hey

this move down or this move up is what

caused those orders to be filled and

that's that move up and that move down

right that that price range is where all

these orders were filled so with that

understanding right we know that okay we

have a little uptrend and then boom okay

right here is where orders were filled

so if price hold on that looks super

shitty

um if price was able to or if the market

makers were able to

fill their orders with this leg up and

within this price range

similarly to how fair value gaps right

they want to push price back within this

price range

right similar to fair value gaps how

they would want to you know push price

back into a price range to fill more

orders to you know either move the

market down further or move the market

up further

um same thing with this so right they

were able to fill short orders within

here so when they start getting buying

pressure again and price starts moving

up they say okay cool we'll push price

right back up because we know there's

going to be people you know willing to

fill even more orders within here right

because literally a couple minutes or a

couple seconds ago or whatever time

frame we're on

right there were there were orders to be

filled within here so what can they do

they can push price back into this order

block right where more resting orders

are waiting to be filled in the opposite

direction right so they can boom fill

their orders boom and send price lower

and that's essentially all in order

block is it's the price range from where

the first orders were filled and then

when we get that retracement on up into

the order block

um

that is where uh that's that's where

they can fill even more orders right

because they were able to fill it before

in this price range they can fill even

more orders to send price boom further

down in that same direction I honestly

like order blocks as I I would rank it

as this so liquidity sweep and break of

structure that's the start of the move

that is

um that's the top of the entry okay fair

value gaps order blocks and equilibrium

are used for retracements right so if we

cannot catch

um

if we can't catch

if we can't catch this liquidity sweep

break of structure entry we can say okay

we have three more options now if we if

we see like okay we missed the liquidity

Suite we miss the break of structure now

we have three more options for a

re-entry for a a retracement play the

first option every single time for me is

going to be an order block

because right it's still at the top of

the move and oftentimes you can get you

know even a better entry than off of

just the liquidity sweep and the breakup

structure right because oftentimes this

low is the very beginning of the order

block and you can you know sometimes get

filled you know within here where where

price wants to retrace to Okay so

with that right Order Box is is always

going to be my very first

um point of Interest or yeah point of

interest uh for for a retracement play

because it's it's the it's still at the

top of the move and oftentimes you can

get even a better entry off of these

um

then you can off a liquidity sweep okay

and then next I would do a fair value

Yap and then after that our equilibrium

and fair value gaps are are pretty

similar

um but something about order blocks that

we need to understand

is there's only one there's only one

order block within a whole Trend right

because they form off of

a liquidity sweep orders getting filled

and then the start of a new trend right

this this trend

this trend right this uptrend got broken

by the liquidity sweep by the break of

structure now we have this order block

within here

right where price can potentially

retrace on up to okay boom and then we

start this downtrend right and then

right there's no other order blocks

within here right because there's right

there's there's fair value gaps there's

equilibrium getting filled and we'll

talk about equilibrium in a couple days

or in like a week or so

um but right there's only one of these

and the next one that gets made is when

boom right when we get another Trend

shift okay so where's our order block on

this it's the it's the leg down prior to

the liquidity sweep

boom and what and we'll talk about you

know how to spot these tomorrow I'm just

trying to help you guys visualize this

but you know this is this is going to be

or let's make sure it shows the

liquidity Suite but yeah so this is the

only order block and then from there

right boom then we go higher so this is

something we need to understand that

there's only one order block within

every single Trend that gets formed okay

yes there can be order blocks on every

single time frame which is again a

reason why I love the way that I trade

because all of these concepts are

applicable on every single [ __ ] time

frame and that's just the way that you

know this [ __ ] should be

um so

that being said today was today was very

very short

um there really isn't much else to to

cover on order blocks um besides the

fact that it is the

it is the move prior to the liquidity

sweep that causes the liquidity sweep

and then because of that move and

because those orders were be were able

to get filled we can get that break of

structure

okay and then when we get that break of

structure what will price likely do it

will likely want to go back up into that

area

fill even more orders because they were

able to fill orders there previously and

send price even lower or send price even

higher

cool

cool really not much else to talk about

um on order blocks today uh just quick

little you know explanation of what they

are you know hopefully you guys

um learn something from this on the

explanation days we don't really have

homework okay

um you're welcome school's off

um but so yeah that's that's

um that's order blocks okay I pretty

much explained and then in two days

we'll talk about how to spot them and

I'll show you how how [ __ ] powerful

these things are especially on uh lower

time frames because they they appear

literally every single day you know

every single hour I'm like one minute

time frames

um and it's it's awesome to see how how

how respected these things actually work

and I I honestly talk about these very

frequently

um in talking about how that's where

orders were accumulated I I call them

like accumulation areas it's very

similar similar it's it's pretty much

you know an order block accumulation

area all all pretty much the same thing

everyone loves giving different

terminologies for different things just

to sound fancy just to sound like

they're unique it's it's the same

[ __ ] [ __ ] we're all trading the same

[ __ ] we're all trading the same markets

um but anyways that being said that's

order blocks explained no homework for

today you guys are off the hook

um I'll see you guys tomorrow for some

psychology stuff hopefully you guys did

not trade today because as we can see

right hopefully you guys learned from

that news from that news thing we had

um

load this thing up if it wants to we had

PPI PPI and fomc all through here which

is actually

um going to happen in about two hours

and right we can we can look at the the

market it looks pretty [ __ ] terrible

if we look like

this is why we need to know when news

when news is going on

this is on the 15 minute time frame and

since U.S market opened which was right

here

uh right here we have moved a total of

34 Pips

on an extremely volatile pair in GBP JPY

so if that if that tells you if that

tells that should tell you enough about

why you should not be trading today

um so yeah hopefully you guys learned

something hopefully this gave you guys

some benefit

um with that being said I'll see you

boys tomorrow peace out