Order block forex trading holds the key to understanding market dynamics and making informed decisions.
As pivotal price levels where institutional orders are believed to have been placed, order blocks play a significant role in determining price movements.
This comprehensive guide delves into the intricacies of order blocks, shedding light on their identification and interpretation.
Whether you’re a seasoned trader or a newcomer to the forex arena, grasping the concept of order blocks can provide valuable insights for recognizing potential trade setups, managing risk, and improving overall trading strategies.
Explore the world of order blocks and elevate your trading proficiency.
ORDER BLOCK MEANING
Order block is a market behavior that indicates multiple orders from big banks and financial institutions. These collections of placed trade become strong supply and demand zones in the future.
INSTITUTIONAL ORDER BLOCK
An institutional order block is when huge lot sizes are placed at a particular price level by financial institutions and banks.
Institutional order block is a huge deal in the forex market because when it appears, it changes the direction of the market with the institutional candlestick formed.
These institutional order blocks become major supply and demand zones in the future.
RELATED: RECOMMENDED LOT SIZE FOREX
ORDER BLOCK FOREX
Order block is a large consolidation that breaks out with a sudden impulse aftermarket ranges. This consolidation and breakouts are better on higher time frames.
These order blocks are determined by the market makers which include financial institutions and banks.
HOW TO IDENTIFY ORDER BLOCK IN FOREX
As simple as this sounds one challenge every forex beginner faces is how to identify order block in forex.
Order blocks are best identified on higher time frames after market consolidations because order blocks are formed as a result of big financial institutions and banks.
This is why the order block candles are bigger than the consolidation zones. Below is an image of how to identify order block in Forex.
RELATED: HOW TO KNOW WHEN A TREND IS ENDING?
BEARISH ORDER BLOCK
Above in this article, the meaning of order block and how to identify them has already been established; that being said bearish order block is when there is an institutional candlestick breakout on a bearish direction from a consolidation zone on a higher timeframe. Below is an Image of a bearish order block.
WHAT IS BULLISH ORDER BLOCK?
A bullish order block is the last bearish candle confirmation probably with a pin par reacting to the order block zone that signals a bullish trend.
WHAT IS ORDER BLOCKS AND BREAKERS?
This is when the candle breaks a previous high or low in the order block zone either in a bullish or bearish direction.
ORDER BLOCK STRATEGY
In my years of trading, order block is beyond a strategy, it is a momentum that drives the forex market and should be respected.
However for the record, I will share with you an order block strategy that works; know that order block strategies are not to be rushed as it takes time to appear and when the trade is placed, it will last for weeks before you exit the trade.
ORDER BLOCK CANDLE FOREX
The best way to identify order block candle is to focus on consolidation zones on a higher timeframe. The order block candle is the largest candle that breakout of the consolidation zone.
Below is an image of order block candles.
ICT ORDER BLOCK
ICT stands for inner circle traders, years ago order block trading used to be a secret for banks and financial institutions, now retail traders can now take advantage of the information for better trade entries.
For clarity order block trading is just another kind of supply and demand but done differently.
A consolidation zone that lasts for days or weeks can be a potential order block for market entry after the necessary conditions have been met.
ORDER BLOCK BREAKER INDICATOR
There are MT4 and MT5 order block indicators out there that you may be looking at buying.
However before you purchase any, first learn the naked way of identifying order blocks as this will do you well when you get the order block breaker indicator for forex trading.
SIMPLE ORDER BLOCK FOREX INDICATOR MT4/MT5
One mistake forex beginners make is that they put too much confidence in indicators
Order block trading strategy works on naked trading and market structure and doesn’t involve any indicator.
If you need an indicator for order block, then what you should be looking out for is a candlestick formation after the consolidation, for example, an engulfing candle.
MITIGATION BLOCK FOREX
Mitigation block are levels where blocks of major support and resistance zones failed.
Another term for it is a failed market structure. Mitigation blocks are manipulative markets and should be avoided if possible. As market makers capitalize on losing trades to keep prices where they hit stop losses.