Understand Order Block Trading Strategy in Simple words

Understand Order Block Trading Strategy in Simple words

Order Blocks and Supply and Demand are virtually the same thing but you’ll find that there are many order blocks but not all of them are tradeable. The best way to identify a tradeable order block is to highlight where big moves have occurred (big candles), you highlight the Origin of where that move started. I make sure that price is high in the Weekly and Daily curve, and I’ll trade the 4H Supply OB’s within.

For example, in a downtrend, you want to see a Supply OB making a lower low breaking past a Demand OB. This means that there was a lot of selling pressure coming from that Supply zone that broke the Demand. It is common for traders to have their pending Sell Orders in that zone. I used to trade this way until I’ve discovered other ways to better “Confirm” a tradeable OB and lessen my risk. Instead of 50-100 pip SL’s, I’m working with 5-10 pip SL’s. I also utilize an indicator that measures accumulation from the Asian session, once London opens, a specific grey zone is automapped on my chart that highlights the “Stop hunt zone”. If this zone is in line with an Order Block, this gives me higher odds. GBPUSD long bias example further below.

3. Yes, I do have my own systematic approach. (GBPUSD Long bias)

a. Step 1: Mark Monthly, Weekly, Daily, and 4H zones.

b. Step 2: Wait for price to reach the 4H zone.

c. Step 3: Note the session (I find my highest odds in London/NY)

d. Step 4: Check Indicator, is the stop hunt zone lined up with a OB Zone?

e. Step 5: Check RSI, is price breaking bands to the downside? IF so, wait for first leg up to confirm rejection. Enter on the 2nd leg.

OrderBlock Finder

In this GBP USD example from last week, Accumulation from Asian is automapped, once London hits, the grey boxes are automapped. When Price enters these zones, lined up with a 4H demand OB and price is breaking bollinger bands to the downside on the 15min timeframe, I wait for the first leg up to close, then enter on the 2nd leg. As you'll see below, I've marked with green arrows when price has met all criteria. Cheers