Order Block Trading
Order block trading is favoured by institutional traders and large funds as it allows them to execute large trades without moving the market significantly, thereby avoiding significant price slippage. By using this strategy, traders can also take advantage of economies of scale, reducing their trading costs and potentially increasing their profits
Is order block a good strategy?
Yes, order blocks are a really good forex trading strategy with minimal risk and high probability returns. The effectiveness of the Order Block strategy as a trading approach can vary depending on market conditions and individual trader preferences.
BTMM vs Order Blocks
Btmm is a much complex strategy as compared to the Inner Circle Trader’s Order Blocks. With Btmm one has to know and understand terms like water, mayo, for example, which are simply moving averages with custom values and unique colour settings. Steve Mauro, who is the founder of the Beat The Market Maker method, spent years trading and perfecting this strategy. Well, if you take it from us, the guy really put in the work and it is one of the most widely used strategy of all time.
The Market Maker Method is famous for its M and W patterns, also known as wedge patterns, but Steve gave the, a simple descriptive name which is also easy to relate to and remember. He clearly states where these patterns occur and when is the best time to trade them. When I first watched his 4 – Day boot camp my mind lit up.
With the very first video I knew that this is what was missing in my trading, so I took notes, went over the videos over and over again until I gained understading. If you have never heard about these patterns, you’d think people are making them up. Truth is, these patterns do exist and they play over and over again throughout the the entire week, every month and 365 days a year.
However, you can’t just go about trading each and every M and W that you see in the market. You need to filter out low probability trades and complete a checklist to see that most of the conditions have been met in order to validate the trade. Assuming you have read our previous article on BTMM, you now understand how the strategy works and what needs to appear before you even consider taking a trade.
Below is a list of terms to familirize with that are used in the market maker method and their meaning.
B.T.M.M – Beat The Market Maker
T.D.I – Trader’s Dynamic Index
Well order blocks indicate imbalances and liquidity in the price. Just like indecision candles, one way of looking at order blocks is to see them as inverse engulfing candlestics meaning they’re upside down. Once you identify an order block the next step is to project zones from the base of the candle. This is marked as a zone of interest and when price comes back into this zone it will be strongly rejected.
This is when you see wicks in price and you don’t understand why there was rejection there. It’s not that price just turned in the middle of nowhere, if you look left you would actually see an order block and that price was rejected as soon as it entered that zone. Order blocks are strong reversal levels and 90% of the time your trade always plays out. If you haven’t had any success with trading order blocks for some weird reason, I suggest that you try them out on this flawless broker.
BTMM & Order Blocks
In conclusion we have found out that if you combine Btmm and the order block strategy you will have a 95% chance of being successful in trading. This means you will only be looking for Ms and Ws on Order Block zones. The O/B will be used for identifying strong levels of reversals whereas the market maker method will be used for entries and exits. This combination will give you a high success rate and you can also throw in price action to get sniper entries.
Order Block Trading is a trading strategy that focuses on identifying and trading from areas on a price chart known as order blocks. Order blocks represent areas where significant buying or selling activity occurred, often indicated by a consolidation or a strong price reversal.
In Order Block Trading, traders look for areas on a price chart where price has previously reversed or consolidated. These areas are considered order blocks. Traders analyze the price action and market structure around these blocks to determine potential future price movements. They aim to enter trades at favorable prices when price returns to these order blocks.
Order Block Trading involves several key elements, including identifying order blocks, analyzing price action and market structure, confirming trade entries using additional technical analysis tools, managing risk with appropriate stop-loss orders, and setting profit targets based on potential price reversals or breakouts.
Order Block Trading offers several advantages. It helps traders identify areas of significant buying or selling interest, allowing for potentially high-probability trade setups. It can provide clear entry and exit levels based on price action around order blocks. Additionally, Order Block Trading emphasizes the importance of risk management by using stop-loss orders.
Like any trading strategy, Order Block Trading carries risks. Traders must exercise caution and apply proper risk management techniques to protect their capital. It is important to consider additional technical analysis tools, market conditions, and overall market sentiment when using Order Block Trading as part of a trading strategy.
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Written By: Allen Matshalaga
Allen is a professional forex trader, blogger, and online enthusiast who spends most of his time testing and reviewing legit ways of making money online and is determined to help others succeed.