In the following article you’ll know how order-blocks work! The first thing you’ll need to understand is how institutions work when it comes to day trading. And this is a concept that a lot of people have left in the past!
You must this keep in mind when it comes to order-blocks
Something to keep in mind if you really want to become a profitable day trader is that institutions like banks and the government sell global currencies. Like euro, dollar and so on. So, when they do that, they are always going to try to get the best possible price!
This means there are basically times when they can manipulate the price of an asset. And then they will use it and share it with other investors to make money from those transactions. Most of the time we go against these specific trades, so the institutions sell, and we buy. We’re going to lose that money, so it makes sense.
Let’s see an example!
Before knowing more about order-blocks, we must show you an example. When you’re trading with the institutions, the price, let’s say the euro against the dollar. The institutions would like the new price when there’s a break in support resistance.
This is the theory of course. This is based on a lot of information, and it works great for the institutions, to buy a certain number of coins. So, when the price of the dollar falls, the institution buys 2 million dollars that at that time had a certain value. Then sells with 1 or 2% higher. They do this to obtain better prices of certain assets! This is awesome for them.
What is an order-block?
It is basically the area that you can have as a possibility to enter a transaction. As simple as that! Awesome, right? Now, an order-block can be easily identified by the area where you will be able to enter. For example, euro vs. dollar, the order-block will say which was the highest point. And you can also see it with the candlesticks and the candlestick wicks.
How can you identify order-blocks?
The order-block with the institutions is the most important part of this article. The easiest explanation of an order-block will be seeing the last candle in a big move. This could be going up or it could be going down.
For example, we can have a large moving red candle, before a large movement of green candles. And these two large movements make an order-block. A day trader must understand that the more people buy the same position, the stronger the move!
Order-blocks can also be used as a support and resistance levels. We can monitor the position and see the take profit will be able to move at certain points. For example, if there is a new low move it lower. What is expected is the price to go below, in this way the order-block will be basically activated!
Institutional trades are probably the most profitable trades. And they are not easy because you could confuse them with certain auto blocks. So, it is not easy to identify any order-blocks. One problem with this specific strategy or this type of trade is that you are going to have a lot of wrong positions. When the trends are bullish, it means that it is very likely that it is going to be a very profitable position.
Conclusion
Order blocks work! You just need to know how they specifically work, and you need to know how to use them. You will have to know that you will see many more losses than usual. So, the main recommendation as always is that you try it in demo accounts. Then once you see that it is profitable in your demo account, start placing operations with real money. We hope that this has helped you! And do not forget to share this information with your trader friends!