Order Block Forex Pdf - Block Order Definition - Investopedia
This breaker is the area I would be looking to buy from should price pull back on Monday. This is the bullish candle before the move down in bullish order block where stops were taken. I became a bit lazy, especially in December, being busy at work, preparing for Christmas and a trip to Disneyland so did not spend the right amount of time studying the charts.
I finally exited for small profits but could have managed that better. One aim this year is to focus more on evenings and prioritise chart analysis and everything becoming second nature. I have attached below my results for the first 4 months of this system to the year end. Once again a Market maker model is forming. The previous short term high was broken before the run down to the bullish order block with the target being the top blue negative order block. So short term I am bullish dollar to this point then will look at reactions at this level and potentially the very clean highs at Last time I posted I talked about the Market maker model running to complete the model and this is why I was bullish.
I have attached the USDX chart below and as you can see this has just about completed as expected. This shows the MM model as previously described in an earlier post. Both blue lines are Order blocks which were used in the move down and now become my targets for the Bullish move up. The reason I target this are that once at these points the probability of price to continue moving higher may decrease. This shows how once the highs were broken at around When in this area around However we did not see huge volume at this level. I am still not an expert on volume but I believe that the huge volume at the first bottom on the daily chart was where they got in most of the buying.
When I seen a bullish dollar I entered several setups in favour of the order block at order blocks on several charts. One thing I have found is sometimes price does not always run right back to the original order block but sometimes we see a smaller retracement. I decided to trade one of these but with the smallest position size and a larger stop. This in hindsight was a bad decision and something I have learnt. Only one of my stops from 6 trades was hit but I had to sit through 2 weeks of drawdown until the full effect of the bullish dollar took its toll on my trades.
This did two things:. In future I will look to enter at original 4hr and daily order blocks if possible. Although in a trending environment I may miss trades this way. Below is one of my winning trades. I entered at a great position with very little drawdown and exited around 5 times my risk. I have been testing my strategy and tweaking my plan as I would like some statistics of what my average risk to reward would be in certain pairs. I have not gotten very far with this but here is an example of what I have been doing.
Forex Order Blocks
Although this looks messy and there are probably much easier ways to do this, this is how I am testing my strategy. It basically involved entering 5 pips above or below an order block depending on if its Bearish or bullish with the stop being the other side of that order block. It is also only traded on the first visit back to the order block.
My Entry and stop is the dark turquoise square and the lighter colour after this is the multiples of this risk the trade has run to.
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The aim here is obviously to cut the losers quickly, have a very specific entry and hopefully be in positions to let my winners run. The fact we are trading on 4 hour and using daily charts and order blocks as the highest probability followed by 4 hour means that I should get nice runs when I am right rather than being stopped out on shorter timeframes.
Below are my results for October. If I could improve one thing I guess it would be that I have made over pips in 2 months and this has only been a small amount of monetary profit because I have started with a small bank. If I can post similar results next month using this strategy I will consider adding to my account each month to help with growth. For now though, I feel my knowledge is growing with each trade and the combination of order blocks, USD index, Volume Price analysis, Market Maker models etc is giving me a good overall feel for the market rather than just relying on a technical indicator.
It has been around a year and half since I first found forex and I feel I am learning and making progress. My reasons for exit were high volume bars with a narrow spread, signalling a lot of activity. This may result in a small term retracement to a recent negative order block on all 3 trades. I decided to take profits at these point and will watch again into next week to see if more Sell Set ups show up on these pairs.
This shows a market maker model which I have highlighted in a previous blog. Targets are for the USDX to reach This is the reason why I closed Trades. As you can see a low spread candle formed with high wicks breaking the lows and the highs. This can also be known as a long legged doji. The volume was far greater than the previous bar. This much volume should have created a much larger down candle where we still bearish for the short term.
Instead this high volume indicated too us that something else was going on.
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The insiders were taking profit or buying up some of this pair. The falling volume on the candles afterwards suggests that there is no interest to the upside yet and this is merely a retracement. Therefore I will be looking to re-enter the trade at the bearish order block we are approaching although this pair is ranging so I am slightly more catious so would like to see it hold first. As you can see 3 hours after I entered the candle has quickly moved back to were I initially entered. This is why volume was a great warning sign to get out whilst profitable.
Below are my fx book results for the week. I have taken 3 trades which were all profitable. My order sizes are very small and I have had to gain a fairly large pips for 2. This is something I must work on. I should have been rewarded much greater in terms of percentage return for these trades.
I must narrow my stop loss which means I can increase my order size whilst maintaining risk percentage. In doing this I should be able to double or triple and profits. The downsize to this is a greater chance of my stops being hit. This is a fine balance and the money management side of trading is the biggest factor in success or failure. I am just concerned I have to find such big moves each week and that is why it is important to work on tighter stops and greater lot sizes.
I am currently in 3 positions this week. One of the disadvantages of trading only on an evening is you do not know your order was not triggered till you return home from work to the charts. I should have looked at logical points to get in on the trade for the remaining part of the move but decided not to chase price. My limit orders both missed by around 5 pips so in future I will try to lower my entry slightly rather than be right on the edge of the order block. At present I am trading with very small lot sizes and fairly large stops so 5 pips will not be critical in monetary terms.
I entered this trade on Monday. Reasons for entering were a reversal pattern on Friday. A climactic high volume candle and a break in market structure breaking the previous swing low.
The pair has moved lower and is now making lower highs and lower lows. I am aware of potential bullish order blocks and will be looking for any high volume candle signalling a reversal in these areas. If this does not occur my target is bellows of 0. I have now moved my trade to Break even. We would be expecting the low of the week to be made on Thursday so I will reassess this trade tomorrow. I entered this trade on Tuesday.
I saw a market maker sell model and marked a 1 hour bearish order block were price had moved from on Monday. The Tuesday Judas swing sent price up to this level almost to the pip and sent the trade straight into profit. I am very happy with the execution of this trade. This is hard at the present as I have to identify potential order blocks the night before. I hope within time to become much better at picking these areas and where to expect big price movements.
For this trade my target is slightly more conservative and at the bullish order block around 0. Again I will monitor this trade for reversal patterns. At present I am applying volume price analysis on higher time frames, namely the 4hour and daily charts simply as I only have an hour or so on an evening. This, at present, is keeping me in the correct direction of the higher trend. He uses a very successful approach and the degree of success for entries is somewhat staggering. I have spent the last 6 months testing his strategies and how his tools are used on differing timeframes. Although the 15 minute time frames help set up trades for the day and have shown success I feel that I am more suited to the larger timeframes.
This is due to other commitments to be analysing the market every morning at London and New York open. This helps me get in at good points. The idea is that when a large move has happened, the people behind it are the smart money. When price returns to this point the smart money will be interested in this price area again. ICT uses the top of the wick to the top of the body of the bearish candle before the upmove to identify where most of the buying has taken place.
I have added a chart here which shows the EUR USD with the wicks of the down candles before the upmove highlighted so you can see the reaction as price reaches.
Here you can see how instead of chasing a move you can be patient and wait till price returns to this area. Another way in which I will be looking for entries is to use volume price analysis. Here I analyse candles, body size and wick size in comparison to volume. This is then compared to candles around them and we zoom out and analyse the big picture. An example would be that if we see a large up candle with large volume then this is a valid move.