Summary of How To Identify High Quality Order Blocks to trade (Advanced tutorial)-Order Block Trading Strategy

Main Ideas and Concepts:

• Importance of Order Blocks:
  • Order Blocks are crucial for executing trading opportunities and are frequently used by smart money traders.
  • Identifying high-quality Order Blocks is essential to avoid significant trading losses.
• Types of Order Blocks:
  • Standard Order Block: The last bullish candle before a sharp downward movement, indicating potential reversal areas.
  • Primary Impulse Order Block: The first weak bearish candle before significant downward movement, suggesting a change in market sentiment.
  • Wick-Based Order Block: Focuses on the wick of the last buying candle, which is greater than half the candle size, providing a smaller area of interest.
  • Engulfed Order Block: Occurs when the last bullish candle is fully engulfed by a bearish candle, indicating strong selling pressure.
  • Breaker Block: A failed order block that has been broken through, turning into a new supply or demand area.
  • Mid Movement Pivot Order Block: An opposite colored candle within a strong trend that signals potential reversals.
• Entry Models:
  • Wick Entry: Place orders directly on the wick of the order block; wider stop-loss margin.
  • Body Entry: Place orders based on the body of the candle; tighter stop-loss but higher risk.
  • Midpoint Entry: Place orders at the midpoint of the order block; offers a favorable reward-to-risk ratio.
  • Body of Candle Entry: Riskier entry based on the body of the candle; stop-loss within the order block zone.
• Criteria for High-Quality Order Blocks:
  • Significant Inefficiency: A gap in the candles indicating an imbalance that needs to be filled.
  • Break of Structure: Indicates a change in market direction.
  • Liquidity Sweep: Price must sweep a liquidity zone before reaching the order block, enhancing its significance.
  • Unmitigated Order Blocks: Focus on Order Blocks that have not been mitigated; once mitigated, they lose their significance.
• Backtesting: Emphasizes the importance of backtesting strategies to enhance trading effectiveness, recommending the use of tools like Trader Edge.

Conclusion:

The tutorial concludes by summarizing the essential aspects of identifying and utilizing Order Blocks in trading. It encourages viewers to backtest their strategies and stay tuned for future content on advanced order block entry models and trading strategies.

Speakers/Sources Featured:

• The video is presented by an unnamed trader or trading educator who provides insights and explanations throughout the tutorial.

Notable Quotes

— 00:00 — « No notable quotes »

Category

Educational

Video