how to trade order blocks in forex trading
Today we are going to talk about order blocks in Forex trading, which is one of the most important and profitable strategies in Forex trading. Big banks cause price changes and trends in the Forex market. Sharp and strong market movements are also caused by banks with their large capital. Banks open trades and transactions with a very large volume. This causes changes in the market.
For example, a bank enters the market with 1 billion dollars. And this amount of money is placed on the chart in the form of orders. Banks do not put all their money into the market at once, but they put the desired amount of money into the market in several blocks of orders.
For example, if a bank wants to trade 100 million dollars, it divides it into several orders.
They place their 100 million in the form of orders for 50 million, 30 million and 20 million dollars on the chart. This is how banks use pending orders. When the banks’ orders are activated, the price moves quickly and sharply.
How to trade order blocks?
When the trend on the chart is sideways and the market movements and candles are very small, and suddenly the price moves sharply up and breaks the previous highs, we call this area the order block area.
After the price goes sharply up, the price goes back down to the order blocks area to activate the other order blocks and we enter the market at this time and open a buy position.
Photo from Tradingview website
Look at the photo above, in the white area, after the market trend is sideways, the price moves sharply up, and after returning to the marked area, it moves sharply up again. When the market returns to the order block area, we can open a buy position.
In the photo above, when the price moved sharply up after being sideways, it broke its previous highs and made them BOS.
Order blocks have 2 models
1_Order blocks that increase the price
2_ Order blocks that decrease the price
In order blocks that cause the price to fall, the price will break its previous low after the order block is activated, and by returning to the order block, the price will fall again.
We hope you enjoyed this article.