What Are Order Blocks?Order blocks are the most basic and common trading concept in forex. They are a form of “supply and demand” where your bullish order block can be seen as a demand zone and your bearish order block could be seen as a supply zone.
Forex traders use order blocks as a way of managing risk by using them in conjunction with stop-loss orders and profit targets. When setting up an order block, you need to specify the following:
- The currency pair you want to trade
- The price at which you want your order executed
- Your chosen time frame for when the order should be executed
Once you find your areas of interest you can look for a stop hunt, break of structure and an imbalance in price action. These 3 things can be seen as confluences to take entries off the order block.
What Is A Liquidity Raid aka “fakeout” or “stop hunt”?
A liquidity raid is a situation where an investor or traders sell their positions in order to acquire assets that are more liquid. Liquidity raids can be conducted by large investors or by market makers who are looking to profit from the difference between the bid and ask prices. in a market. The practice of a liquidity raid is known to be highly risky because the trader may be able to execute the trade at the ask price (selling at a higher bid price), but if they are unable to do so they will incur large losses .A person who has a large trading position may find themselves in the position of having no bids to sell their shares, or only a few. In this circumstance, the person will be obligated to sell their shares at the ask price and as such can potentially incur a significant loss because if they cannot sell around 2/3 of their position at that ask price then they.
Liquidity raids can also be referred to as fakeout or stop hunts. In these cases, traders will manipulate the market by selling off a large number of shares in order to trigger stop-loss orders and then buy them back at a lower price. This type of trading is illegal in most markets and is punishable by fines, jail time, and other penalties.
Liquidity raids are a form of market manipulation in which traders buy or sell large quantities of a security simultaneously in order to create the appearance of increased demand.
The goal is to drive up the price, then quickly sell it at an artificially high price.
They are also designed to trigger stop loss orders and panic selling in other traders who are watching the market or to create momentum and hype among the traders on their own exchange. Fake buy walls are seen as a signal to sell, while fake sell walls are used as a signal to buy. There is also significant psychological impact in seeing such manipulation.
How To Identify Break of Market Structure?
A break of market structure is a change in the current market structure. This change can be caused by new entry, exit or innovation. A break of market structure usually has an impact on the supply and demand side of the market. It can cause a significant change in price and quantity demanded or supplied. A break of market structure may also lead to a new equilibrium point for the market.
The purpose of waiting for a break of market structure is to identify when there is an opportunity to make profit from it.
A break in the market structure is when there is a change in current market structure. The change can be caused by a new entry, exit, or innovation. Break of market structure usually has an impact on the supply and demand side of the market. It can cause a significant change in price and quantity demanded or supplied. A break of the market structure may also lead to a significant change in price and quantity demanded or supplied.
How To Trade Order Blocks Correctly?
In the order block pattern, traders are waiting for a stop hunt to occur. This is when the price of a security breaks through the level of support, and then returns back to the same level of support.
When this happens, traders are waiting for an imbalance in price action. They want to see a break of market structure create an imbalance in price action.
If you see that happen, wait for price to return to the previous level of support before placing your trade order.
Watch this video for Order Block tutorial here: