Order Block Forex Trading Strategy is a trading system that focuses on identifying the footsteps of smart capital in the market and entering trades in the direction that they are moving. Traders must combine this with other analysis methods, such as support and resistance levels, volume indicators and moving averages, to ensure that they have a robust trading plan.

This is a powerful method for central banks and institutions to purchase the currencies they want without creating a massive move in the price. They typically enter the market, buy their currency in one or more blocks and then disappear. This allows them to achieve their goal without adding volatility to the markets and drastically changing prices.

“Order Block Strategy Demystified: A Comprehensive Guide to Forex Trading

To identify the presence of these order blocks, traders can use a zoomed out chart. They look for a cluster of orders on the sell side and a cluster of buy orders on the buy side. They can then mark these areas as potential order block zones.

The next step is to look at the price action around these zones. They should look for a break above or below the zone and wait to see if it makes new highs or lows. If it does, traders should place a pending trade at 50% of the order block area and set a stop loss below or above it with a buffer. This way, they can monitor their trades and avoid chasing the price. They can also assess the role of these zones as support and resistance levels by analyzing past price behavior. For example, a broken resistance level may turn into a support level and vice versa.