Original subtitles

So now that we've touched base on supply and demand that leads

us perfectly into order blocks. Now firstly what I wanna say is

order blocks or the term order blocks originated from someone

on YouTube. Um his name is ICT which stands for the Inner

Circle Trader. Now I haven't personally learned from him. Um

I've just learned from other people and you know my own sort

of research but this is what he I believe in invented about the

the term order blocks. So, you can go check his YouTube out.

You know, see his videos from years ago. And his most recent

videos. Um, but yeah, I thought I would just make that clear

because you know, it's only fair I'm teaching it. But this

is how I'm gonna be teaching it. Now, there's a lot of

information here. Uh, so definitely, you know, write

some of this down, get a notepad, and let's get into it.

So, starting at top left, order blocks. So, what are they?

Well, an actual order block is the final candle before an

impulsive move that leads to a breaking market structure. This

basically means the most recent higher high gets taken out or

the most recent lower low gets taken out. If a higher high or

lower low is not made and price proceeds towards the upside or

downside impulsively then that final candle before that move

is not considered a valid order block. Price must break

structure to be valid. So an impulsive move up or down which

doesn't break any significant market structure is not

considered a valid order block. So when we take a look at

supply and demand or bullish and bearish order blocks the

newer is usually the better. So the fresher the order block

usually the better and more significant it is to us. So

what I mean by this is an untested supplier or an

untested demand zone IE order block is more likely to give us

the expected reaction that we're looking for with price.

As opposed to one that price has already come into before to

mitigate, we may not see that reaction we're looking for or

it's it's less likely we will. Now a quick rule of thumb, the

50% equilibrium point of a particular order block can act

as a strong level where price likes to mitigate to before

continuing in that overall direction. So basically the

halfway point of that order block. What I found to be true

in my own testing is if price comes up to fill 50% of the

order block then we can classify that as mitigated

meaning is completed and there's not much reason to look

at that area for future interest. So if price comes up

to reach 50% of a particular order block we can cast that as

you know a completion of that uh mitigation. But it's

definitely important that you do your own um research on that

and back test because you may may find it doesn't work as

good for you. You know you may you may have different rules.

Now the time frame you're trading and the market

structure you are currently seeing is important. Meaning

are you seeing bullish market structure? If you are then it

would make more sense to be looking for long trades at

demand zones and bullish order blocks. Rather than looking for

supply zones and shortened bearish order blocks. Now

obviously the same concepts apply if you're seeing bearish

market structure. So again bullish market structure. So if

we're putting in high highs and high lows then it would make

more sense for us to be looking for long trades at demand zones

or bullish order blocks. Rather than trying to short at at

supply zones. And then the same concepts flipped in reverse. If

we've seen bearish market structure it would make more

sense to be looking for supply zones and bearish order blocks

as opposed to demand zones and bullish order blocks. Now,

usually speaking, the higher the time frame, the more

significance of the zones and the order blocks will have.

Meaning, they can be more reliable. So, an example of

this, taking a long from a four-hour order block that

leads to AA 5,000 pound move or $5,000 could give more of a

reaction from taking along from say a 15 minute order block

that led to only a 500 pound move or a $500 move. So I hope

that makes sense. If not you know make sure you're writing

this down because all of these points are you know they're

really important. Okay so let me read that bit again. Just

taking along from a 4 hour order block that led to say a

5,000 pound move could give more significance or more of a

reaction from taking along from a 15 minute order block. That

led to only a 500 pound move. Okay? Okay so now order blocks.

A bullish order block is the last down candle. The last down

candle before a bullish impulsive move to the upside

that breaks structure. We will see large momentum to the

upside which usually leaves behind some price imbalance.

Not always but it can leave behind price imbalance and we

will get into imbalance um in upcoming videos. So don't worry

about that. So

Now order blocks are just a fancy word for supply and

demand. They're pretty much the same thing but you know we're

just taking the one the one candle rather than that

consolidation range. Now these levels are where large

institutions have placed big orders at these areas in the

market. Now the theory behind it is the price will eventually

gravitate back towards these order blocks to rebalance

price. Fill any liquidity that couldn't be filled before as

price moved aggressively away from that area. And for more

orders to be placed and then before continuing price to the

upside. Und

we can identify a clear entry and stop loss with order blocks

entry at the top of the order block with the stop loss at or

just below the order block. So, if we look at this diagram

here, This is a bullish order block. So this candle is the

actual order block because the momentum came in on this next

candle here. And this with a broken structure as well. So

again the theory is price will eventually gravitate back

towards these order blocks to rebalance any of this liquidity

or imbalance left. For more orders to be placed and then

for price to continue to the upside.

What we can do with these order blocks is we can set an entry.

So once we impulsively move away we can set an entry at the

top of the order block. Our stop loss can be you know at

the low. Of the order block or we can put it just below if we

have you know some weeks or if you wanna just account for you

know a bit of spike in you can put it a couple pips below so

pricing tap in rebalance price and then it continues to the

upside. Now a bearish border block is obviously in reverse

so it is the last candle before a bearish impulsive move to the

downside. That again break structure. So it's the last a

bearish order block is the last up candle before a bearish

impulsive move to the downside the break structure. We will

see large momentum to the downside which usually leaves

behind some price imbalance and again as we covered here large

institutions have placed big orders in the markets at these

areas. The theory is that price will eventually gravitate back

towards these order blocks to rebalance price, fill any

liquidity and for more orders be placed. So this is the order

block. Price impulsively moved away. Leaving behind imbalance

and you know liquidity. Price need to return back and make

price efficient before continuing down. So we tap in

rebalance price and then we continue to adapt to the

downside. We can identify a clear entry so we can enter

with a limit order at the base of the order block. So we take

the wick with a stop loss at the top of the order block or

we can account for you know spiking so we can put it you

know two pips above just to give us that leeway so if price

does come up to test this higher. You know we'd be

protected and then we can see price continue down. Now one

thing we can do with all the blocks is we can refine it down

and see where that momentum has come into the market. Now what

I mean by this is if we had this as our order block. But we

had a candle that followed this one and it didn't engulf the

actual order block. What we can do is refine it down to that

bullish candle rather than rather than the last down move.

So let's get into this now and show some examples. Order block

refinement. So one thing we can do as we've discussed is we can

refine our order block down if possible. So it's important for

us to note where the momentum has come into the market. IE

where the institutions have got in. Because essentially what

happens is wherever the momentum started price will

need to come back to that area and then we can see price

continues move from there. The reason why refining our order

blocks down is beneficial to us is because it tightens our area

of interest. Meaning, we can get in more precise with a

tighter stop loss. And usually, decrease our draw down on our

positions. It will also give us the chance to increase our risk

to reward ratios on our trade so we can get a better return

on investment. Now the examples below show an order block

refinement. So let's start on the bullish order block. So

what we've got is is the last down move before the up move.

So this would be our order block. But you can see the

candle we got that followed this one is here. And it's a

bullish candle but notice how it's not showing any momentum

or you know any progression in the market. It hasn't engulfed

this order block. Meaning it hasn't closing above showing

that momentum. It was in fact the next candle that showed

that momentum engulfed this candle So what we can do is we

can take our order block which is here. So this is the last

down move but we can actually take this as our order block.

Because it's the candle before that momentum came in. So the

ratio on this candle is fifteen pips. Whereas if we would have

kept to this order block this is what we're looking at

twenty-five pips so we're able to decrease our area of

interest by ten pips so that's what that's gonna do is

basically get us in at a better price a tighter stop loss and

you know less draw down and more risk to reward on our

trade. Because we are able to decrease our stop loss size by

you know ten pips. Okay? So the next example is a bearish order

block. Which is you know exactly the same thing. This is

our bearish order block. But the candle after did not show

any momentum or it did not engulf the order block. So we

can take this as our order block. Refine it down to this.

So this is now our order block because it's the counter before

that momentum came in. As you can see this is large momentum.

So we can refine it down. This is our order block fifteen pip

um a stop loss which is including you know the wick. So

this is the wick. What we can do is put our stop loss at that

wick or just above you know giving ourselves a bit of room

to breathe as is still fifteen pips. Whereas the original

order block is twenty-five pips as you can see here. So now

we've covered that. I wanna get into some examples on the

charts because I think you'll you'll start to get it a bit

more when when you actually see it visually. So let's get into

that now. Okay so now we're gonna go through some examples

of order blocks and refinement. Now we're on the hourly time

frame looking at Euro USD. So if we look at price section we

can see we was previously in this downtrend. So we was

putting in lower lows and these lower highs. It's clear to see.

Now we broke structure to the upside. So we we broke this

lower high here. We pulled back. Impulse start breaking

this high. So we can see a change in market structure.

It's clear to see we're now bullish. So you know we're

looking now put in higher highs and higher lows. So once we've

broke the structure

uh excuse me we broke structure here so this lower high we

broke we then pulled back and we broke this lower high as

well so we're now seeing that change in momentum so we wanna

be looking for you know uh potential lungs. So if we look

to see where the order block would be. So we pushed up,

broke structure, pulled back. This is the last down move

before the impulsive move up the broke structure. So this is

the order block. So if I just zoom in a bit so you can see

this. So last down move. But what we've learnt already is we

can refine this down. So the candle after this order block

is here and it hasn't engulfed this candle. Meaning it hasn't

shown momentum. So we can actually refine it down. And

when we refine down order blocks it won't always mean

that the the area of interest is tighter. It means we can be

more precise. Usually it'll be tighter but it won't always be

tighter because in this example here we have a wick. Quite a

large wick. So this is our order block because again price

pull back last down move refined this order block here

impulsive move up we broke this structure okay So BOS. BOS

means breaker structure.

To see change in market shift. I want to be impulsed away. We

left some imbalance in price. Now basically what imbalance is

is when buyers or sellers take control and you know sellers or

buyers haven't got a chance to get involved. Now you can see

the imbalance would be from this week to this week because

they're not meeting. So everything in here within these

weeks is you know buying buying power and you know zero

sellers. So usually what that means is price will in the

future come back to feel this imbalance that was left before

potentially continuing to the upside. Now as we can see once

we impulsely moved away price started to correct correct we

actually had equal lows on a lower time frame. We swept the

equal lows. But you can see price didn't come back into our

order block. But what did it do? Will it come down to

mitigate the majority? Not all but the majority of its

imbalance. Before continuing. Now this will happen from time

to time. We won't get a tap into the order block. But the

reason being is because it's usually just rebalancing any

liquidity or imbalance from just above the order block.

Okay we didn't get tapped in so you know we could have had an

order here. Order would have been set at the top of the

refined order block. Stop loss at the base of the block or as

we've learned we have a wick here so we can account for that

wick. Just above. So we've got a twelve pip stop loss. And we

can set this entry as soon as we we've broken structure here.

Now you can see if I get my measurement tool. We felt

Norte

If we look at the next example, what have we got? Well, now we

know that we've pushed off from here. This move up hasn't

broken any structure. We just wicked sort of this high.

Forming these equal highs here, okay? So, we can put that on.

So, equal highs basically means, you know, the the same

way you look at a double top. Um

Sou

Let me just put that on. So I put a dollar sign just so I

know there's liquidity above.

Deko heißt

okay now let me just remove that we can see we've broken

structure

BOS. And you can also class this as a break of structure

here because we have closed above the candle bodies but you

know, we had a large wick which is up here which price hasn't

got to. Um but we have had a break above candle bodies. Now

we will get into market structure and mapping out you

know your breaks and structure in that um in a future video.

But we can see that we have broken structure regardless. So

this is an area of interest for us. Now, this is our order

block. So, what we can do is place on an entry. Now we can't

refine that down because this is the last down move. And the

candle after is when the momentum came in. So we can't

actually refine it down like we did here. So we have got a

large stop loss but what we can do in this example is actually

drop to a lower time frame and look to see if we can refine it

down. But for the purpose of this video I'm just gonna go

with this. Um Okay so yeah we've got our entry set. This

is our trade. We've got our limit order on. So let's just

see if price taps us in. So we get wick um and we close you

know with this large wick. And we then pull back quite

aggressively. But what this essentially is is price pulling

back um rebalancing the inefficiency left on this move

up which you can see more clearly on a lower time frame

but we've mitigated meaning you know a close of the sell

positions stacking more buy positions so the expectation

now is for price to continue making high highs So we got

tapped in. We've got triggered into the trade here. Stop loss

just below this wick. And this is our trade. So we're in. So

we know we're expecting a push up. So we tap in we tap in

again with that er wick. We then push away and eventually

we start to make a new high. As you can see. Reprogram this

right here. Broken structure. And if we was in this trade

what we can do at this point is you know we can place our stop

loss at break even or just above oh Yep, stop us at break

even or just above to a counter force spreads. Just like that.

So now we're risk free on this position. Or we can take

partials um on trades but it's your preference. So let's see

what we get.

Now as we have broken structure would I be looking at this down

move as an order block. But if we look at it it would be a

very a very large sort of older block. We can then refine it

down to this candle. And for me in this example I would use

this candle as these candles do show a bit of momentum. Not

really so we've got a bit of wicks but you know we did push

off breaking structure. Notice how the wicks are meeting on

each candle as opposed to here where they where they didn't.

So this is showing me efficient price action. Price doesn't

really need to come back down to mitigate because it's

already efficient. So, price could just pull back from here

and go. So, for that reason, I wouldn't be looking to get

involved in a trade or look at this as an order block but

let's put it on just to, you know, for why not? And then we

break structure we have a wick and we push up. Corrective

price action but if we was in this trade from the bottom uh

we can look to if this goes gonna work. We we can look to

lock in more profit you know at this low here cuz we've broken

a higher so we can manage under this low and lock in some

profit and we then push up so that this is what we was

expecting so we're now putting in these higher highs and these

higher lows. But you know price is corrective and it is

efficient so I wouldn't be looking to you know get

involved in any sort of scaling trades. But what we'll be doing

now is moving my stop loss up to this new low just below it.

So we've got around you know 1.4 locked in. But don't focus

too much on the percentage. This is just showing you all

the blocks because this trade here you know we can get in

with a much tighter stop loss. Utilizing the lower time

frames. Um but for this video we're just gonna be looking at

the concepts of order blocks. And yeah Okay so here you can

see we've now shown large momentum as we see here and

here, okay? So, we can look to get involved but we need to

break structure and we have broken this structure here.

It's definitely structure. Um because we did pull back. So

let's mark it on. Be it like this. Spike a structure. So let

me just remove that because we don't need that. So where would

the order block be? Um Let me give you a second to see if you

can see where the order block would be before I place it on.

Okay so firstly take the last down move. Which is this tiny

candle which is a doji candle. Then let's look at the next

candle which is this one. Doesn't really show too much at

all. I'll be looking for this as my PI which means point of

interest. This candle here. Let me make this a different color.

So you can see it, okay? So this is the candle that I would

be using as my order block because the candle next to it

is the one that broke structure and then we see momentum in

into the market okay? So II can't quite remember what

happens in price so I'm just gonna you know set an entry and

see what we get. Stop loss just above uh just below the order

block fourteen pips. And I'm gonna see what we get. Now the

imbalance in this move would be from from this week. To Do you

hear? So again notice how the wicks aren't meeting. So that's

imbalance. So what we could see is price pull back to rebalance

this imbalance and then continue to the outside. But

you know I don't know what happens next. Let's just see.

Okay so we've mitigated that imbalance and we have this wick

we whipped above closed below we've now tapped in to our

order block so if we took this trade we would be tagged in So

let's see what happens. Okay so there we go. We tap in and we

go. So I didn't actually know this was gonna happen um but

you know this is just the power of order blocks. So price just

moves based on order blocks. So when when we're seeing bullish

order flow we push up breaking structure to the left. We come

back to mitigate that move and tap into the order block.

Breaking structure. Mitigation. Continuation. Breaker

structure. You know this is bullish order flow. Okay so

we're seeing breaker structure. Um initiation mitigation

continuing if you can learn that in trading then you know

you're onto a winner. But from this first trade that was in we

were set to break even once we broke structure. We then broke

structure here. And then we moved our stop loss to the low.

And then you know keep repeating the process. So now

we can move to this low here. I know it's a bit hard to see but

this is our stop loss from this first position. You know this

position we can move to break even just above because we have

broken structure. Okay so we broke structure here. Brs. So

now we're seeing bullish order flow, okay? So the expectation

doesn't have to happen but the expectation is either a push

up, a push back, mitigate, continue. New high, um break a

structure, mitigate, continue. Now, if we keep seeing this and

we wanna keep seeing this, if we are to see price push down,

excuse the drawing but if we are to see price push down

below, this higher, higher low, the expectational order flow

comes to an end and you know we can see price start to sell

off.

Okay so back to corrective price action. And we're pushing

back now so we're out for break even and we're out of our next

position. Uh first position, sorry. So, what I was saying,

for us to see this continue, we don't wanna see price come

below the most recent higher low which is here. If we see

that then it's showing us a change in market a shift in

market uh structure. So now what we can see is price either

pull back tap into a supply zone as we have here. Bearish

order block and then it continues down. But that's

gonna do it for this example. I think I covered it pretty well.

Um if you have any questions, let me know. Um yeah thank you

everyone for watching.