Lesson 13 of 20 · 10 min
Order Block
Step 1
What it is
An order block is the last candle in the opposite direction before a strong move. For a bullish order block, that is the last down candle before price surges up.
The idea is that large orders may have been filled around that candle, and that some may be left over if price returns. Nobody outside those firms can see those orders, so treat this as a theory about the chart, not a fact about the market.
Traders use it to choose a small, specific area to plan around. A small area can mean a tight stop, which makes 3:1 easier to reach.
Step 2
See it on a chart
The last down candle before a strong move that breaks structure.
Illustrative chart with made-up prices and tick volume, built for teaching. It is not real market data and not a trade idea.
Step 3
The exact rules
What must be true before entry
- The last opposite candle before a strong move.
- The move closes past a recent swing point. Without that, it is just a candle.
- The block has not been traded through since it formed.
What volume should show
Where to enter
Where the hard stop goes
Where the target goes
What invalidates the idea
- Price closes through the block.
- Price returns to it several times. Each return makes it less meaningful.
When not to take it
- There was no break of structure after the block.
- Price has already used most of the room to the objective.
- Major news is due soon, or you would be trading outside your planned hours.
- You have just taken a loss and feel the need to win it back.
Step 4
Your turn: plan the trade
A strong move down has broken structure, and price has come back up to the last up candle before it. Mark your plan.
This setup is a short. Look at the candles and the volume. Choose a line below, then tap the chart to place it. You can also drag its label or type a price.
Illustrative chart with made-up prices and tick volume, built for teaching. It is not real market data and not a trade idea.
Step 5
The trap: believing you can see the big players
It feels good to think you are trading alongside banks. That belief makes it hard to accept a losing trade, because surely the banks cannot be wrong. You do not know who placed what. All you know is your plan, your stop and your size.
Take the Personal Litmus TestStep 6