The Order Block Finder is a price action-based indicator that identifies the presence of a chunk of market orders at specific price levels and shows the BOS and CHoCH levels. These smart money concepts help to forecast the market with high probability.
In this post, I will explain to you in detail about trading using the Order Block Finder indicator. I will also recommend an order block indicator that does most of the work for you. So, read the full post and do not skip any step.
Essentials of Order Block Trading
A simple order block trading strategy cannot make you a profitable trader. You will always need some confluences that will help you increase the winning probability of an order block strategy.
In trading, you will have to wait until the market makes a clean trading setup. To find clean setups in the market, you also have to apply the following methods:
- Find the Trend
- Break of Structure (BOS)
- Change of Character (CHoCH)
- Liquidity and stop-loss hunting patterns
Before finding the order block zones, you will have to make sure that the market is respecting the methods above, such as trend, BOS, etc. Then we will find the order block zones and open trades accordingly.
For example, if the price is trending in the bullish direction, then we will have to find and trade the bullish order blocks only. If the price is trending in the bearish direction, then we will have to find and trade the bearish order blocks.
If the price is not respecting the trend and there are no clear BOS patterns in the market, then we will have to stay out and wait until the price respects these patterns.
How to Identify a High-Probability Order Block?
A high-probability order block zone forms at the last opposite-colored candlestick when the price leaves impulsively, making a break of structure.
Bullish Order Block: A bullish order block forms at the last bearish candlestick when the price leaves impulsively in a bullish direction, making a break of structure in a bullish direction. You can also analyze the image below for a better understanding.
Bearish Order Block: A high-probability bearish order block forms at the last bullish candlestick when the price leaves impulsively in the bearish direction, making a break of structure.
So, in this case, both the trend and the order block align, which is why it becomes a high-probability order block. You can also use other smart money concepts, such as change of structure and liquidity.
What Does the Order Block Finder Indicator Do?
As we have learned, we need to apply filters before trading with order blocks to get high-probability trades. So, keeping those things in mind, the Forexbee team has developed an order block indicator that does most of the work for you. This OB Finder indicator will do the following tasks:
- Finds the trend using price swings in the market (Higher Highs, Lower Lows)
- Identifies the Break of Structure or Change of Character patterns in the market
- Draws the order block zones based on smart money concepts (BOS, CHoCH, HH, LL)
Now, the Order Block Finder indicator will find more accurate and high-probability trade setups.
However, for take-profit levels, you will have to make a decision manually. The take-profit level is the most important thing. We will have to hold a winning trade for longer to get the maximum risk-reward from each trade. This will help us manage our risk effectively.
Let me show you the workings of the Order Block Finder indicator.
How to Trade Using the Order Block Finder Indicator?
First of all, you will have to determine a suitable timeframe for trading. The price action analysis remains the same in both day trading and swing trading, so you should choose the timeframe based on your daily routine. For example, if you want to do trading as a part-time job, you should select swing trading because this will give you enough time to analyze and open a trade. However, if you want to trade as a full-time job, then you should choose day trading.
Now, when you add the Order Block Finder indicator to the chart, it will display the order block zones. Next, we will have to open the trade based on the conditions below.
Entry: When you see an order block zone, open a pending limit order. For example, if there is a bullish order block zone, open a buy limit order at the high of the zone.
Stop-loss: The stop-loss will always be on the low/high of the zone, based on the order block type.
Also i will recommend you using the order block finder indicator that will find the high probability order block zones for you and will also send you an alert. so if you are not a full time trader then this indicator will be very beneficial for you in trading.
Click below link to get access to order block indicator.
How to Take Profit Using the Order Block Finder Indicator?
In reality, order blocks only tell us about the presence of market orders. It tells us where to buy or sell, but it does not explicitly tell us about the trade closing or take-profit level.
So, for the take-profit level, we will have to use other market patterns, such as the broadening pattern or Last swing high. Market makers mostly use the broadening pattern for stop-loss hunting, so we can use this pattern for our take-profit level. Other retail traders’ stop-losses will be our take-profit level.
Conclusion
I highly recommend that you just stick to a simple trading strategy, but the most important thing is that you will have to wait for the market to create a clean environment. You will get winning trades only during a clean market environment. So, the most important thing here is a clean market environment. You will get many losing trades in a choppy environment, even if you are following all the rules.
So, keep this in mind, as it will help you a lot in your trading.
I hope you will find this Order Block Finder indicator very useful.
If you have any questions, don’t forget to ask in the comments below.
