Money Clues Fx Education
The video discusses tradable and non-tradable order blocks in trading. It provides characteristics of valid order blocks, including proximity to support/resistance, flip zones, and breaking market structure. Examples are provided to illustrate these characteristics.
Understanding Tradable and Non-Tradable Order Blocks: A Comprehensive Guide
As a trader, the ultimate goal is to make profits while minimizing losses. However, this is not always the case, as most traders end up losing money due to the wrong application of trading strategies. One of the common mistakes traders make is choosing an invalid or wrong order block. Not all order blocks are tradable, and understanding the characteristics of tradable order blocks is crucial. In this article, we will delve into the characteristics of tradable order blocks, with various examples to aid in understanding.
What are Tradable Order Blocks?
Tradable order blocks are those that have a higher probability of price respecting them in case they come back. These order blocks comply with the multiple time frame analysis within your time frame Matrix together with the following rules.
Characteristics of Tradable Order Blocks
1. Order Blocks Should be at or Near your Support Resistance level
When an order block is within your support resistance level, it’s a vital zone to watch for bullish or bearish order blocks. You should wait for confirmation to push up or push down to execute your order.
2. Order Blocks Should be at or Near your Flip Zone
Flip zones help in getting good reversal entry points. When an order block is close to the flip zone, it confirms that it’s a valid order block.
3. Order Blocks Must Break the Market Structure (BMS)
Breaking the market structure confirms the validity of an order block. The market structure must break to make the order block valid.
4. Imbalance After Creation of Order Block Must be Two Times the Order Blocks Plus Risk Equal Ratio Must be Three Times the Order Blocks
When an imbalance occurs after creating an order block, it confirms that the market has potential movement. You can look for your entries on your imbalance level or wait for the price to return to the order block zone.
5. Order Blocks Must Take Out an Opposing Order Block
When an order block takes out an opposing order block, it confirms its validity. The opposing order block must be taken out to validate the order block.
6. Bearish Order Blocks Must be Above SSL and Bullish Order Blocks Must be Below SSR
When the bearish order block is above SSL, it confirms potential market movement to the downside. Conversely, when bullish order blocks are below SSR, they confirm potential market movement to the upside.
Valid Order Block Examples
To have a clear understanding of valid order blocks, we will look at different examples.
1. Order Block Near Support Level
An order block near your support level confirms potential market movement to the upside. You should wait for confirmation before executing your buy order.
2. Order Block Near Resistance Level
An order block near resistance level confirms potential market movement to the downside. Therefore, you should wait for confirmation to execute your sell order.
3. Order Block Near Flip Zone
Flip zones help in getting good reversal entry points. When an order block is close to the flip zone, it confirms that it’s a valid order block. When the market is rising or dropping, valid order blocks can be found.
4. Order Block Breaking Market Structure
When an order block breaks the market structure, it confirms its validity. The market structure must break to create a valid order block.
5. Order Block at Imbalance Level
Imbalances after creation of order blocks confirm potential market movements. The market has potential movement when imbalance occurs after creating an order block.
6. Order Block Taking Out an Opposing Order Block
Taking out an opposing order block confirms the validity of an order block.
Conclusion
Understand the characteristics of a tradable order block before executing your trade to minimize losses. Not all order blocks are tradable, and choosing the wrong order block can lead to losing your money. Follow the rules on entry types so that you may have a higher probability of making profitable trades.
