What are Order Blocks:
Order blocks in forex refer to the collection of orders of big banks and institutions in forex trading. The big banks do not just open a buy/sell order but distribute a single order into a check of blocks to maximize the profit potential. These chunks of orders are called order blocks in trading.
Types of order blocks
Order blocks are categorized into two types in trading based on order types.
- Bullish order block
- Bearish order block
Bullish order block
When a bullish impulsive wave forms after the break of a ranging market structure or block, it indicates the formation of a bullish order block.
When the price returns to the order block zone, we’ll open buy orders to trade with institutions.
Bearish order block
When a bearish impulsive wave forms after the break of price range or block, a bearish order block forms. We’ll open sell orders from the bearish order block zone when the price returns to this zone in the future.
How to draw an order block zone in trading?
- To draw an order block, you should first learn to identify the chart’s price range or price block.
- In the next step, mark the highest point and the lowest point of the price range
- Draw a horizontal zone meeting the high and low of the order block zone. This will act as an order block zone.
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