A market behavior from banks and financial institutions that indicates order collection is named Order Block in Forex Trading. As we know whose drive the forex market is central banks and prominent financial institutes. Thus, in the market, traders must know what they are doing.
If the order block has built by the market, it would move like most of the investing decisions happen. And after the order building is completed a sharp move towards both downsize and upsize will be made by the market.
Due to institutional traders are the key price driver, there are a lot of strategies that they do includes institutional trading. From this order block, anything that the institutional traders are doing with the best forex broker is the key term of this trading strategy.
Order Block Meaning
In any trading instrument, a sudden investment would not be made by financial institutes. And to get the best trading result, a plenty of money was spent by them on analysis. Besides that, the retail traders often not regulating with the money that was played by them.
There are several steps made by smart money in their trading based on price availability. For example, $100 million of EURUSD want to be bought by a bank, four steps will be taken. In step one, they will take $20 million, in step two $20 million, and step 3 $30 million.
Usually, the price move when there is a complete $100 million quota. The Order Block in Forex Trading looks like a range but each range is not an order block. Besides, we don’t know where and when the movements of smart money occur.
So, we will rely on the best price and location so that the appropriate order block can be identified. Apart from block orders, we also need to know about the order flow. Once a movement started by the price of the order block an order flow provided by it in all directions.
Order Block in Forex Trading (The Trading Strategy)
The daily timeframe of 1 hours until 4 hours will be used in this trading strategy to enter the trade and identify the order flow with a weekly timeframe. Next, potential locations will be identified from which the movement of the market that expected by using Fibonacci.
1. Currency Pair
In all currency pairs, profitable trades are provided by this trading strategy. This is the best section of this strategy. But, according to the research, the strategy works well across all major currency pairs such as USDJPY, GBPUSD, and EURUSD.
2. Entry
Wait for the broke of the price below or above the Order Block in Forex Trading, winning over bearish pressure or impulsive bullish. The price will reach a new low or high, but you will have to wait for that time to return to the order block.
Mostly, the price will test the 50% level and come back to the order block before the final move is made. Therefore, if you feel reluctant to monitor the price, a pending order can be taken at the level of 50% of the order block.
3. Take profit level and stop-loss
The level of the stop loss must be above or below the order block with some support.in most cases, use a 15 or 10 pips buffer can avoid market behavior that unexpected. The usual take profit level will lead to a flow of orders with a reward: ratio risk of 1: 1.
Although In most currency the block order strategy is profitable, it is important to remember that there will be uncertainty in the forex market. With didimax forex broker become a smart trader with various trading strategies including Order Block in
Forex Trading.