Order Block Theory - Institutional Trading Method

It's a solid system,I following Inner circle Trader last 6 years,it's a part of his trading style

I dont see the reason to argue.We are adults.Order block is trading supply and demand like banks.In ICTthe way order blocks are identified,u see with evidence dt there is a argorithym behind.I agree those of us who learnt from ICT dont present this subject like its explained in ICT and dts not a problem again becos from a mentor or teacher,we discover our theories within their theories,its not exact copy and paste.

would it fit this strtegy?

nd GOLD .... your opinion?

Hi guys ... in case anyone wants the indicator.

I share the indicator - please don't ask me

If someone knows and knows how to use it, it would
be great to teach how to use it.

skywalker , i guess this would be a good sell

First and second touch were ok but now its probably gonna break to the upside

I couldn't really see the difference between S/D and order block trading. Order block is a candle before an impulsive move. Market orders come in and drive price higher to seek liquidity. Where is the liquidity? S/D... What is liquidity? Limit orders. Limit orders provide liquidity and market orders take off liquidity. Usually order block is just pinpointing a specific candle within S/D. You could have high RR if you use multiple time-frame analysis. Actually, I could even combine both to define VAs (volume profile) to trade auction market theory... What's the difference? I don't know. Could anyone kindly explain it plz?

I have been studying order blocks and are exactly the same as supply demand, the only thing that I have found different is that ICT order block strategy is more flexible is not like if it touches this resistance it reverses and so on

I find out that order block trading only use engulfing candle within or nearby S/D zones depending on where the impulsive move starts and target wild risk-to-reward ratios by multiple time-frame analysis. It's easy to get stopped out but the return is huge. That's how it works. I haven't seen any long-term trading records on order block trading alone and I am very curious about its shape of equity curve.

[quote=zkchyo;13554646]. Where is the liquidity? S/D... What is liquidity? Limit orders. Limit orders provide liquidity and market orders take off liquidity.

Don't stop orders provide liquidity? I would think limit orders, are the real drivers.

Supply and Demand = Orderblock

Orderblock = marketing technique

Stop orders are NOT liquidity. A stop order is really an OSO order telling your broker to execute a market order once triggered by a price you set. Most stop orders are either sell orders below the current quote or buy orders above the current quote.

Limit (or liquidity) orders are not allowed to do this. One can only place a pending buy order (a buy limit) below the current quote. And conversely, one can only place a sell limit above the current quote.

[quote=NwBoyy;13569533] I am talking from observing order book dynamics. Do stop orders provide liquidity? Most of retail traders' orders won't be sent to the forex market unless you have an access to ECN broker. Still, it's just a peanut compared to institutions' order flow. I couldn't embrace the concept of stop hunts or things like institutional traders want to cause max pain to trigger your stops as liquidity in order to buy low or sell high.

Ha. I can't argue with that. The only true thing is order flow. S/R, S.A.D, OB... it really doesn't matter. They're just ways to grab the idea of order flow.

I laugh at this thread. Orderblock is just a term to define a specific zone where you wanna wait for a fast money supply or demand to show up first before retail traders can have a safe trade with a retest at the orderblocks zone. ICT may call this "orderblock" in the retail world but it is actually just simply a wholesale price level zone. It is a technical method to see whether the market shows weakness near the zone. This is also usually a POC zone if you place a volume/market profile at the balanced area. When price returns to value (POC) and shows weakness, usually this creates a low volume node in the profile. All POCs exist in a balance area and they have a great chance to have a retest why? Simply because there are two-way money there and institutions have to make a decision. But whether is it OB or supply & demand zone, these are just the technical aspects of the market. There is still risk involved simply because only the fundamental factors are the drivers of the market.

To me ICT should be a good trader because all I can see is he's an extremely talented L2 liquidity intern type trader. The only bias technique he shows is using COT for long term trading and US T-Notes to determine the bias of majors pairs (Sniper Series). He calls divergence between 2 instruments as "Smart Money Divergence" but it is simply just a measure of value divergence in institutional trading.

Although ICT can be a good mentor and trader, he is very vague like other retail gurus. Yes there are bank algos (HFT) running but it is not the only factor that drives price simply because there are many various players in the market and they all have different business models. Prop Desk, liquidity hunters, commercials, MM Marker maker, central banks all have different business models.

Passive traders don't drive price.- they sit on the limit order book... Aggressive traders cross the spread and do drive price...
Market maker simply prices the buy side and sell side creating an imbalance by applying liquidity and withdrawing liquidity from the market... HFT algos are momentum based or aggressive traders- they cross they spread and consume liquidity ....
Now when an HFT buys at the market or "crosses the spread" the liquidity provider either sells to the buyer at a good price with a limit order because it wants the other side of the trade (causing price to not move by much" , or the liquidity provider can withdraw liquidity(limits) to a higher price and fill the buyer at a higher price (because he doesn't want the other side of that trade...this what causes price to move up quickly. It's the withdrawal of liquidity that moves price.... But there needs to be aggressive traders crossing the spread ...almost a combined effort..

Great post. How do you apply volume profile on forex market? Do you use futures volume instead or you trust broker data?

Futures volume or even tick volume you should be able to identify areas of exhaustion and absorption because price is attracted to volume and is repelled by lack of volume i.e the Market Makers want to rotate price between volume at highs and volume at lows then back again; and big commercials are looking for volume in order to get all the size of entry that they're looking for.. Volume Profile isn't as precise on MT4 or TradingView for SpotFX or CFDs because the volume is only the volume from one particular Broker. Thus most institutional traders often use the futures contract in order to get the precise volume for the whole of that futures contract.