An Order Block Trading Strategy Using the Best Order Block Indicator Suite

Have you ever wondered how smart money trades the markets? I used to until I discovered order block trading. As a forex and crypto trader, finding the spots where the big players enter, and exit is key. You'll have a huge advantage once you know how to spot these levels.

I will show you how to identify the best order blocks using an easy-to-use Smart Money Concepts indicator. You'll learn what order blocks are, how they form, and the exact entry and exit rules I use daily. Whether you're a day trader or swing trader, order block trading works on all time frames.

The best part? All you need is an understanding of the market structure and the willingness to follow some simple rules. If you're ready to trade like smart money, keep reading to learn how order block trading can transform how you view and profit from the markets.

What Is an Order Block Trading Strategy?

As a forex or crypto trader, have you ever wondered how the big players make their moves? An order block trading strategy can give you insight into how smart money trades.

An order block represents supply and demand at a key support or resistance level. When the price returns to that level, it often results in a reversal. The idea is that the "smart money" placed their trades at that level, so they are likely defending their positions when the price comes back to it.

I use a smart money concepts indicator by SonarLab to identify order blocks. It scans historical price action to find areas where a ton of volume came into the market, resulting in a strong move up or down. These areas often become future support and resistance levels.

When the price eventually returns to an order block, I look for a reversal signal like a pin bar or engulfing candlestick pattern. This indicates that smart money is pushing prices back in the other direction. I then place a pending order slightly beyond the order block level to catch the move.

Using an order block trading strategy, some have caught some huge reversals. The key is finding a solid indicator to identify the order blocks and then being patient for the price to return to those levels. With a little practice, this approach can become a core part of your trading plan and help give you an edge in the markets.

Does an order block trading strategy make sense to you? Let me know if you have any other questions! I'm happy to help you become a smarter trader.

How to Spot High Probability Order Blocks

As a forex or crypto trader, finding high-probability order blocks is key to success. Here are a few tips to spot the best order blocks:

• Look for blocks formed at key support and resistance levels. The more times a level has been tested, the more significant it becomes. These major levels often produce the most powerful bounces.

• Pay attention to blocks formed at swing highs or lows. The market frequently reverses at pivot points where the trend changes direction. Blocks at these turning points signal the potential for a large move in the opposite direction.

• Watch for blocks that form at the close of a time frame. Order blocks established at the daily or weekly close tend to be more substantial. The close represents the final battle between buyers and sellers for that period, so breakouts from these blocks can lead to sustained moves.

• Look for signs of strong buying or selling pressure. The larger the block and the more volume during its formation, the more likely follow-through will occur. Big blocks with heavy volume show institutions are entering the market.

• Consider the overall market structure and the current cycle. Order blocks tend to be most powerful within the larger trend. During uptrends, look for buys from support blocks. In downtrends, look for sales from resistance blocks. The probability of a successful reversal increases near the end of a trend.

Following these tips, you can spot high-probability order blocks leading to the biggest moves. Combine this with a solid trading plan, and you'll be well on your way to becoming a successful forex or crypto trader.

The Best Indicator for Identifying Order Blocks: Smart Money Trading Concepts

The Sonarlab order block indicator on Tradingview is my go-to tool for spotting order blocks. This custom indicator was created to identify areas where the “smart money”—institutions and large traders—enter and exit positions.

How It Works

The indicator scans the chart for spikes in volume and volatility, which often signal large orders being placed. It then marks the high and low points around that spike, creating a “box” on your chart. These boxes represent potential order blocks or levels where big players entered or exited the market.

I use this Smart Money indicator on the 1-hour, 4-hour, and daily timeframes. It’s great for catching reversals and price targets and starting short-term trades on smaller timeframes. On a daily, it helps me spot key support and resistance levels for swing trading.

Trading the Order Blocks

Once the indicator plots an order block on my chart, here’s how I determine if it’s worth trading:

• Look for signs of strong buying or selling pressure around the order block. Big wicks or large volume indicate the “smart money” was very active there.

• See if the price has already retested the level. Order blocks that have been retested and held are more reliable.

• Check if the level aligns with other support/resistance zones. Confluence adds confidence.

• Wait for a price action signal like an engulfing candle or trendline break. This confirms the level is significant and the trend may be changing.

I’ll enter a trade on a retest of the order block in the new trend's direction. I set my stop loss on the other side of the block and target a risk: reward of at least 1:3. With experience, the Sonarlab Smart Money Trading Concepts indicator has become an indispensable tool for my order block trading strategy. I highly recommend it!

How to Use the Smart Money Trading Concepts Indicator to Trade Order Blocks

Once the Smart Money Trading Concepts indicator is installed on my Tradingview platform, it's time to implement it and identify order blocks. Here's how I use the indicator to trade order blocks:

Check for signs of buying or selling pressure

Next, I examine the price action around that area to determine if it shows strong buying or selling pressure. For buying pressure, I look for long wicks below the level, closes above the open, and an overall bullish candlestick pattern. For selling pressure, I look for long wicks above the level, closes below the open, and an overall bearish candlestick pattern.

Wait for the price to retest the level

Once I've identified a significant order block level, I wait for the price to reverse and retest that level eventually. This could happen quickly, or it may take weeks or months. I remain patient because the big players often return to these levels.

• When the price retests the level, I look for a bullish or bearish rejection candle indicating the level has been respected. This signals an opportunity to enter a trade in the direction of the overall trend.

• I set my stop loss just beyond the order block level to allow the trade to move in my favour.

• My target is typically 2 to 3 times my risk, so if I risk $100, my target would be $200 to $300 away.

The key is really just watching and waiting for the right confluence of factors to come together at an order block level. With some practice, the Sonarlab Smart Money Trading Concepts indicator can help make order block trading a simpler process. The trades don't always work out, but by keeping your risk small and targets large, even just a few good trades a month can make a big difference to your bottom line.

Examples of Winning Order Block Trades

When I started trading order blocks, I wasn’t sure how to identify the best setups. But after using a smart money concepts indicator, it became much clearer. This indicator scans the chart for order blocks that meet certain criteria, like a strong rejection of price and heavy volume. It has helped me find some big winners.

Winning GBP/USD trade

One good trade was on GBP/USD. The indicator identified an order block from a previous swing low. When the price returned to that level a few hours later, traders went long. Within a few hours, the price shot up over 175 pips! The key was waiting for the price to show signs of rejection and buying interest at the order block level.

25-pip winner on XAU/USD

On gold (XAU/USD), an order block formed at a key support level from the previous day. When the price returned to that exact price point, traders went long. The price quickly bounced off that level, and I secured 25 pips of profit in just a few hours. The indicator made it easy to spot that perfect order block setup.