I just realized that many traders do not truly understand order blocks, even though this is one of the most powerful tools for finding quality entry points.

What is an order block? Simply put, it is a price zone that you can use to look for reversal or continuation trade opportunities. I like to call it a different perspective of supply and demand zones. Essentially, an order block is the last candle before a strong price movement — it is where the final buyers or sellers have not yet fully executed their orders.

Why is it important? Because order blocks help you identify price levels that significantly influence trader psychology, thereby improving your trading skills. The identification method isn’t very complicated, but its effectiveness is very high.

There are two main types of order blocks. A bullish order block is the last bearish candle near support before the price starts rising sharply. The next strong bullish candle is usually a Bullish Engulfing. Conversely, a bearish order block is the last bullish candle near resistance before the price drops sharply, accompanied by a Bearish Engulfing candle.

How about trading strategies? When you identify an order block in an uptrend, wait for the price to return to that zone to enter a buy order. Similarly, in a downtrend, wait for the price to reach a bearish order block to sell. Place your stop loss outside the order block, and set your take profit according to your target price.

But there is one important thing: you need to understand market structure and Dow Theory clearly to know when to trade order blocks and when not to. Not every order block is reliable; it depends on the market context.

In summary, an order block is a very important and easy-to-understand tool. It is essentially a strong supply or demand zone. My strategy is to buy when the price reaches a bullish order block in an uptrend, and sell when the price reaches a bearish order block in a downtrend. This is how I have improved my win rate. You can explore other methods to suit your trading style. Remember, this is just for reference, not investment advice.