📋 Video Summary

🎯 Overview

This video, the fourth lesson of the second level, is a detailed explanation of the "Order Block" concept in trading. Trader Hermes breaks down the intricacies of order blocks, explaining how they form, how to identify them, and how to use them effectively in your trading strategy. The video aims to clarify misconceptions and provide a practical guide for traders.

📌 Main Topic

Understanding and Identifying Order Blocks in Forex Trading

🔑 Key Points

• 1. What is an Order Block? [0:00]

- An order block is the last bearish candle before a bullish move or the last bullish candle before a bearish move, but it's more complex than that.

- It's a zone where banks/smart money are likely to have placed orders.

• 2. Order Blocks as Areas of Interest [1:42]

- Treat order blocks as areas of interest, not immediate entry points.

- Look for confirmations and signals within these zones to decide whether to enter a trade.

• 3. Bank's Strategy: Buying and Selling [2:02]

- Banks are always opening both long and short positions.

- They manipulate the market to shift the balance between long and short positions based on their objectives.

• 4. Liquidity and Market Manipulation [3:30]

- Banks aim to trigger stop-loss orders in liquidity zones, causing rapid price movements.

- They then use these movements to close existing positions and open new ones.

• 5. Identifying Smart Money Movements [5:39]

- The banks' actions create patterns that can be identified.

- These patterns reveal where the smart money is likely to be placing their orders.

• 6. Order Block Requirements [7:39]

- Order blocks must be located within a liquidity zone or area of interest.

- Not every bearish candle before a bullish move is an order block.

• 7. Importance of Timeframes [11:14]

- The higher the timeframe, the stronger the order block.

- Lower timeframes have less reliable order blocks.

• 8. Bias and Liquidity [11:28]

- Your bias (bullish or bearish) is crucial.

- Order blocks should be considered in relation to existing liquidity levels.

• 9. Order Block Levels [13:37]

- When price returns to an order block, use the open and close of the candle to define the zone.

- Watch the 50% level of the order block; if the price breaks below it, the order block is likely invalid.

• 10.Order Block Types (Candle Patterns) [16:04]

- Order blocks can consist of multiple candles, not just one.

- Look for candles with large bodies and small wicks.

• 11.Order Blocks and Trend [25:35]

- Order blocks in a downtrend are less reliable.

- Prioritize bullish order blocks in an uptrend and vice versa.

💡 Important Insights

• • Order Block Validation: An order block is more likely to be valid if it takes out liquidity. [20:41]
• • Order Block and Liquidity: When there is a lot of liquidity above an order block, it is less likely to be respected. [38:00]
• • Structure Break: Order blocks are invalid if they don't break the structure. [24:50]

📖 Notable Examples & Stories

• • Example on US5 [19:06]: The presenter analyzes multiple charts to show how to identify order blocks and validate them.
• • Real-time analysis [20:41]: The presenter shows an example on a chart where a potential order block is invalidated.

🎓 Key Takeaways

• 1. Order blocks are areas of interest, not immediate entry points.
• 2. Consider the context, including liquidity and your bias, when evaluating order blocks.
• 3. Choose the right timeframe to find the best order blocks.

✅ Action Items (if applicable)

□ Practice identifying order blocks on different charts and timeframes. □ Analyze charts to identify liquidity zones.

🔍 Conclusion

The video provides a comprehensive guide to understanding and using order blocks, emphasizing the importance of context, liquidity, and confirmation signals. It encourages viewers to practice identifying these zones and to integrate them into their trading strategies.