I just realized that many of you are still unfamiliar with the concept of order blocks and how to apply them to trading. In fact, this is an extremely powerful tool if you know how to use it correctly.

Order blocks are basically specific price zones where large traders have accumulated or distributed their positions. They differ from supply and demand in that they provide a highly precise entry point for reversal or continuation trades. Once you understand what an order block is, you'll realize that these zones are often where price tends to return before making significant movements.

There are two types of order blocks you need to remember. Bullish Order Block (BuOB) appears near support levels — it is the last bearish candle before a strong upward move. Conversely, Bearish Order Block (BeOB) is the last bullish candle near resistance, followed by a sharp decline. The identification process is quite simple, but its psychological impact on traders is very profound.

When you see a Bullish Order Block in an uptrend, it’s a signal to prepare to enter a trade. A Bullish Engulfing candle will appear right after the OB, and that’s the best time to enter. Conversely, in a downtrend, when the price hits a Bearish Order Block, you’ll see a strong Bearish Engulfing candle afterward. Placing a stop loss above the OB candle and taking profit at subsequent targets is a basic strategy.

But here’s the important part — you shouldn’t always trade based on order blocks. You need to understand the market structure first. What is the current trend? What phase is the market in? Identifying key support and resistance levels is essential before using OB. If you trade order blocks without understanding the market structure, you’ll encounter many false signals.

In reality, an order block is a very strong supply and demand zone. It’s where large traders have created opportunities, and the price always returns to test these zones. When you buy at a Bullish Order Block in an uptrend or sell at a Bearish Order Block in a downtrend, you are trading in the same direction as the big players.

This is just some knowledge I want to share with you. Everyone will have their own way of applying it, depending on their trading style. The most important thing is to thoroughly analyze before applying any strategy to your real account.