Have you ever seen the market reverse perfectly from a random candle —and wondered, “Why here?
”That’s not coincidence. That’s an Order Block.
Order Blocks are the hidden footprints of institutional trading activity — areas where smart money has placed large buy or sell orders before major price moves.
Let’s decode what order blocks are, how to identify them, and how to use them like professionals.
1. What Is an Order Block?
An Order Block is a zone where large financial institutions or banks have executed huge orders — causing a major shift in market direction.
These zones show the last buy or sell candle before a strong impulsive move.They represent:
Institutional order accumulation (buy blocks)
Institutional distribution (sell blocks)
2. Why Institutions Create Order Blocks
Institutions can’t enter millions of dollars in one click — they split orders.They need areas of high liquidity to fill them gradually.
So, before a big move:
They trap retail traders (liquidity hunt).
Fill their buy/sell orders quietly.
Then launch the real move.
These footprints appear as order blocks — the last candle before an impulsive displacement.
3. Types of Order Blocks
Bullish Order Block
The last bearish candle before a strong bullish move. Represents institutional accumulation (buying phase).
Bearish Order Block
The last bullish candle before a strong bearish move. Represents institutional distribution (selling phase).
4. How to Identify Order Blocks
Here’s a simple step-by-step method:
Step 1: Find Strong Impulsive Moves
Look for large, clean moves away from a zone — with high volume and wide candles.
Step 2: Mark the Last Opposite Candle
The last opposite candle (e.g., red before strong green move) is your order block.
Step 3: Draw Zone from Candle Body
Mark from the candle’s open to close, not full wick.This zone represents institutional entry range.
Step 4: Wait for Price to Return
Institutions often retest their previous order block to fill remaining positions — that’s your entry opportunity.
5. The Psychology Behind Order Blocks
Institutions use order blocks because:
They create liquidity zones.
They control both retail emotions and order flow.
They provide hidden entries before major moves.
When retail traders see a sudden reversal, institutions are often re-entering at their previous block — not reacting emotionally.
6. How to Trade Using Order Blocks
Here’s how you can use them like professionals:
Bullish Order Block Setup:
1. Identify a strong bullish displacement.
2. Mark the last bearish candle before it.
3. Wait for price to retrace into that zone.
4. Enter long with a stop below the block.
5. Target next liquidity pool or opposite block.
Bearish Order Block Setup:
1. Identify a strong bearish displacement.
2. Mark the last bullish candle before it.
3. Wait for retracement.
4. Enter short with stop above the block.
5. Target next liquidity pool.
The beauty of order blocks: you trade with institutions, not against them.
7. Confirmation Tools
To strengthen your setup:
Look for liquidity sweep before price taps the order block.
Confirm with break of structure (BOS) afterward.
Check for volume spike or rejection wick inside the block.
This triple confirmation filters fake setups and traps.
8. Common Mistakes Traders Make
Marking random candles without displacement.
Using full wicks instead of candle bodies.
Entering without confirmation.
Trading multiple timeframes without context.
Always align your order block with higher timeframe direction —institutions operate across layers, not single candles.
The market always leaves clues — order blocks are the biggest ones.They show you where institutions have been and where they might return.
Once you start seeing these patterns, you’ll realize:
“The market is not random — it’s engineered with precision.”
If you want to master order blocks, liquidity traps, and institutional entry patterns,join my ₹500 course, The 25 Lakh Lesson. It’s a practical deep dive into how real institutions position, trap, and profit — step by step.
