Order Blocks Explained: Trade Like the Banks (No BS Guide)

Here is the link. 

This video by The Trading Geek (Brad Goh) serves as a comprehensive guide to understanding and trading Order Blocks as part of a larger trading strategy he calls "Market Mechanics."

What are Order Blocks? (1:10)

Order blocks are areas where financial institutions and banks enter large buy or sell orders. Understanding these zones allows retail traders to align their positions with "smart money" liquidity rather than being stopped out by market manipulation.

Criteria for a Valid Order Block (2:40)

Not all price action zones are valid order blocks. Brad outlines three core rules:

1. Inefficiency (Fair Value Gap): There must be a sharp, drastic price move that leaves a gap or imbalance in the market (2:45).
2. Break of Structure (BOS): The move must originate from a point that leads to a clear break in market structure, indicating a change or continuation in trend (3:49).
3. Mitigation: Order blocks are "one-time use." A valid order block must be unmitigated, meaning price has not yet returned to that specific zone (5:22).

The Trading Strategy (6:33)

Brad explains a mechanical approach to trading these zones:

• Market Shift: Wait for price to break the last higher low (for a downtrend) or last lower high (for an uptrend).
• Identify the Zone: Mark the candle before the inefficiency that caused the break of structure.
• Refinement: Drop down to lower timeframes (e.g., 15-minute or 5-minute charts) to refine the entry zone for a "sniper" trade (12:51).
• Patience: Use limit orders or alerts to enter only when price returns to the specific unmitigated order block (11:47).

Final Takeaways

• Transparency: Brad shares a live trade example (20:09) to demonstrate how these concepts apply in real-time, emphasizing the importance of risk management and adjusting to market conditions.
• Backtesting: The creator stresses that this strategy must be backtested personally to ensure it fits the trader's style, reminding viewers that "what works for me might not work for you" (27:21).
• Future Outlook: This video is the first in a series focused on "Market Mechanics," a hybrid strategy that integrates order blocks with other concepts like supply/demand and liquidity manipulation (23:35).