Vertex Investing - Order Block playbook [PDF]
Order blocks (OB) are areas where Institutions are either buying or selling from, these blocks are formed prior a large impulse to an already pre planned direction. The reason we trade order blocks, is because for the institutions to make a move they need to grab liquidity first, this is from retail traders stop losses, where many retail traders call it 'stop hunts'. So institutions drive price to grab this before creating their desired move. Institutions do not use Stop losses, which means although they have moved the market how they would like, they still have a trade going the opposite way in heavy drawdown. So they drive price back down to mitigate their orders then continue the move. This is where we come in with our strategy. We look to enter at this mitigation and follow price with them.
Using order blocks is all about understanding the story behind each trade and understanding why order blocks exist and how they are used. Understanding this will change your perspective in how you view the markets
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