Part 1: What is an Orderblock [PDF]

 What is an Orderblock?

The order block is basically the last place where the institutions have placed their orders before the move happens. So if we think about it from this perspective, where is that position? Because what we can see is didn´t mean to draw that there, but what we can see is this is the last bearish candle before the bullish move. 

So what does that mean this is the order block, this is the last place where the institution sold before price is pushed up, so they need to come and mitigate their loss, they need to close it either a break even or a small loss, and then they can continue their move as they always want to do.

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Order Blocks Forex?

Order blocks in trading refer to a situation where central banks or large financial institutions accumulate large quantities of a particular asset through one big order.

They are supply or demand zones in which big players can find the comfort of placing large buy and sell orders and completing a big, very big transaction. But, banks and financial institutions cannot place a huge order to buy or sell an asset as they might trigger unexpected moves and create high volatility.

As central banks and institutions typically aim to buy or sell valuable assets that are used by ordinary people and have day-to-day uses, they must create these special orders known as “blocks”.

Basically, they split their orders into blocks, enter the markets, make a purchase, and disappear. Then, they do the same repeatedly until they reach their target. For example, if a large bank has to buy 200M EUR/USD, they will make this purchase in three, four, or even more steps.