Order Block

The rules

1. The candle: the last opposite-colored candle before the move.
2. Fast: the move away is displacement, not a slow drift.
3. Gap: the move leaves a fair value gap above (or below) the block.
4. Break: the move closes beyond a swing point (BOS or MSS).
5. Bonus: the block swept liquidity before the move.
6. Mean threshold: 50% of the block's body. A body close through it means the block is weak.

How to mark it

1. Find a displacement move that broke structure.
2. Step back to the last opposite candle before it: that is the block.
3. Mark its high and low, and the 50% of its body.
4. Confirm a fair value gap exists in the move away.
5. Wait for price to return to the 50%; do not chase.

The 1:3 trade

Entry at the mean threshold, the 50% of the block's body. Stop below the block's low. Target the high the displacement left. Reward is exactly three times the risk.

Before you enter

• The move away was displacement
• A fair value gap was left behind
• Structure broke with a body close
• Price returned to the block's 50%
• Stop below the block, target the next liquidity

Common mistakes

• Marking every down candle before a rally as an order block
• Trading blocks that drifted away slowly
• Ignoring blocks that never broke structure
• Entering at the top of the block instead of its 50%
• Holding after a body close below the block

Key terms

• Order block: last opposite candle before displacement
• Mean threshold: 50% of the order block's body
• Displacement: fast, large-bodied move that shows intent
• Fair value gap: the imbalance the move leaves behind
• BOS: a body close beyond a swing point
• R:R: reward divided by risk; 1:3 means 3R for 1R risked

Fast, gap, break. Missing any of the three? Skip the block.