Advanced Order Blocks
An episode of pure value. Dylan will show you how we refine order blocks, detailing how we regularly see traders over refine and take unnecessary losses. We also cover key concepts that aid your overall understanding of more granular price action when interacting with orders, this is how you will achieve insane RRs Before we start this written piece it should be noted that advanced order block refinement should only come when the trader is experienced enough within the market. We touch upon this in a later episode but over refinement can cause a detrimental effect on your trading. The more experience you have in the market and in particular with order blocks will make this topic far more likely to have a positive impact on your trading, allowing you to extract the most out of our edge. Advanced order blocks essentially take what we learnt in the previous video ‘order blocks’ and take it to the next level to achieve more advanced risk to reward ratios on our trades. Order blocks will already give you a lot of accuracy within the markets but refining them can be an incredibly powerful tool if used in the correct manner. You have to remember that every candle you see can be broken down into multiple sub candles. For example a 4hr order block candle will have multiple 1hr, 30min and 15 min candles within. By zooming down the timeframes we can narrow down our entries to these much smaller order blocks therefore providing us with more accuracy to get in tighter providing a much higher risk to reward on our trades. This can be hugely beneficial if you have mastered the ability to place your entries within the most probable areas within the market. However, for an inexperienced trader this may result in unnecessary losses within the market. Being a the move with a slightly reduced risk to reward ratio is far better than being taken out for a -1% loss (often by only the smallest margins) In order to attempt this, we would recommend that you heavily backtest this. take a look at what you would class as a standard order block (1hr candle +) and refine this down to the lower time frame candles within. Play that trade back, see if your refined order block actually tagged you into the move and if so what was the improvement in the risk to reward. The positive of getting in tighter is that you can: Get into trades with a much higher risk to reward. What may have been a 1:5 could quite easily turn into a 1:20 with the correct refinement. You can also manage your trades more much more aggressively therefore potentially taking fewer losses after seeing a rejection from an AOI. For example, if a trade pushes off the OB perfectly then there is not need to leave that trade wide open. The orders have been respected and if the price then comes back to your entry point there is a much higher chance that the OB will break. What not to do: Refine too much - don’t drop down to the really low timeframes like the 1 minute. What we often see is traders do this and then fail to get back up to the higher time frames where moves are more concrete and thought out. If you are in the mindset of refining too much then we often see trades stick to these lower timeframes and trade as if they have ‘blinkers’ on. Constantly looking for entries on the lower timeframes and forcing positions. This is the worst position to be in as a trader, we need to let the moves come to us and trade primarily on the mid timeframes like the 30min, 1hr and 2hr for entries.