Order Block

An order block is the last candle (or small cluster of candles) in one direction, right before a strong impulsive move in the opposite direction. There’s a bullish order block (last down candle before a strong rally) and a bearish order block (last up candle before a strong drop).

The ICT idea behind this concept: this zone marks where large institutional participants placed a meaningful part of their orders before moving the market. When price returns there later, the assumption is those remaining orders can move price again.

In practice, an ICT trader waits for price to come back and "mitigate" (retest) a valid order block to look for an entry in the direction of the original impulsive move, with a stop placed just beyond the zone.

How to spot one, step by step. First look for a genuinely impulsive move — a run of wide candles in the same direction, with no hesitation. Then walk back to the last opposite-coloured candle before that move. That is your order block. Its zone generally runs from that candle’s open to its close, sometimes including the wick depending on the school.

Not all order blocks are equal, and that is what separates a profitable trader from one who “follows the method” without results. A good order block has three traits: it precedes a move that breaks structure (a BOS), it leaves an imbalance behind it (a fair value gap right after), and it has not yet been retested. An order block already mitigated once has spent most of its value.

How to trade it? You place a limit order inside the zone, with a stop just beyond its far edge. The aggressive entry takes the first touch of the zone; the patient entry waits for a confirmed reaction on a lower timeframe. The first gives a better price, the second a better hit rate — pick according to temperament, but pick in advance.

The classic mistake: drawing an order block after the fact, on any opposite candle. There are dozens on every chart. Without an impulsive move behind it and without a structure break, that is not an order block, it is a candle. The honest test: could you have marked it live, before price came back?

Second trap: ignoring the inducement. Price rarely reaches an order block without first sweeping a small pocket of intermediate liquidity. Entering before that sweep means getting stopped out just before the setup works.