📊 Guide to Identifying and Using Key Concepts in Trading
In this text, you will learn how to visually identify essential concepts such as Order Blocks (OB), Fair Value Gaps (FVG), Optimal Trade Entries (OTE), Breaker Blocks, Sell-Side Liquidity (SSL), and how to differentiate a ChoCH from a BOS. At the end, I will share a simple yet powerful strategy to trade based on them. Let's go! 🚀
🟩 1. Order Block (OB)
An OB is a key candle before a directional change, created by institutions.
• How to identify it:
• Look for a bearish candle before a strong bullish move (bullish OB).
• Look for a bullish candle before a strong bearish move (bearish OB).
• Tip: Confirm with a retest to validate the entry.
🟦 2. Fair Value Gap (FVG)
An FVG is an imbalance in price where there was not enough volume.
• How to identify it:
• Find the gap between the high wick of candle 1 and the low wick of candle 3 (ignore candle 2).
• Tip: These gaps tend to fill; mark the zone and wait for an entry.
🟨 3. Optimal Trade Entry (OTE)
The OTE is a strategic zone between the 61.8% and 78.6% Fibonacci levels.
• How to identify it:
• Draw Fibonacci from the high to the low (or vice versa) of the main movement.
• Tip: Use it alongside an OB or FVG for greater accuracy.
🟧 4. Breaker Block
It is a broken OB that then acts as support or resistance.
• How to identify it:
• Look for an OB broken by the price and a possible reaction in the broken zone.
• Tip: Useful after a liquidity sweep.
🟥 5. Sell-Side Liquidity (SSL)
These are liquidity zones below key lows, where traders place their stops.
• How to identify it:
• Look for equal or obvious lows, usually swept before a directional change.
• Tip: Wait for the sweep and enter in the opposite direction.
🔄 6. ChoCH vs BOS
✨ ChoCH (Change of Character):
• Marks the beginning of a change in market structure.
• Identify broken internal highs/lows that do not confirm the trend.
🚀 BOS (Break of Structure):
• Break a key high/low and confirm a new trend.
• Key difference: The BOS confirms, the ChoCH anticipates.
🎯 Simple Strategy for Trading
“Hunting Institutional Zones”
1. Identify the Main Trend:
Use higher timeframes (H4/Daily) to determine if you are in a bullish or bearish trend.
2. Look for an Order Block (OB):
Find a relevant OB in the higher timeframe.
3. Confirm with a ChoCH and/or BOS:
• If you are in a bullish trend, wait for the price to break a key resistance (BOS).
• If you are in a downtrend, look for a broken support.
4. Draw Fibonacci (OTE):
• Use the range of the recent movement to mark 61.8% to 78.6% levels.
5. Wait for a Retest in an FVG or OB:
• Mark an FVG close to the OTE and wait for the price to enter that zone.
6. Enter and Manage Risk:
• Entry: At the upper/lower limit of the OB or FVG.
• Stop Loss: Just above or below the OB.
• Take Profit: At the next liquidity zone or key level.
📌 Practical Example
• Trend: Bullish (H4).
• Identify an OB in H4.
• In M15, find a ChoCH and draw Fibonacci.
• The price enters the 61.8% zone and touches an FVG.
• Entry: Upon confirming a candle pattern in the zone.
• Stop Loss: Below the OB.
• Take Profit: At the next relevant high.
🔑 Conclusion
The key to trading is not to use all concepts but to combine them strategically. Use higher timeframes for context and lower ones for entries. Make sure to practice on real charts and adjust strategies according to your style.
Remember, trading is patience and precision. Now apply what you've learned and master the market! 💪📈