Order Block Detector

Leveraging high-volume activity as a trading signal, this innovative indicator identifies areas where market participants are concentrating their orders on lower timeframes. It achieves this by pinpointing volume peaks, creating what are known as order blocks. This method acts as a bridge for traders looking to decipher the subtle cues of market depth and order accumulation, ultimately offering a strategic edge in trading.

Understanding the Indicator

This smartly crafted trading tool automatically conceals mitigated order blocks on your chart, yet provides the flexibility to choose between two distinct mitigation methods: "wick" and "close." The choice between these methods allows traders to fine-tune their strategy, relying on precise conditions to determine if an order block has been mitigated.

To further enhance trading efficiency, alerts can be set for the creation and mitigation of both bullish and bearish order blocks, giving traders timely notifications that are critical for decision-making.

Key Settings for Optimization

• Volume Pivot Length: This setting refers to the pivot function's lookback, which is instrumental in detecting volume peaks. Lower values will result in more frequent detection of order blocks, presenting traders with multiple opportunities.
• Bullish OB: Dictates the number of the most recent unmitigated bullish order blocks visible on the chart, allowing for a focus on fresh opportunities.
• Bearish OB: Functions similarly to the Bullish OB setting, but for tracking unmitigated bearish order blocks.
• Average Line Style & Width: Customize the appearance of the average order block level to suit your visual preferences on the chart.
• Mitigation Methods: Select between "Wick" or "Close" to define when an order block is considered mitigated. "Wick" marks mitigation when the candle wick extends beyond the order block, while "Close" confirms mitigation if the closing price moves beyond the order block.

How to Trade with Order Blocks

In the realm of trading, strategic market participants often phase their order executions. This phased execution can prevent causing abrupt price shifts and ensures that their orders are processed smoothly and efficiently. Such gradual order placements reduce unnecessary market impact, shielding from potential price volatility spikes.

Order blocks emerge as zones of price where these strategic executions take place incrementally. Recognized as crucial support/resistance areas, these zones provide traders with potential entry and exit points.

During market downtrends, bearish order blocks appear, while in uptrends, bullish order blocks are observed. Bullish order blocks encompass the area from the price low to the median price, whereas bearish order blocks span from the median price to the price high, using the median price as a pivotal balance point.

By adjusting visualization settings, traders can spotlight bars that signify the detection of an order block, easily toggling the 'Bull OB' or 'Bear OB' options for focused analysis.

It's essential to remember that order blocks are identified in hindsight due to the necessity of confirming a peak with Volume Pivot Length bars, emphasizing the retrospective nature of these signals.

FAQ

How can I access this trading indicator tool? You can access this indicator on the LuxAlgo Library for charting platforms such as TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.

What are the primary benefits of using this indicator? This tool helps in identifying potential support and resistance zones and provides alerts for strategic decision-making, making it invaluable for those who rely on volume-driven strategies.

What makes the "wick" and "close" methods significant? The choice between these mitigation methods allows traders to tailor their approach based on preferred technical conditions — whether they act on wicks surpassing a threshold or wait for candle closings to determine market shifts.