What is order block theory?

<p id="isPasted">A block order refers to the placement of an order for the sale or purchase of many securities at the same time. Block orders consist of orders, such as a few lakhs to a few crore shares, as opposed to retail trades for a few hundred or thousands of shares. Stock transactions are reported separately as block orders as well as large trades in stock.&nbsp;</p><p>In addition, order blocks are frequently traded off but should be accounted for when trading. An entity or group may be interested in buying a 100k portion of an asset from one hedge fund, but another wants to sell 100k. Gatherings may be conducted through a dark pool or through a middleman. When the dark pool matches a transaction, the exchange takes place at a predefined price or the midpoint between ask and bid price.</p><p>The price of block orders is set by a specific system, or by a third party, based on the average price of all the trades necessary to complete the order. Investors decide which order to place. The intermediary can control the quantities they want to input and process and issue instructions accordingly.&nbsp;</p>

<p>Order blocks are accumulated orders from financial institutions and central banks. An order block is actually a special Supply and Demand zone that forms when there is an order placed in a single purchase.</p>

<p>An order block submits a buy or sell order to an exchange. In the Block Properties panel, you can specify all the details of the order. Various inputs are required based on the order type selected.</p>

<p>Order block theory is a technical analysis technique used in forex trading that is based on the idea that large institutional traders, such as banks and hedge funds, leave behind "footprints" or "blocks" of orders in the market. These order blocks can be used to identify key levels of support and resistance, and traders may use this information to make buy or sell decisions. This technique is considered a form of price action analysis, which looks at the underlying forces that drive price movements rather than relying on indicators or other forms of technical analysis.</p>

<p id="isPasted">Imagine looking at a price chart for something you want to trade, like a stock or currency. Sometimes, you'll notice that the price suddenly stops or changes direction in a specific area. This happens because a lot of people are buying or selling at that moment.</p><p>In the world of trading, this special area is called an "order block." It's like a spot on the chart where the price acted differently than usual because many people wanted to buy or sell there. Traders believe that these order blocks are important because they can influence future price movements.</p><p>When the price goes up to an order block where people previously sold a lot, it might stop the price from going higher – like a ceiling. And when the price goes down to an order block where people previously bought a lot, it might prevent the price from going lower – like a floor.</p><p>So, traders who follow order block theory look for these spots on the chart where the price previously made big moves. They think that these spots can help predict where the price might stop or turn around in the future. When the price gets close to an order block, traders watch closely for certain patterns or signs that tell them whether to buy or sell.</p>