What is an order block in trading?

In ICT and Smart Money Concepts, an order block marks where a large move started. A bullish order block is the last down-close candle before price displaces upward and takes out a recent swing high. A bearish order block is the mirror: the last up-close candle before a sharp drop that breaks a swing low.

The idea is that the candle’s range is where large orders were filled, so when price returns to it, some traders expect it to hold. The zone is usually drawn from the candle’s open to its low for a bullish block, and from its open to its high for a bearish one.

The last down-close candle before the rally is the order block (open to low). The rally breaks the swing high; price returns into the block and continues.

The example in numbers

Order block	1.08140–1.08260 · 12 pips · 50% at 1.08200
Entry (long)	1.08260 — top of the order block
Stop	1.08120 — 2 pips below the block’s low (14 pips)
Target	1.08740 — the high before the pullback (48 pips)
Reward to risk	3.43R · breaks even at a 23% win rate

EURUSD prices from the chart above (Order block), entry at 1.08260. At 3.43R, this setup needs to win more than 23% of the time to make money before costs. Try your own levels in the risk/reward calculator.

Order block: how to spot it

Find a strong, fast move — several large candles in one direction, often leaving a fair value gap behind.
Check that the move broke a recent swing high (for a bullish block) or swing low (for a bearish one). Without a break of structure most traders do not count it.
Go back to the last candle that closed against the move. Its range, open to low or open to high, is the order block.
Wait for price to return into the zone. The 50% level of the block, the mean threshold, is a common entry.

Definitions differ

Schools draw it differently. ICT teaching uses the open to the wick of the last opposite candle and watches the mean threshold; many SMC courses draw the whole candle, wick to wick, or merge several opposite candles into one block. Some only count blocks that left a fair value gap or that sit in a discount (for longs) or premium (for shorts) of the range.

Common mistakes

Every candle before a move becomes a block
Without a break of structure, the “order block” is just the bottom of a pullback. Ask what swing the move broke before you mark it.
The stop sits exactly at the block’s low
Price often wicks a few pips through the block before turning. Traders who keep a stop a little beyond the low, or use the mean threshold, get stopped out less.
Blocks are traded against the higher timeframe
A bullish 5-minute block inside a falling 4-hour trend has a different record from one that agrees with it. The journal tells you which.

Your win rate on OB

A definition does not tell you whether your OB trades pay. Your own record does: in the journal, open a trade from MT4 or MT5 and press the key of OB under Entry criteria — the most used criteria get keys 1–9.

Reports then show OB by itself: trades, win rate without breakeven trades, average R and P&L, and OB in each ICT killzone, which is set on every trade by itself. Combinations such as OB with another criterion appear once they have 15 trades, so a lucky streak does not look like an edge.

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Questions

›What is the difference between an order block and a breaker block?

An order block is expected to hold. A breaker block is an order block that failed: price broke through it, took liquidity on the other side and then came back, so the old zone now works in the opposite direction.

›Which timeframe is best for order blocks?

Many ICT traders mark blocks on the 1-hour to 4-hour chart and refine the entry on the 1- to 15-minute chart. There is no single answer; your own record by timeframe and killzone is the honest one.

›Do order blocks work in forex?

They are a way of reading price, not a guarantee. Whether they work for you depends on how you define and trade them — which is why it pays to tag them in a journal and look at the win rate after 30 or more trades.