Breaker Block Trading Strategy

Breaker Block Trading Strategy:

In this article, I am going to discuss Breaker Block Trading Strategy with Real-time Examples. In the smart money trading concept, it is called breaker block trading and in the price action concept, it is called breakout test. The idea behind a breakout test or breaker block is that if the market can successfully retest the breakout level and continue in the same direction, it provides confirmation of the validity of the breakout and suggests that the market is likely to continue moving in that direction.

A breaker block strategy or breakout test involves looking for key support or resistance levels on a price chart that may cause a significant change in price direction when broken. When an SR/SD level is breached, it is considered a significant signal that the price may continue to move in that direction.
Then waiting for the price to return to the breakout level to confirm that it has become a new support or resistance level. Once the level has been confirmed, traders can enter a trade in the direction of the breakout.

Below is the basic idea about breaker block trading or breakout test trading strategy

Breaker Block Trading Strategy step by step

Step 1: Identify the key support or resistance levels in the range (accumulation/distribution)

Step 2: Watch for a price breakout above or below these levels, which can be a signal of a potential trend reversal or continuation.

Step 3: Confirm the breakout by looking at the trading volume and candle, to see if the move is supported by market activity.

Step 4: Wait for the price to return to the breakout level and confirm that it has become a new support or resistance level. Look for the price to touch or bounce off the breakout level, indicating that it is holding at a new level of support or resistance

Step 5: Enter a trade in the direction of the breakout, using stop-loss orders to manage risk. If it was a bullish breakout test or bullish breaker block, enter a long trade and place a stop-loss order below the breakout level and recent swing low

Step 6: Monitor the trade closely and adjust stop-loss orders or exit the trade if the market moves against your position.

BREAKOUT CONDITION

liquidity hunting and break of market structure
Valid breakout
HIGHEST CLEAN VOLUME OR WIDEST CANDLE (VOLUME SPIKE). Greater the volume and size of the candle stronger the breaker block
Should not break and follow-through of the breakout candle

U can trade trend continuation or trend reversal. Here is the basic idea behind the valid breaker block entry method

Below is an example of Breaker block trading strategy

Order Block Trading Strategy

The order block strategy involves identifying areas on a price chart where significant buying or selling activity has taken place in the past. When the price returns to an order block, traders look for confirmation that the level is holding before entering a trade in the same direction as the previous buying or selling activity. 3 types of order block entries. In Order Block Trading or SMART MONEY MARKET STRUCTURE

SD FLIP
CHoCH
BOS

Step 1: Look for areas on the price chart where significant buying or selling activity has taken place in the past, creating order blocks.

Step 2: Watch for the price to return to the order block area, which can signal a potential trading opportunity.

Step 3: Wait for confirmation that the order block is holding by looking for price action or trading volume.

Step 4: Enter a trade in the direction of the previous buying or selling activity, using stop-loss orders to manage risk.

Step 5: Monitor the trade closely and adjust stop-loss orders or exit the trade if the market moves against your position.

Break of Market Structure and Order Block Trading Strategy

Supply Demand Flip and Order block trading strategy

Change of Character and Order block trading strategy

Pullback Trading Strategy:

The pullback strategy involves looking for temporary retracements in the price of an instrument before the price continues to move in its previous direction. Traders look for areas of support or resistance (using any confluence factor) where the price may retrace before continuing in its original direction.

Here are the basics idea behind the pullback trading strategy

After an impulse move formed. wait for any trend continuation Chart Patterns like the flag, pennant, wedge channel, etc

Below is the basic idea behind the confluence of fibo retracement +flip zone with pullback trading

Pullback Trading Strategy step-by-step Process

Step 1: Identify the trend of the instrument by analyzing the price chart using the supply-demand zone or market structure. Wait for a valid breakout for trend continuation or trend reversal

Step 2: Look for areas of support or resistance that the price may retrace before continuing in its original direction.

Step 3: Then look for temporary weak retracements to any areas of support or resistance (using any confluence factor) where the price may retrace before continuing in its original direction. Wait for the price to pull back to the identified support or resistance level. Confluence zone (Flip zone /sd zone/fibo/trendline/ma/vwap/avwap)

Look for continuation chart patterns like flag, pennant, wedge, channel, double top or double bottom etc

Step 4: Confirm the retracement zone by looking at price action or trading volume.

Step 5: Enter a trade in the direction of the original trend, using stop-loss orders to manage risk.

Step 6: Monitor the trade closely and adjust stop-loss orders or exit the trade if the market moves against your position.

Differences between Breaker Block Trading, Order Block Trading, and Pullback Trading:

The key difference between these strategies is how they identify potential trading opportunities.

The breaker block strategy focuses on identifying significant support or resistance levels,
Order block strategy focuses on identifying areas where significant buying or selling activity has taken place,
And the pullback strategy focuses on identifying temporary retracements in the price of an asset.

Each strategy has its own advantages and disadvantages, and traders should choose the one that best fits their trading style, risk tolerance, and goals. Traders should also have a good understanding of technical analysis tools and market dynamics to effectively implement these strategies.

SMART-MONEY TRADING BOOKS: https://amzn.to/3Jf3747

You can check more details about

Order Block Trading Strategy here

Pullback Trading Strategy here

Chart Patterns for trading here

For more details, u can watch the below video

SMART-MONEY CONCEPT

Supply and demand
order block

SMART MONEY MARKET STRUCTURE

SD FLIP
CHoCH
BOS

Location of entry

Breaker block or breakout test
Order block or supply-demand reversal
Complex pullback /chart pattern entry

In the next article, we will discuss below pointers

SMART MONEY ENTRY TECHNIQUE

Liquidity hunting
Inducement

In the next article, I am going to discuss What is Liquidity Hunting or Stop Hunting in Trading with Real-time Examples. Here, in this article, I try to explain Breaker Block Trading Strategy with Real-time Examples. I hope you enjoy this Breaker Block Trading Strategy article. Please join my Telegram Channel and YouTube Channel as well as my Facebook Group to learn more and clear your doubts. Please watch the following video if you want to learn and understand this concept in a better way.

Breaker Block Trading Strategy