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Sniper Order Block Entry Trading Strategy
In this article, I am going to discuss Sniper Order Block Entry Trading Strategy. Please read our previous article where we discussed What is Liquidity Hunting or Stop Hunting in Trading.
Core Concept of Smart Money Trading System Using Order Block
Following the movements of major institutional investors or traders, who are often thought to have access to greater knowledge and resources than individual retail traders and who have the power to change the movement of the market, is referred to as “smart money.” In trading
Who are they?
- They can influence prices and direction because they actually have the power to change the market.
- They can choose the top or bottom, or they can choose against the trend.
How can one recognize Smart Money (SM)?
By examining an order block or supply-demand region in a chart. Supply and demand (SnD) zones, or Order Blocks, are footprints left by the market when an impulsive move occurs.
- The Spread (i.e. range of the price bar) increasing
- The clean Close (the point where the price closes on the current bar). And Consecutive directional candles close
- The Volume (i.e. activity), generally volume increasing on impulse move
What is Order Block in Trading?
Order Blocks are footprints left by smart money when an impulsive move occurs in the chart. Order Block (OB) is the last opposite candle before the strong impulse move that creates an imbalance in the market and breaks the market structure. Price is most likely to come back to those zones before it triggers another impulse move to continue with the trend.
What is a smart money trap in Order Block?
Every order block is not a valid order block. Then how smart money trap. Smart money only targets areas where higher Volumes or liquidity are pending and he grabs the liquidity by
- induce traders to take positions in the wrong direction or location
- Create panic and fear by moving against their entry
- Hit the stop Losses and grab the liquidity
Why did they do this?
The main objectives of the smart money trap are as follows:
- Avoid Slippage due to big orders. Stop hunts are one of the mechanisms for Institutions to be able to carry out large transactions without “slippage.”
- Buy low(discounts) sell high (premium)
Sniper Order Block Entry Trading Strategy Step-By-Step Process
Step 1 identify Market Structure (who is in control)
Principles of Smart Money Market Structure in Order Block Trading in any time frame. Price moves within the structure of the supply and demand zone. A breakout of the structure of the demand or supply zone will lead to price movement in the next area of the supply or demand zone.
How do Identify the Market Structure in any time frame?
Analyzing a chart’s price movement is one of the simplest ways to spot a trend. A downtrend is defined by a sequence of lower highs and lower lows, whereas an uptrend is defined by a sequence of higher highs and higher lows. The market structure gives us the bias for entry when the price breaks support or swings low in an uptrend, it may indicate a trend shift to a bearish market.
The sideways market happens when the price moves between predefined support and resistance mean 2 equal high and low. Price stays in a range during this point of the market and is in consolidation. This range is broken if the price breaks out from the top or bottom of the range, and This may be the beginning of a new trend either in trend continuation or trend reversal. The higher time frame structure is for the direction of the market means who is in control we want to trade the controlling side of the market.
3 types of Market Structure:
- Uptrend is also known as a Bullish Market. Will buy at discount zone or demand zone
- Downtrend also known as a Bearish Market sells at a premium zone or supply zone.
- Sideways or Ranging Market. If ranging, will I scale down to a lower timeframe to find opportunities at a range high or low, and will stay out of the market in the middle of the zone?
Supply and demand zone or Order bock zone (any time frame)
Step2: Finding Order Block in multiple time frames
Trading professionals often use multiple time frame studies in order to understand the general market trend and spot possible trading opportunities.
You must first decide which time frames are important for your analysis in order to carry out a multiple time frame order block analysis. To identify the general trend, for example, you might begin with a higher time frame like a daily chart. Then, you might switch to a smaller time frame like the 1-hour or 30-minute chart to find more precise levels of support and resistance.
If you have identified order blocks across multiple time frames, you can utilize this knowledge to make your trading decisions. A lower time frame order block at a key level of support, for example, would indicate that the market is likely to reverse direction and move upward. On the other hand, a higher time frame order block at a significant level of resistance may indicate that the market is likely to continue moving lower.
The market is fractal in nature, and depending on the market structure, we know our bias and its change from time frame to time frame. Suppose a higher time frame (HTF) IN CORRECTION is a bullish trend, then in a lower time frame, it’s a bearish trend. depend open both times frame we have to select which entry method to apply and also whether to risk entry vs confirmation entry
- Trend cont. entry or
- Trend reversal from higher time frame zone
- AGGRESSIVE vs confirmation entry
Note: – IF TRADING ANY REVERSAL FROM a higher time frame then confirmation entry is safe. avoid entry in the tested order block
Step3: Identify smart money trap in Order Block
This is done by either
- Liquidity hunting
Below is an example of one type of liquidity hunting
- Liquidity hunting
Sometimes fake order block is formed by smart money to induce traders to take an entry, then they hit their stop loss to take liquidity. here is one example.
Step4: Smart Money Sniper Entry in Order Block
First, decide which types of trade because depend on open trend entry technique change
- Trend continuous entry
- Trend reversal entry
- Range reversal entry
|Trend Continuation||Trend Reversal||Range Reversal|
First, understand Aggressive entry vs confirmation entry
Continuous Order Block Entry Method (aggressive entry)
Note trend continuous entry. Find an untested bearish order block in a downtrend or an untested bullish order block in an uptrend
As you can see the market is in a downtrend making a lower low and lower high. Valid bearish order blocked formed in the downtrend. Wait for any bearish entry at the bearish order block zone.
Sd/ds Flip confirmation entry model
Sd flip is a reversal confirmation entry method. It involves identifying untested strong supply and demand zones on a price chart and waiting for a price flip or change in the trend to occur at this untested zone, which can signal a potential bounce or trend reversal. When this structure is broken, it can indicate a shift in market sentiment and can provide opportunities for traders to enter a current form untested supply-demand zone.
Supply Demand Flip (bullish reversal)
- Price created a new low (market structure bearish supply in control)
- It tested the last supply zone (OB zone) but the price takes a technical bounce from the supply zone instead of actual selling, but could not create a new lower low in the downtrend.
- Instead of creating a new lower low in the downtrend, it broke through the last supply zone. Demand in control leaving a demand zone behind
- When the price retests the demand zone we will buy
CAN ENTER IN TREND CONTINUOUS OR AS WELL AS REVERSAL FORM HTF UNTESTED OB ZONE
CHoCH IS A REVERSAL CONFIRMATION ENTRY MODEL.
It involves identifying untested strong supply and demand zones on a price chart and waiting for or change in the trend to occur at this untested zone, which can signal a potential trend reversal. When this structure is broken, it can indicate a shift in market sentiment and can provide opportunities for traders to enter a current form untested supply-demand zone. Generally, two types of entry can take
- WITH INDUCEMENT
- WITHOUT INDUCEMENT
Change of Character
- Price faces an untested higher time frame demand zone or untested demand zone for trend continuation entry. Then the price broke the untested supply zone instead of bouncing or reversal,
- Strong move and beak of market structure (Strong demand IN downtrend) demand in control leaving a demand zone behind
- TEST OF OB. When the price retests the demand zone we will buy.
Note this is the 5th part of the smart money concept. Do read our previous article
- Order Block Trading Strategy
- Breaker Block Trading Strategy
- Liquidity Hunting or Stop Hunting in Trading
- Smart Money Market Structure
Here, in this article, I try to explain Sniper Order Block Entry Trading Strategy. I hope you enjoy this Sniper Order Block Entry 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. For more details, please watch the below video.