In today’s highly competitive trading landscape, retail traders need more than basic indicators to stay ahead. To truly understand how the market moves — and why — professional traders rely on market structure and order blocks. These two core concepts form the foundation of many institutional trading strategies and can dramatically improve your accuracy and consistency in the markets.
In this article, we’ll break down what order blocks and market structure are, how they work together, and how to apply them in your own trading.
What is Market Structure in Trading?
Market structure refers to the way price moves in waves, forming trends and patterns that reflect the overall behavior of buyers and sellers. It helps traders identify the current phase of the market: uptrend, downtrend, or consolidation.
The Three Key Phases of Market Structure:
- Higher Highs and Higher Lows (Uptrend)
- Lower Lows and Lower Highs (Downtrend)
- Sideways Ranges (Consolidation)
Understanding market structure is crucial for identifying entry points, setting stop losses, and aligning with the dominant trend.
What Are Order Blocks?
Order blocks are price zones where institutions and large players place significant buy or sell orders. These are areas where the market paused before making a strong move, indicating that a large order was likely executed.
Order blocks represent areas of institutional interest and are often used to anticipate future price reactions. They are more reliable than traditional support/resistance levels because they are rooted in actual order flow.
Types of Order Blocks:
- Bullish Order Block: Last down candle before a strong upward move
- Bearish Order Block: Last up candle before a strong downward move
These zones act as potential entry points when retested and are key to understanding where smart money is active.
How Market Structure and Order Blocks Work Together
Combining market structure and order blocks creates a professional-level trading approach. Here’s how they complement each other:
- Identify trend direction using market structure (e.g., higher highs, lower lows)
- Mark key order blocks within the trend as areas of interest
- Wait for price to return to the order block and look for confirmation before entering
This approach allows traders to enter at high-probability points with strong risk-to-reward setups.
Steps to Trade Using Order Blocks and Market Structure
Step 1: Analyze the Market Structure
- Determine whether the market is trending or ranging
- Look for breaks of structure (BOS) or change of character (CHOCH)
Step 2: Identify Valid Order Blocks
- Locate the last bearish candle before a strong bullish move (bullish OB)
- Locate the last bullish candle before a strong bearish move (bearish OB)
Step 3: Mark Key Zones and Wait for Price to Return
- Draw your order blocks on higher timeframes (H1, H4, or Daily)
- Wait for price to return and show a reaction at the block
Step 4: Look for Confirmation Entries
- Use lower timeframes (M15, M5) for precise entries
- Wait for a break of structure or reversal candle pattern to confirm the move
Common Mistakes to Avoid
- Misidentifying order blocks: Not every move is institutional — be selective.
- Ignoring market structure: Don’t enter trades against the prevailing trend.
- No confirmation: Jumping in without a proper entry signal increases risk.
Why This Approach Works
Using order blocks with market structure shifts your perspective from reactive trading to strategic, informed decision-making. Instead of chasing price, you learn to anticipate where price is likely to move — and why.
This is exactly how many institutional traders operate: by identifying areas of interest, waiting for liquidity to be created or grabbed, and then executing based on structure and confirmation.
Conclusion
By mastering order blocks and market structure, you can transform your trading from random to reliable. These tools help you understand the market’s underlying logic, giving you the same insights professional traders use to stay consistently profitable.
If you’re ready to trade like the smart money, start incorporating these concepts into your daily analysis and watch your edge improve.
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Tags: Order Blocks, Market Structure, Forex Strategy, Institutional Trading, Price Action, Smart Money Concepts, Break of Structure, Professional Trading