The Order Block Locator Indicator MT5 (MetaTrader 5) offers superior buy and sell signals within the forex market, pinpointing them by analyzing price exhaustion points. These order blocks represent regions where substantial orders have been executed, a result of participation from various significant market players, including banks, hedge funds, and other financial institutions. This forex MT5 indicator is available for free download.
Order Block Locator Indicator MT5: Introduction
MT5 Indicator Overview
The download link of the Order Block Locator MT5 indicator is placed at the bottom of this post – once you’re done, your Metatrader 5 trading chart should look similar to the example below.
Forex order blocks hold paramount significance in the realm of forex trading. These are pivotal trading zones where meaningful institutions accumulate substantial orders within the forex market. They serve as focal points where noteworthy forex trading activities have previously unfolded. Consequently, they serve as valuable markers for forex traders, potentially indicating areas where trends might experience reversals or breakthroughs.
In the world of forex, order blocks reveal the aggregation of substantial orders by major market players, notably banks. To achieve this, participants in the forex market divide their sizable orders into smaller, more manageable blocks, thus enhancing their overall profitability. This sequence of order blocks has the potential to trigger robust bullish or bearish movements.
Central banks, in particular, employ the strategy of breaking down their substantial orders into multiple blocks. This approach enables them to mitigate immediate disruptions to market stability. They initiate one block of their order, temporarily step back, and subsequently return to repeat this process until they successfully reach their intended order target.
How To Trade Using Order Blocks?
To effectively utilize the MT5 indicator, it’s crucial to have a solid understanding of the supply and demand trading approach.
When the price ventures into a bullish order block, it signals the potential for a price reversal. Consequently, technical traders should seek a suitable buy entry point by analyzing price action within this bullish order block. Given that order block signifies robust support, technical indicators and trading strategies designed to test support levels are deployed when dealing with it. The optimal stop loss placement is either below the cluster of orders within the block or the preceding swing low. On the other hand, take profit positions are determined by assessing the risk-to-reward ratio or identifying the next available resistance level.
Likewise, if the price enters a region characterized by bearish orders, traders should consider initiating a sell position, anticipating a market reversal. The most judicious entry point in a bearish context is determined through a careful analysis of price action. For risk management, setting a stop loss just above the cluster of bearish orders or the previous swing high tends to yield the most favorable outcomes. However, traders should aim for profit-taking opportunities that offer a favorable risk-to-reward ratio.
It’s important to note that an order block typically encompasses a zone rather than a single precise point. Consequently, forex traders should thoroughly assess the order block and adapt their strategies accordingly within this zone. A breakout from an order block may indicate a potential reversal point against the prevailing trend. Nonetheless, order blocks that persist in the direction of the existing trend often present more profitable opportunities and maintain a favorable risk-to-reward ratio.
Order Block Algorithms
The Order Block Locator employs three primary search algorithms for identifying order blocks:
Simple Fractal Search Algorithm:
This algorithm detects fractals based on user-defined settings for candles around fractal highs or lows. Once a price fractal is identified, the indicator searches for an order block within that fractal zone. It operates based on fractal patterns and is not real-time. The absence of real-time updates ensures that the indicator does not repaint.
For example, if you set “CandlesAroundFractal” to 3, the algorithm requires seven candles to form a fractal: one at the extremum, three to the left, and three to the right. Only after this formation will the algorithm search for an order block. This algorithm exclusively identifies order blocks at extremum points, such as Fractal Highs and Fractal Lows. To qualify as an order block, a candle must have x times “CandlesAroundFractal” candles around the fractal on either side.
Naive Fractal Movers Algorithm:
This variation of the simple fractal search algorithm utilizes a lower candle around fractal value, typically recommended as 2/3. It identifies order blocks with prices that move away from the order block within a specified candle count threshold, enabling fast move detection.
Candle Transition Algorithm:
The Candle Transition Algorithm identifies order blocks by first recognizing a shift from bullish to bearish or from bearish to bullish candles. It then requires the next consecutive candles to follow a single direction. For more stringent order block selection, users have the option to identify those where the shift candle is engulfing, indicating increased strength.
Furthermore, users have the flexibility to combine their two favorite algorithms to harness the strengths of both:
- Mixed Algorithm (Naive Fractal + Candle Transition)
- Mixed Algorithm (Simple Fractal + Candle Transition)
These mixed algorithms offer a comprehensive approach to order block identification, incorporating the characteristics of the selected algorithms for enhanced trading strategies.
MT5 Indicators: Download and Installation Instructions
Download the Order Block Locator Indicator MT5.rar archive at the bottom of this post, unpack it, then copy and paste the order-block-locator.ex5 or order-block-locator.mq5 indicator files into the MQL5 folder of the Metatrader 5 trading platform.
You can gain access to this folder by clicking the top menu options, which goes as follows:
File > Open Data Folder > MQL5 > Indicators (paste here).
Now go to the left side of your MT5 terminal. In the Navigator find the gauge name, right-click it and select Attach to the chart.
Free Download Forex Order Block Locator MT5 Indicator
To download the Order Block Locator Indicator for Metatrader 5 (MT5) for free just click the button below: