Smart Money Concept / ICT
Order Block (Smart Money Concept)
The last opposing candle before an impulsive, structure-breaking move.
What is Order Block (Smart Money Concept)?
An order block is a Smart Money Concept (SMC) and ICT idea: the last down-candle before a strong bullish move (bullish order block), or the last up-candle before a strong bearish move (bearish order block). It marks a zone where institutional orders are presumed to have entered the market.
How it works
Order blocks are identified after a sharp, structure-breaking move away from a consolidation. The originating candle's range becomes a supply or demand zone. Traders expect price to return to ('mitigate') that zone later and react from it, because resting institutional liquidity is thought to sit there. A valid order block is usually paired with a break of market structure and often an accompanying fair value gap.
How traders use it
- ▸Entries: look for reactions when price returns to an unmitigated order block.
- ▸Confluence: combine with break of structure and fair value gaps.
- ▸Stop placement: beyond the order block's far edge.
- ▸Bias: bullish vs bearish order blocks frame directional context.
Build Order Block (Smart Money Concept) without code in Algovex
Algovex ships a stateful order-block node that detects bullish and bearish blocks, tracks them across bars (forming → active → mitigated), and draws them on the chart with the same logic your strategy trades. Add mitigation triggers, backtest, and export, all without writing detection code yourself.
Works well with
Common mistakes
- ✕Marking any down/up candle as an order block, it must precede an impulsive, structure-breaking move.
- ✕Trading order blocks without a break of structure to confirm directional bias.
- ✕Entering on already-mitigated blocks; the edge is in fresh, unmitigated zones.
- ✕Ignoring fair-value-gap confluence, which strengthens the zone.
Key parameters
| Parameter | What it does |
|---|---|
| lookbackBars | How many bars the detector scans for structure. |
| impulseStrength | How strong the move away must be to qualify the block. |
| mitigationMode | When a block is considered consumed (touch / close-through). |
Frequently asked questions
What is the difference between an order block and a fair value gap?
An order block is the originating candle before an impulsive move (a supply/demand zone), while a fair value gap is the price imbalance left inside the impulsive move itself. They frequently appear together and are used as confluence in ICT/SMC trading. Algovex has dedicated nodes for both.
Can Algovex detect order blocks automatically?
Yes. The order-block node detects and tracks bullish and bearish blocks across history and live bars, so you can both visualise them and trade them in a backtested strategy.