ICT CONCEPTS · PRICE ACTION
What is an Order Block in Trading?
An order block is not a reversal candle or a supply/demand zone. It is specifically the last opposing candle before a displacement — the precise zone where institutional orders were placed. Understanding that definition changes how you identify and trade them.
The definition: what makes a candle an order block
In ICT methodology, an order block (OB) is the last opposing candle (or set of candles) immediately before a significant displacement move. The “opposing” part is critical: for a bullish OB, the candle is bearish (closes down). For a bearish OB, the candle is bullish (closes up).
The theory behind it: institutional traders cannot fill large orders at a single price without moving the market significantly. Instead, they accumulate positions over a range of prices — the order block zone — before deploying capital in the intended direction. The displacement that follows is the result of that deployment. Price is expected to return to the OB zone to fill remaining orders before continuing.
This is meaningfully different from a generic support/demand zone. An OB has a specific candle it references, a specific displacement it preceded, and a specific mitigation mechanic. It is not a range of price where “price bounced before.”
Bullish vs bearish order blocks
Bullish OB
The candleLast bearish (down) candle before upward displacement
DisplacementBullish displacement that produces a BOS to the upside
EntryPrice returns to the OB zone — entry on mitigation of the candle body (typically 50–100%)
TargetDraw on buy-side liquidity above the prior swing high
Bearish OB
The candleLast bullish (up) candle before downward displacement
DisplacementBearish displacement that produces a BOS to the downside
EntryPrice returns to the OB zone — entry on mitigation of the candle body
TargetDraw on sell-side liquidity below the prior swing low
Three criteria for a valid order block
Not every opposing candle before a displacement is a tradeable OB. Apply these three filters before marking one:
01The displacement that followed must have broken structure
A bullish displacement that didn't break the prior swing high is not institutional — it's noise. The BOS confirms that the displacement was meaningful and that the OB zone has institutional weight behind it.
02The OB must not have been fully mitigated
Once price has traded completely through the body of the OB candle and closed beyond it, the zone is invalidated. A partially mitigated OB (price touched 50% of the candle body) may still be valid — this depends on how cleanly price respected the zone.
03The OB must be in alignment with the HTF narrative
A bullish OB in a bearish HTF trend is a countertrend play. Valid OBs align with the higher-timeframe draw on liquidity — the OB should be pointing price toward, not away from, the identified target.
OB mitigation: the entry mechanic
When price returns to an order block zone, the entry is taken on mitigation — price trading into the body of the OB candle. The two most common entry references are:
50% of OB bodyThe midpoint of the OB candle body — commonly used as the entry level for a more aggressive position. Higher risk, more R-multiple if target is hit.
Bottom/top of OB candleThe open of the OB candle (for a bullish OB). More conservative entry that requires deeper retracement — lower risk of being triggered by noise.
Full mitigationPrice trades through the entire OB body. At this point the OB is considered invalidated — if price then reverses, the zone is no longer valid by ICT rules.
In Tradexis, OB detection records whether an unmitigated OB was present within the entry zone at the time of the trade — your journal will show your win rate split by OB-present vs no-OB entries.
Order blocks vs supply and demand zones
The terms are often used interchangeably in retail trading content, but in ICT methodology they are distinct. Supply and demand zones are typically drawn around any area where price reversed significantly. Order blocks have a stricter definition: the last opposing candle before a displacement, where that displacement produced a BOS.
The practical difference: a demand zone might include 5–10 candles of consolidation before a move. An OB is a single candle (or the last few candles) before the institutional displacement. The OB is a more precise reference — smaller zone, clearer invalidation point. This is why ICT-trained traders often use OBs with tighter stops than traders using broader supply/demand zones.
How Tradexis auto-detects order blocks in the backtester
In the Drill Mode simulator, OB detection is automatic. When you initiate a BUY or SELL, Tradexis scans for the most recent valid OB in the direction of your trade: the last opposing candle before the most recent significant displacement, where that displacement produced a structure break, and the OB has not been fully mitigated at the time of entry.
This is stored as ob_present: true/false in your trade fingerprint. The Pre-Trade Mirror then uses this variable in its win-rate calculation — before your next OB entry, it can tell you your win rate on OB-present entries in similar context: same session, same direction, same volatility regime.
Combined with FVG detection and BOS confirmation, the OB variable gives you a complete picture of the structural context around every entry — and after 20+ trades, the Mirror's verdict starts incorporating all three as a composite fingerprint.
Frequently asked questions
What is an order block in trading?
An order block (OB) is the last opposing candle before a significant displacement move. A bullish OB is the last bearish candle before a bullish displacement; a bearish OB is the last bullish candle before a bearish displacement. The theory: institutional orders were placed in that price zone, and price returns to mitigate those orders before continuing in the displacement direction.
What is the difference between a bullish and bearish order block?
A bullish OB is the last down candle before price displaces upward — entry on return to this zone with a target at buy-side liquidity. A bearish OB is the last up candle before price displaces downward — entry on return to this zone with a target at sell-side liquidity. Both require the subsequent displacement to have broken structure.
How do you identify a valid order block?
Three criteria: (1) It is the last opposing candle before a displacement. (2) That displacement broke structure (BOS) in the displacement direction. (3) The OB has not been fully mitigated — price has not traded completely through the candle body. Tradexis auto-detects OBs meeting all three criteria on every backtesting trade.
What is OB mitigation in trading?
Mitigation occurs when price returns to trade through the OB zone after the initial displacement. Entry is typically taken at 50% of the OB candle body (more aggressive) or at the open of the OB candle (more conservative). Full mitigation — price trading completely through and closing beyond — invalidates the OB.
How does Tradexis detect order blocks automatically?
Tradexis's Drill Mode identifies the last opposing candle before each significant displacement, confirms BOS, checks mitigation status, and records ob_present as a fingerprint variable on every trade. The Pre-Trade Mirror uses this to split your historical win rate into OB-present vs no-OB entries.
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