Description:
The Order Blocks Proximity indicator is a valuable tool in trading platforms enabling traders to identify significant levels of buying or selling activity based on clusters of orders or "blocks" at specific price levels. By marking these zones on a price chart and measuring the proximity of the current price to these identified order blocks, traders can gauge the relevance and strength of these levels in the current market context. Incorporating this indicator into their strategy, traders aim to anticipate potential price reactions around these key levels, using them for entry and exit points, stop-loss orders, or to confirm their overall market analysis.
Input Parameters:
- Sensitivity: Serves as a benchmark for crossover/under functions and the Rate of Change calculation, indicating the percentage change required in price movements for an order block to be drawn; typically set at 28 by default.
- Band Type: Choose from four different types of band calculations - including ATR, ST.Dev., Constant, or Percentage.
- Band Length: The width or size of a price band used to identify the patterns.
- Band Multiplier: Determines the width of the bands relative to volatility by multiplying the standard deviation of price movements around a moving average.
- OB Mitigation Type: Determines how price action will affect an Order Block's visibility, with "Close" requiring the candle to close through the block range for mitigation, while "Wick" simply necessitates price to wick through the range.
Use Cases:
- Confirmation of Support and Resistance Levels: Traders can use the Order Blocks Proximity indicator to confirm the presence of support and resistance levels on price charts. By identifying clusters of order blocks near key price levels, such as previous swing highs or lows, traders can gain confidence in the significance of these levels and make more informed trading decisions based on potential price reactions.
- Trade Entry and Exit Points: The indicator can help traders identify optimal entry and exit points for their trades. When the price approaches an order block, traders may look for confirmation signals, such as candlestick patterns or momentum indicators, to enter or exit positions. The proximity of the current price to these order blocks can provide valuable insight into the strength of potential trade setups.
- Risk Management: Incorporating the Order Blocks Proximity indicator into risk management strategies allows traders to place stop-loss orders more effectively. By setting stop-loss levels beyond order blocks that are likely to act as significant support or resistance, traders can potentially reduce the risk of premature stop-outs and improve the risk-reward ratio of their trades. Additionally, the indicator can help traders adjust their position sizes based on the proximity of the current price to key order blocks, allowing for more precise risk management.
This feature can be used in:
- Market Scanner
- Strategy Tester
- Multi-Factor Alerts
- Smart Checklist
Do you want to learn more? Check out our Learning Center Article.