Smart money: order blocks, FVG, liquidity
One block, one sweep, one return: 20 pips on 0.10 lots
| Step | Amount | Note |
|---|---|---|
| Order block marked | 1.0830 to 1.0836 | the last down candle before a sharp move up, drawn as a zone rather than a line |
| Fair value gap | 1.0842 to 1.0848 | the gap left between the low of one candle and the high of the candle two places later |
| Liquidity sweep | low at 1.0824 | price dips below the block, takes out stops resting there, then returns |
| Return into the block | entry at 1.0832 | price comes back to the upper half of the marked zone |
| Distance to the gap | 10 pips | 1.0842 minus 1.0832, the gap being the next marked area above |
| Value of 10 pips on 0.10 lots | KSh 1,300 | 10 pips x 10 units per pip on one standard lot x 0.10 lots x 130 KSh per unit |
| Value of 20 pips on 0.10 lots | KSh 2,600 | 20 pips x 10 units per pip x 0.10 lots x 130 KSh per unit |
The exchange rate used to convert the quote currency into KSh varies between brokers and changes through the day. A broker may also charge a spread, a commission or a swap on top, and may quote a different pip value for the same position size. Check the contract specification before you calculate anything.
The mistake people make here
The common mistake is to treat a marked block, gap or sweep as a reason to enter rather than as a place to watch. The vocabulary sounds precise, so it is easy to forget that every one of these terms rests on an assumption about where large orders sit, and that assumption is never shown on the chart. People also mark the zone after the move has already happened, which makes the chart look far clearer than it was in real time. Instead, mark the area first, write down what would make you wrong, and treat the level as one input among several. If the price does not return to the zone, there is no trade, and that is a normal outcome rather than a missed opportunity.Check yourself
Price returns to a marked block at 1.0832 and reaches the gap at 1.0842. On 0.20 lots, with one pip worth 10 units of the quote currency and the rate at 130 KSh per unit, what is the gross value of the move?
The move is 1.0842 minus 1.0832, which is 10 pips. One pip on one standard lot is 10 units of the quote currency, so on 0.20 lots it is 10 x 0.20 = 2 units. At 130 KSh per unit that is 260 KSh per pip. Over 10 pips the gross value is 10 x 260 = KSh 2,600. Spread, commission or swap would reduce this.
A reader marks a liquidity sweep at 1.0824 and says price must return to the block above. What is the assumption in that sentence, and what would falsify it?
The assumption is that large orders are resting in the block and will push price back up. It is falsified if price continues below the sweep low without returning, which is a normal outcome and not a signal to add to a losing position.