Checklist 7

The Block Trade Principle

What is the block trade principle all about anyway? The block trade principle is on the basis that
you are going to see the market memory getting triggered again in the future…
Stick with me, by the time you are done with this checklist you will have a clear understanding of
what the block principle is…

There are many classifications in trading as to what each candlestick represents.

You may be familiar with Steve Nisons Japanese Candlesticks book Engulfing Patterns, three
crows, Three Soldiers, what else? Dojis, Morning star patterns, evening star…

The list goes on…

I look at it like this:

What set of candles tells me that there is interest? How can I simplify this process?

That is where the block trade principle comes into play.

Now I have done masterclass sessions on the Blokc trade principle…

This checklist will break down everything you need to be mindful of when trading the blocks…

What is a Block?

The image above shows you what a block looks like…

How do you identify a block? If its simply just going back in the chart and finding vector candles,
which there will be many, how do you know which one to use?

Checklist Point 1 - Big Candle, small wicks -

The Image above shows you the ideal candlestick for a block trade.

Logic—We want to use a candlestick with a strong body and very small wicks to indicate a
commitment within it.

When you use a block that has big wicks, it tells you that the candlestick experienced a run of
stops or there was inconsistency in the battle between the bids and the offers.
The smaller the wicks, the easier it is to identify the candlestick's intentions and assume that in
the future, that same behaviour will happen again.
Example of a bad block

Now there is nothing stopping you from using a block with wicks, however, you want to improve
the odds of being involved in a move that can lead you to believe that the markets memory is
going to trigger again in the future…
Checklist Point 2 - Solidifying intention -

A word of advice - You are all playing the game of “Hide and Seek” - The market is hiding it’s
intentions, you are seeking the journey it will take…

If there is an image you study, its the one below and i will explain in detail the thought process
needed because this is the exact zone i traded yesterday on the NASDAQ that I spoke about in
live on the 11th October 2024 - (evening stream 5pm ET 10pm GMT)

I identified the block, the red vectors left me a clue that price would come back to this point in
the future.
Nasdaq creates the manipulation and drops down (the drop-down happened to be a sweep of
the Asian session low)

Now this is where you have to start thinking about things… Notice the green vector candle that
is breaking the block…This is the trigger point…

The chart above is the 5m time frame which is the sweet spot of block trades. Higher time frame
blocks are just as good, but I will get to that later.

Lets look at how that trigger point looked on the 1m time frame; Refer to the chart below…
Notice how the green vector came into play…Is that enough? Technically, the move that broke
through the blocks low, what was going on inside that range?

The chart below shows you the 30s time frame on NASDAQ. What do you see? Take time to
really look at the range we are discussing, which is the trigger point zone…WE are looking for a
reason to justify that price is going to trigger the market's memory and break through the vector
block low and move higher and give us the idea that there are bids in that zone that want to offer
higher prices….Where are the bids???
 DO NOT PROCEED UNLESS YOU CAN SEE IT….

WHAT CLUE APPEARED BEFORE TO SUGGEST THEY WERE GOING UP?

If you had said the violet vector candle, then you have Hybrid eyes…

Let’s break ti down:

The violet vector candle gave me a clue that I was good for the move to the upside on the
Nasdaq when I took the trade. Remember when I said it was one candle (the stopping volume
candle that appeared on the 5m time frame)? All the activity above in the 30s time frame was
that candle…

The violet vector was the last of the bids coming in to load up on longs before the intended
move to the upside… Remember, the block principle is all about triggering the market's memory
to suggest that the same thing that happened before is likely to happen again. This is based on
the market participants who want to buy low and sell high…The violet vector gave me that clue.
To top it off…What made me believe that this was the low?
Look at the stopping volume candles…

When nasdaq sweeps lower and reverses at speed, these are the subtle clues that we
have “players” holding the range” meaning, they are bidding prices and controlling how
low it will go before they decide to offer prices higher…
For the depth of market traders what does this look like?

I shared it last night on the live stream but I will show you here:
The image above is the ES, this behaviour was 4 hours after the brinks, but the same behaviour
in the depth above is what the candlesticks in the Nasdaq within the block were showing.
Remember, we want to identify areas that are giving us clues the markets memory is going to
trigger again…

Look above at the ES - Notice the point of control with 19301 contracts Look right and you can
see the green arrow with 12652 of offers…S owe know there are players in here that want to
sell at higher prices and do so in that zone…

Now look below in the green highlighted box…Can you see orders of 125 and 186…These are
guys getting in the last bids…What are they doing in the mean time…?

Look at the offers (green circle above) see how there are contracts ranging between 102 and
128…These are the offers knowing that if they place their orders there, they are likely to sell into
market participants who start to see price rising…At this time of day es was approaching its all
time high…
The image above shows you the follow through: Can you see how the point of control showed
more interest from the bids and they loaded up more positions at the Point of control and the
offers started to come in…
Notice how (green rectangle) the offers of players buying up ES contracts…This is an example
of a sweep and when price breaks from a block…
What does the above look like on the Hybrid system?
The depth of market above of the ES is shown with the hybrid…What do you see…?

The point of control triggered more orders, which increased from 19k to 21k…That is identified
by the red vector stopping volume candle that spikes below the green vector block in the image
above…

Then price returns back up and the blue vector appears and sweeps the range…
Granted it was a fast move, which is why dom trading requires speed and attention to profits,
otherwise you will miss the chance to pay yourself and you will end up in a draw down…
You effectively had 30 seconds to decide if you were happy with the profit; otherwise price came
down recovered the blue vector and dropped from there.

So it’s safe to say that if you have made it here, you might be a little confused…

Not to worry:

Let’s take the above and put it into pointers that will help you make sense of how you can
identify the blocks and whether or not they are going to work.

Checklist Point 1 - Big Candle, small wicks - The ideal scenario for a block is to see if it has
appeared after a move lower…You want to prove that the candle is getting ready to mark prices
higher… A great exercise to test this is to refer to the first vector above the 50 ema strategy.

Checklist Point 2 - Solidifying intention - As explained above, you want to see proof that they
want to trigger the markets memory and move prices higher. Drop down to smaller time frames
focus on the block range and explore if there are any vector candles that have not been
recovered within the block…The example of the violet vector candle above is perfect)

Checklist Point 3—Is the block you have identified appearing after a sweep of the Asian
session low? The US brinks box? For longs, you want to establish if they are trapping traders in
shorts. You will find that stopping volume candles tend to appear after a block, as this is the
market's way of trapping and shaking out range traders.

Checklist Point 4 - The timeframe you base your trading on is important. Blocks within a block
are also good at letting you know if the intention is there to continue with the behaviour from the
perspective of the block. E.g. If you mark off a green vector block on the 1hr time frame, go
down to the 15m or the 5m or the 1m and determine the make-up of the developing candles to
see if they align with the 1hr block you have marked off…Use the high and low block ranges and
focus on how price behaves around these levels. YOu are looking for green and blue vectors to
suggest that the green vector block on the 1hr is starting to trigger the market's memory and
wants to move higher…Remember, the smaller time frames will show you this.
Checklist Point 5 - TAKE THE TRADE - This is one of the only strategies that require you to
take on risk and manage it based on the behaviour of the candlesticks. You make a conviction
that you think the memory of the green vector block will come into play, take the trade and
generate the feedback..If the price is playing around the range of the block (high and low) you
are looking for vectors on smaller time frames to come in to suggest they are looking to move
away from the zone.

Checklist Point 6 - Vectors Must Break The Block Range - I cant stress this enough. You
can improve in catching momentum if you see a vector candle appearing in the higher time
frames breaking through the block range. Now, this is the hardest bit because you won't know
for sure that the block will be broken with a vector, but if you see vectors breaking through the
block range on smaller time frames, then that is still ok for you to take the trade or be in a trade
until you see the vectors coming into play to break the block range.

I hope this helps guys…

Trade Safely

Mad Love