Pattern Reality Check / Order block

PATTERN REALITY CHECK · SMART MONEY AND LEVELS · TESTED 8 OCT 2026

Order block: does it work after costs?

The last opposite candle before a strong move. "Smart money" courses say price returns to it before continuing.

Small positive result, not confirmed

Verdict

Small positive result, not confirmed

The average is slightly positive, but the result does not pass our strict test and does not hold up across all periods.

Average per trade+8.6%+0.086Rof the amount risked, after costs and funding. 95% range: +0.2% to +17.5%.

Trades tested1,86729 coins2020-06-15 to 2026-09-23, 4-hour candles.

Trades won38%needs 35% to break evenWins averaged +1.920R, losses -1.049R.

Against random entries100%of random runs beatenRandom entries averaged -6.5%, because costs hit every trade. Beating them is not enough: the average must also be clearly above zero.

Read with care. Limit orders are assumed to fill whenever price touches the level. In real markets a touch is not always a fill, and the fills that are missed tend to be the winners. This makes the result optimistic.

Why "not confirmed". The average is above zero and its 95% range stays above zero. It does not pass our stricter bar: the 99% range includes zero. The limit-order fill test below shows the result depends on how generously fills are assumed. Treat it as a hint to test further, not as evidence.

Percentages are % of the amount risked per trade. New to R? Read this first.

What courses teach

The idea

Popular in "smart money" and ICT-style content. The last down candle before a strong up move (and break of a swing high) is called a bullish order block, said to hold institutional orders. Price is expected to come back and react at it.

The rules we froze

These numbers are the usual textbook values. They were written before we saw a single result and were not changed afterwards.

PartRule, fixed before the test

Signal

A candle of at least 1.5 ATR that closes above the latest swing high (or below the latest swing low). The last opposite candle in the previous 6 is the order block.

Entry

Limit order at the edge of the block, filled if price comes back within 60 candles and the close has not gone through the block first.

Stop

0.25 ATR beyond the block extreme. At least 1 ATR from entry.

Target

Twice the distance to the stop (2R).

Time limit

Closed after 60 candles (10 days) if neither stop nor target was hit.

Costs

0.14% round trip plus real funding, charged on every trade.

What it looks like

Examples, good and bad

Two real trades picked by a fixed rule, not for being pretty, and six drawn at random from the held-back period (the most recent two years). 3 of the 6 won. Examples show the rule, they are not results: the results are the numbers further down.

Order block example that reached the target

Order block example that was stopped out

Results

Trade after trade

All 1,867 trades added up, with the three periods shaded. The right axis shows euros if you risked €100 on each trade. The dashed line is what random entries would have done.

By period

The same average, split by period. The black bars are the 95% range: if they cross zero, we cannot tell the result from luck.

PeriodTradesAverage per tradeTrades won95% range

Build

852

+7.4% +0.074R

37.8%

-5.5% to +20.8%

Validation

633

+10.9% +0.109R

38.9%

-2.4% to +25.6%

Held-back

382

+7.5% +0.075R

38.2%

-11.1% to +27.8%

By version

VersionTradesAverage per tradeTrades won

Long

1,072

+10.7% +0.107R

39.1%

Short

795

+5.8% +0.058R

37.1%

How the trades ended

The honest yardstick

Compared with entering at random

A pattern should beat luck, not zero. We ran 1,000 simulations that enter at random times on the same coins and periods, in the same direction, with the same stop distance, target and time limit.

Order block compared with random entries

In plain words

Why the numbers look like this

Random entries lose too. Entering at random times with the same stops and targets averaged -6.5% per trade (-0.065R) because of fees, funding and spread. The pattern averaged +8.6% and did better than 100% of 1,000 random runs. That is the honest comparison: not zero, but what luck plus costs produce.

Before costs: +14.1%. After costs: +8.6%. Fees, funding and slippage took 5.5% of the amount risked from every trade, on average.

Win rate versus break-even. It won 38.2% of trades. With average wins of +1.920R and losses of -1.049R, it needed 35.3% to break even. The win rate is above what it needs, which is what a positive result looks like.

Consistency across time. The average was positive in 3 of 3 periods. All three periods are positive, but the ranges below show they are within normal luck.

Sensitivity. Across 32 variations of the rule, 27 were positive and 5 negative. The best variation (+27.4%, 3,431 trades) is not a result: with 32 variations, a few green cells appear by chance. We look for a broad green region.

Stress tests

Does it survive changes?

Changing the pattern shape

Each cell is the same test with a different setting. The outlined cell is the rule we froze. Green is positive, red negative. We do not pick the best cell: we look for a broad region.

Changing the exits

Same idea for the target and the stop.

Changing the costs

CostsAverage per trade

No costs, funding only

+13.9% +0.139R

Half the costs

+11.2% +0.112R

Our costs (0.14% + funding)

+8.6% +0.086R

Double costs

+3.4% +0.034R

Triple costs

-1.9% -0.019R

Stricter limit-order fills

Limit orders rest at a level and fill when price touches it. In real markets, a touch is often not a fill: your order sits in a queue, and the touches that do not fill tend to be the ones that reverse in your favour. To test this, we kept only the trades where price went further through the level.

Fill ruleTradesAverage per tradeHeld-back period

Our assumption: filled when price touches the level

1,867

+8.6% +0.086R

+7.5%

Filled only if price trades 0.1 ATR through the level

1,403

+3.8% +0.038R

-0.4%

Filled only if price trades 0.25 ATR through the level

862

-10.7% -0.107R

-11.2%

If the result were real, it should survive a stricter fill. It does not: the more demanding the fill, the lower the average.

Another timeframe

On daily candles the same rule gave -5.0% over 246 trades.

Coin by coin

18 of 29 coins had a positive average. With a few dozen trades per coin, some are always positive by chance.

Limits

What this does not say

It does not say order block never works. It says this version of the rule, applied to every case, shows small positive result, not confirmed in this data.
It is a simulation. Real fills, delays and emotions make results worse.
The market may change. Results from the past are not a forecast.
We publish tests of popular patterns, we do not publish or comment on strategies we use ourselves.

Method: how we test · Errors: corrections · Education only, not investment advice.

Questions

Questions about order block

Does order block work in crypto?

In our test of 1,867 trades on 29 crypto perpetuals, with real costs and funding, the average result was +0.086R per trade (+8.6% of the amount risked). Verdict: small positive result, not confirmed. This applies to the textbook rule defined on this page, not to every way of using it.

Why do I see charts where order block worked?

Because any rule produces winning examples. A chart that shows a winner says nothing about how often the same rule fails. The test above applies the rule to every case, with costs, without picking.

What would make this result change?

A different timeframe or market, different exits, or filters that add information the pattern does not contain. We tested a second timeframe and 32 variations of the rule; the numbers are on this page.

How should I read the percentages?

They are percentages of the amount you risk per trade, not of your account or of the coin price. +8.6% means +8.6% of the amount risked, on average. See what is R.