Smart money: order blocks, FVG, liquidity
What you learn in 3 minutesThis lesson gives you the vocabulary of smart money: order blocks, fair value gaps and liquidity. These are not signals. They are names for places where large orders are assumed to sit, and the assumption is what you need to understand.
One block, one sweep, 20 pips on 0.10 lots
| Step | Amount | Note |
|---|---|---|
| Demand block | 83.2000 to 83.2100 | the last small range before price moved up; treated as a place where buyers may still sit |
| Liquidity line | 83.3000 | a round number where stop orders are assumed to cluster |
| Sweep and return | price touches 83.3000, then falls back to 83.2200 | the move is assumed to take the stops above 83.3000, then reverse |
| Distance traded | 20 pips | 83.2200 to 83.2400, the gap left behind on the way down |
| Value of that move | ₹200 | 20 pips x ₹10 per pip on one standard lot, then scaled to 0.10 lots: 20 x 10 x 0.10 |
Your broker may quote a slightly different price, widen the spread around 83.3000, round the pip value, or charge a commission on top. The ₹200 is the raw pip value only.
The mistake people make here
The common mistake is to treat an order block or a fair value gap as a promise. A block is only a guess about where large orders might sit, and price can pass straight through it. People also forget that a sweep of 83.3000 is not a signal by itself; it is just a move that may have taken stops. Instead, write down the level, the pip distance and the rupee value before the move happens, then watch what price does. If the level fails, that is information, not a loss of faith.Check yourself
Price sweeps 83.3000 and returns to a block at 83.2100. The gap left behind is 15 pips. On 0.10 lots of USD/INR, what is that move worth in rupees?
One pip on one standard lot is ₹10. On 0.10 lots that is ₹1 per pip. 15 pips x ₹1 = ₹15.
A reader says the demand block at 83.2000 to 83.2100 must hold. Is that a fact or an assumption?
It is an assumption. The block is a place where large orders are assumed to sit. Nothing in the chart makes it hold, and SEBI does not license any method that guarantees it.