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Mastering the Market With Breaker Blocks: A 2000+ Word Price Action Guide

Yoda once said: "Truly wonderful, the mind of a trader is."

But let‘s get real…the path to trading mastery is long and treacherous. Sure you might fluke a few winning trades. However, developing true order flow skill takes 1000s of screen hours.

As someone who‘s traded successfully at the institutional level, I‘ve built that experience the hard way.

And today I want to shortcut your learning curve by unveiling all my secrets around the powerful breaker block strategy.

This guide will expand on the core concepts you likely know. But by the end, you‘ll have a comprehensive roadmap to spotting high-probability block patterns for precision entries, bankable targets, and smooth psychological state.

So whether you‘re a breaker block apprentice or full-on Jedi price action master, stick around…

Things are about to get interesting!

Why Breaker Blocks Matter More Than You Realize

Before we dive deeper, let‘s revisit why breaker blocks need to be front and center of your trading process:

They reflect true order flow sharks battling behind the scenes

As retail traders, we can only see the visible printouts of price. But beneath the hood, hedge funds and prop firms battle with complex algorithms to mask intent.

Breaker blocks form when these institutional power players finally reveal their hand – if only temporarily.

Their attempts to aggressively push price beyond key liquidity levels often fail after rejections from other big players.

This leaves behind vital clues for us to capitalize on…

They signal major directional intent and conviction

Not all breakouts fail equally. Ranging price can fluctuate up/down harmlessly within well-defined bounds.

But when mega institutions finally make a concerted effort to shift price aggression, it leads to explosive moves.

If that momentum rapidly fizzles, confirming the failure with a breaker block, expect fireworks soon after!

They provide structure around executing with precision

You‘ve likely heard trading psychology cliches like "plan your trade and trade your plan". Easier said than done without structure!

Breaker blocks provide that professional framework to plan entries, stops and targets objectively.

When discretionary trading you might chase price randomly. Breaker blocks add order around ideal moments to engage risk.

Now let‘s break down what makes breaker blocks truly unique compared to other order flow tools…

How Breakers Fit Alongside Other Order Flow Patterns

If you‘ve studied Smart Money concepts, you likely know terms like:

  • Order blocks
  • Tails
  • Deep value/liquidity
  • Speed of tape
  • Composite man

Breaker blocks belong in that toolbox – but with some exclusive twists:

Breaker Blocks vs Order Blocks

Order blocks mark levels where buyers/sellers initially step in with force after periods of consolidation. The breaker block forms with the subsequent stopping out of those same players.

So while order blocks show us when hedge funds first reveal their hand, breaker blocks confirm they got blown out moments later!

Breaker Blocks vs Speed of Tape

Speed of tape focuses on tempo changes in buying/selling pressure across multiple timeframes. Breaker blocks isolate specific price rejections rather than general momentum.

Both remain hugely valuable depending on context – often best used together!

Breaker Blocks vs Tapered Blocks

Tapered blocks describe wedge-style formations often emerging during breaker blocks moves. While useful later in trends, tapered blocks lack the singular levels proving institutional failure.

Only breaker blocks reveal exact areas big players tried pushing above/below…but got embarrassingly rejected from!

As you can see, breaker blocks serve a unique role marking failed order flow auctions by the market‘s most powerful participants.

Now…

Let‘s analyze some real chart examples to drive these concepts home!

Chart Examples Breaking Down Common Breaker Block Formations

Studying past price action containing breaker blocks is invaluable for spotting similar patterns developing right now.

You‘ll train your eye to recognize them almost immediately once you review enough historical examples.

Here are two common formations I regularly exploit:

Example 1: Deep Shakeout Fakeouts

Deep Fakeout Breaker Block Example

This AUD/JPY daily chart above shows price consolidating under resistance before an aggressive, multi-day push upward attempting to break out.

But after moving over 600 pips, buyers get exhausted and reject violently back below the prior swing high.

This signals institutions tried taking out liquidity above 93.500 but got ambushed by heavyweight sellers. The rapid reversal candle confirms the failure – classic breaker block structure.

Now when price returns over a week later to retest that precise level, we can confidently enter short targeting swing lows and support areas below.

Example 2: Layered Liquidity Traps

Layered Liquidity Breaker Block

Here we see EUR/USD forming layered resistance between 1.09050 and 1.10000 leading into March 2020.

Eventually an order block spike launches price up to test those layers. However, sellers lay in wait with huge orders sitting just above, as evidenced by the wicks hitting 1.10670.

When pandemic news accelerates selling momentum, the rejection is vicious. We get a sharp breaker block closing within the prior swing highs/lows around 1.10470.

As EUR/USD returns to retest that price over the next few weeks, we could enter short targeting the major support levels below 1.07000.

Now…

Let‘s shift gears and discuss the psychological lessons needed to trade breaker blocks effectively long-term…

Mastering The Mindset: Psychology of Trading Breaker Blocks

If you nail entries, targets and risk management but still lose money, psychology likely remains the bottleneck.

Trading breaker blocks successfully requires tremendous discipline alongside the technical skills.

Here are three crucial mindset principles to embrace:

1. Accept You Can‘t Control The Market

The market doesn‘t care about your analysis or profit goals. Price does what it wants, when it wants.

Attempting to will trades in your favor or rationalize price levels leads nowhere. Stay flexible!

2. Trade Process Over Outcome

Winners focus on honing their strategy rather than random P/L on any one trade.

Sticking to your breaker block rules through ups AND downs keeps you in the game long enough to master them.

3. Embrace Responsibility

Stop playing victim or blaming externals for losing trades.

Taking ownership of both successes AND mistakes keeps you honest about change needed.

Now, let‘s shift gears and break down the step-by-step process of executing a real breaker block trade from start to finish…

Walkthrough: Entering a Live Trade from Breaker Block Signal

The best way to engrain a skill is practicing it actively. So let‘s analyze a fresh breaker block setup emerging right NOW on AUD/JPY daily price…

Live Breaker Block Trade Example

  • After choppy consolidation under resistance at 93.500, price rallies over 600 pips higher in an order block to test the liquidity above*

  • Bulls quickly get rejected violently back below 93.500 – clear breaker block signal*

  • Weeks later, AUD/JPY returns to retest that precise breaker level and key former resistance*

Based on this real example, let‘s review the complete trade entry workflow:

Confirm Bullish Order Block

We first identify the sharp bullish order block impulse breaking above swing high resistance. This shows us a level where buyers overwhelmingly stepped in.

Label Bearish Breaker Block

When the upmove rapidly fizzles and reverses over 600 pips back below 93.500, we mark that full rejection candle as the pivotal breaker block.

Wait Patiently For Retest

Rather than anticipating the retest, we exercise patience for price to arrive there naturally – confirming that level‘s relevance.

Initiate Short Position

As price pushes up to test but stalls directly at 93.500 resistance again, we enter short with stop just above the highs.

Consider Scaling In

If bearish momentum accelerates off the test, we may consider adding to short exposure targeting liquidity/support down below.

Review this blueprint when analyzing your own breaker block setups later!

Now let‘s tackle the biggest mistakes I see traders make when learning this strategy…

The Top Breaker Block Trading Mistakes To Avoid

Here are several common errors undermining success with breaker blocks:

1. Overcomplicating Entry Rules

I often see traders wait for 5+ additional factors to align rather than just clean structure + retest of precise level. Minimize indicators!

2. Not Using Levels Already On Chart

No need to reinvent wheel every time! If obvious visible structure exists from previous price action, use those areas.

3. Assuming All Breakouts Will Fail

Some push extremes because they assume if highs/lows break, it must reverse. But strong trends often surge through swing points.

4. Fixating on Target Profit vs Risk Management

Blindly hoping for 20R is useless if your stop losses and exits aren‘t defined. Control risk first!

5. Trading Against Higher Timeframe Context

Don‘t take breaker pullback entries in a strong uptrend on higher timeframes without other confirmation signals.

Internalize these lessons and avoid wasted effort down the road.

Now for the final piece of the puzzle:

Let‘s discuss fivekey habits to ingrain for achieving long term consistency…

5 Key Habits For Mastering Any Trading Strategy (Including Breaker Blocks)

Beyond specific entry rules, stellar traders employ certain "meta" principles carrying them through ups/downs:

🔸 Start banning all distractions for a set period daily

My best ideas and trades emerge when I ruthlessly lock myself away without phones or internet.

Train focus by incrementally extending your distraction fasts.

🔹 Trade every setup aligned with rules

Beware getting "selective" on higher probability trades – it masks whether your strategy itself needs tweaking.

🔸 Review losing trades more than winners

It‘s easy rewatching winning setups…but our biggest breakthroughs happen analyzing losses.

🔹 Measure progress in months not days

Skills compound over years not days. Patience, persistence and trust in probabilities is key.

🔸 When emotions spike, walk away temporarily

Books could be written on mastering psychology – but the simplest tactic is still just stepping away briefly before placing irrational trades!

Now over time internalizing these key concepts will prove infinitely more valuable than entries alone!

Phew…I told you things might get intense!

But if you‘ve made it this far, pat yourself on the back. You now know more about trading breaker blocks than 95% of so-called "pros".

Just remember:

True mastery doesn‘t happen overnight. Be patient with yourself as you ingrain these principles over hundreds of trades.

However, the profits generated when you stick to the rules make it all worthwhile!

So commit to honing your skills, pay attention to subtle market clues, and May the Pips Be With You…always!

And if you have any other questions, don‘t hesitate to reach out.

To your trading success!