Propulsion block trading may seem straightforward, but most novices struggle with the fundamentals. Discover all about its nature and applications today.
Table of Contents
1. Introduction
Propulsion block trading, one of the newest theories of the century, has proven enviable success across all experience levels. The strategy seems straightforward, involving candlesticks and how they attract future prices. However, novices may struggle to implement these blocks profitably enough.
Stick around to learn the nook and cranny of their nature, including applications and variants. Readers will also receive exclusive access to a nearly automated trading system that depends on this theory to guarantee success.
2. Propulsion Blocks: Definition, Types, and Method To Ride Underlying Trends for Profits
Propulsion blocks (or propulsion candles/candlesticks) are order blocks that return to an earlier-formed order block. In other words, they are the next set of order block(s) that appear (and retrace into the first set of order blocks) in a series of ascending or descending markets.
Remember, order blocks are red candlesticks that the market may return to temporarily while trending upwards.
Such retracing candlestick(s) become a propulsion candle if they violate the swing high of another order block.
The opposite is the case in downtrends with green candlesticks as such blocks.
Like the traditional order blocks, propulsion candles assume the role of price support/resistance during retracements in a trending market.
However, financial markets hardly retrace past the midpoint of propulsion blocks. They are so sensitive that prices will quickly move away from them after hitting the candles’ swing high/low price level during retracement.
That’s the main reason why they’re called propulsion blocks.
Trading with propulsion candlesticks involves using such candles to enter trades in the underlying trend direction.
Hence, after confirming the appearance of a propulsion candle in live conditions, traders can place limit orders at their high/low (depending on the trend), expecting a reversal back in the initial trend direction.
Others who prefer market orders wait for the retracement before entering new trades.
Based on the underlying trend, there are two primary types of propulsion candles:
- Bullish propulsion candlesticks
- Bearish propulsion candlesticks
2.1. Bullish Propulsion Candlesticks
A bullish propulsion candlestick is a candlestick (or group of candlesticks), which has retraced into a bullish order block in a bullish market. Thus, it is a bearish or red candle.
Bullish propulsion candles act as price support during bearish retracements.
A strong one will keep the market above, unlike a weak one that may not.
2.2. Bearish Propulsion Candlesticks
Conversely, bearish propulsion candlesticks are candlesticks (single or multiple) that retrace into a bearish order block during downtrends. Hence, they are green/bullish candles.
Like their bullish counterparts, bearish propulsion candles are of different strengths.
Stronger candles keep prices below during retracements, but weaker ones won’t despite the anticipation.
3. Common Setbacks & Mistakes in Trading Propulsion Blocks
Propulsion block trading only involves opening new positions when the market retraces into a propulsion candle. Such candles are those that retrace into an order block.
However, despite how straightforward it appears, proponents of this strategy (new and experienced) may still experience setbacks, some of which are avoidable.
Below are a few errors and challenges common to this trading style:
3.1. Identification Error
As discussed, a propulsion candle is fundamentally a new order block that trades into an older one. It may appear as the second, third, fourth, or fifth order block in a trending market but it can never be the first.
Many traders may not identify these candles correctly, derailing the entire analysis and trading.
The most effective solution is to back-test extensively, learning to spot them quickly.
3.2. Forgetting There's Rarely A Mid-Point Violation
A propulsion candle is much more sensitive than regular order blocks. Therefore, market retracements to the blocks are typically brief without reaching its middle.
A retracement beyond the middle of a propulsion block indicates the block’s weakness. If so, traders scrutinize the market again, expecting a complete trend reversal.
3.3. Only for Trade Entries
Without modifications, the trading theory only provides insights into trade entries in a trending market. Traders must rely on other data sources for position management, risk management, and trade exits.
Unfortunately, this may lead to over-complication and disapproval from those who prefer all-in-one strategies.
Regardless, it remains one of the best options for high-probability trade entries.
3.4. Neglecting the Underlying Trend
Exploring this trading style is almost only possible by learning how to determine the underlying trend.
The candles form after sustained bullish or bearish price runs. Thus, traders should employ various techniques and tools to confirm an up-trend or down-trend.
The goal is to ride the contemporary trend.
3.5. Propulsion Blocks with Multiple Candles
Pros consider an uninterrupted sequence of propulsion candles as a single one for several reasons, including the possibility for them to appear as such in higher time frames.
It is essential to have this mindset because it affects one’s consideration of the block’s midpoint.
Traders familiar with Smart Money Concepts (SMC) are already familiar with this because they treat order blocks similarly.
4. Taking Every Reversal Opportunity With the Propulsion Edge for TradingView
One of several products of propulsion block trading is Indicator Vault’s Propulsion Edge indicator – a groundbreaking system that uncovers every potential reversal.
Below is an image of the tool in action:
Succinctly, it offers the following benefits to every user:
- Fastest awareness of potential reversals at any time
- Ability to work on any desired timeframe and market
- Knowledge of the best trade entry and exit points
- Assurance of taking every opportunity, credit to its built-in alert system
Still in doubt? Click here for confirmation of how to improve your trading results today!
5. Conclusion
Propulsion blocks, one of several Smart Money Concepts, are candlesticks that retrace to an existing order block during price trends.
Despite their proven effectiveness, they come with setbacks, such as difficulty identifying them correctly and neglecting the underlying trend.
Fortunately, the Propulsion Edge indicator for TradingView is available to solve such setbacks. Its operation depends on the propulsion candle theory.
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