Smart money: order blocks, FVG, liquidity
What you learn in 3 minutesThis lesson is about three words you will see on chart videos: order block, fair value gap and liquidity. None of them is a signal. They are names for places where large orders are assumed to sit, and the assumption is the part worth understanding. You will also see what one pip costs on EUR/USD in pesos, so the vocabulary has a price attached.
One pip on EUR/USD at 1.0850
| Step | Amount | Note |
|---|---|---|
| Standard lot size | 100,000 units | the contract size the pip formula uses |
| One pip in the quote currency | 10 units | 100,000 x 0.0001 |
| Conversion to pesos | ₱580 | 10 units x ₱58 per unit, the rate used here; your broker's rate will differ |
| Move of 20 pips | ₱11,600 | 20 x ₱580, the same arithmetic scaled up |
The broker may round the conversion rate, charge a spread on entry and exit, and hold a swap if the position stays open overnight. The peso figure changes with the exchange rate, so treat it as an illustration, not a quote.
The mistake people make here
The common mistake is to treat these three terms as a system that tells you what happens next. They do not. An order block is only a candle where price paused before moving; a fair value gap is only a stretch of chart with little trading in it; liquidity is only a cluster of stop orders near an obvious high or low. The assumption that large orders sit there is reasonable, but it is still an assumption. Instead of asking what the pattern means, ask what would have to be true for the assumption to fail, and size the position so that being wrong is survivable.Check yourself
If one pip on a standard lot of EUR/USD is ₱580, what is a 35 pip move worth?
35 x ₱580 = ₱20,300. The figure moves with the peso conversion rate, so it is an estimate.
Price sweeps below a recent low, then closes back above it. What are the two events being described?
The sweep is the move below the low, where resting stop orders are assumed to be filled. The return is the close back above it, which is read as a sign that the move did not hold.