🔮How to trade using obsidian

Trading using Obsidian gives you an edge since it dynamically maps out the key concepts institutions use, including market structure and Points of Interest (POIs), the price levels where smart money is likely to engage in buying or selling.

As covered in the earlier chapters, CHoCH (Change of Character) signals a potential trend reversal, whereas a Break of Structure (BOS) confirms the reversal by indicating that the market is committing to the new direction.

In the chart:

• The green line represents a bullish CHoCH, signaling a possible shift to an uptrend.

• The red line represents a bearish trend continuation, confirming further downside movement.

• Diamonds mark key structural zones where the price has formed Higher Highs (HH), Higher Lows (HL), Lower Lows (LL), and Lower Highs (LH), helping visualize market structure shifts.

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How to enter trades

Now lets understand how to enter a trade using Obsidian and the strategy we have backtested so far to see consistent results. This is one of many ways you can enter a trade :

First lets identify a mini consolidation followed up by either a bullish impulsive move or a bearish impulsive move the impulsive move shall form a BOS.

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Then we wait for the price to tap into the order block ( bullish in this case since it was a bullish BOS ).

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Now the process is very simple, you can enter the trade with a 2:1 risk reward ratio.

I entered at the first bullish candle I saw after the price tapping in to the order block

THis is how the trade turned out to be

Trade Logic :

1️⃣ Identify Consolidation – First, we look for a period of sideways movement (consolidation) to confirm that institutions are not yet active in the market.

2️⃣ Wait for an Impulsive Move – A strong breakout signals institutional participation. If this move leaves behind a bullish order block (OB), it confirms that this is a Point of Interest (POI) for big players.

3️⃣ Retracement to the Order Block – Instead of chasing price, we wait for a pullback to the OB, as institutions often retest their entry zones before continuing the trend.

4️⃣ Confirmation Candle & Entry – Once price returns to the OB, we wait for a confirmation candle in the opposite direction (e.g., a green candle in the above example). This signals institutional buying, providing a high-probability trade setup.

5️⃣ Risk-Reward & Trade Execution – We enter the trade with a 2:1 risk-reward (RR) ratio, ensuring a favorable setup.

🔹 Key Takeaway: POIs help us predict areas where institutions will react, increasing the likelihood of price movement from these levels. Instead of reacting emotionally, we wait for smart money to show its hand and trade in alignment with them. 🚀