PO3

OHLC Macro Range Map PO3

The ICT Power of Three (PO3/AMD) is a strategic market framework developed by Michael Huddleston, also known as The Inner Circle Trader (ICT). This framework is designed to help traders gain a deeper understanding of institutional trading behavior, often referred to as "smart money." It highlights three key phases that drive price movement: Accumulation, Manipulation, and Distribution.

1. Accumulation Phase

This phase marks the start of the cycle, during which institutional traders—smart money—slowly accumulate positions within a narrow, low-volatility price range. This often occurs during quieter market sessions, such as the Asian trading hours, where the price moves sideways, consolidating. During this time, liquidity builds up above and below the range, primarily through retail stop-loss orders and pending trades, creating a trap for less-experienced market participants.

2. Manipulation Phase

Once sufficient liquidity has been generated, smart money triggers sharp price movements to activate retail stop-losses or lure traders into false breakouts. This manipulation phase is designed to push the market in the wrong direction, prompting emotional reactions and poor trading decisions from retail traders. It provides institutions with an opportunity to refine their positions at more favorable prices by countering these erratic moves.

3. Distribution Phase

After the accumulation of positions and the clearing out of retail participants, smart money drives the market in its intended direction. The distribution phase is characterized by strong, directional price movements that follow the initial accumulation phase. In this phase, institutions sell off their positions into the liquidity generated during the manipulation phase, capturing the majority of the price movement and realizing their profits.