ICT Power of 3 – The Ultimate Guide
Do you want to master ICT power of 3 strategy like a pro to level up your trading?
ICT power of three is the strategy which exposes the smart money traps for retail
traders. As we all know as a retail traders we are trading against the smart and informed
money and they tend to manipulate the market moves to trap the retail traders.
In this article we will be exploring the ICT power of 3 strategy to avoid these traps and
follow the foot prints of smart money.
But to be able to use the ICT power of three strategy one must have a correct Daily
Bias . Daily bias means the anticipated direction of the day that can be found by various
means of technical analysis.
Once you have got the correct daily bias you can use ICT power of 3 strategy to catch a
good move in the market.
Now lets start with defining the ICT power of 3 strategy.
What is ICT Power of 3 strategy?
The word ICT power of 3 is basically derived from three main concepts.
(I) Accumulation.
(II) Manipulation.
(III) Distribution.
ICT power of 3 concept is also known as AMD setup because of the three main
concepts accumulation, manipulation and distribution.
Now lets understand what does it mean by accumulation, manipulation and distribution.
Accumulation phase is when the day opens, market ranges near opening price and
smart money accumulate their positions in this area.
Manipulation phase, as obvious from the name, is to manipulate the retail traders. After
accumulation smart money moves the market in opposite direction like on bearish day
they manipulate the retailers toward buy side. And on bullish day they manipulate
toward sell side. They do this by running price above or below the accumulation phase.
Distribution phase is the real move of the day. After manipulating retail traders smart
money add their positions toward the real direction of market hence moving market
opposite to retail mindset.
All the three phases of ICT power of 3 strategy or AMD setup are shown below in the
picture.
ICT Power of 3 in Bullish Market
On a bullish day prices accumulate near the opening price of the day, as we discussed
earlier smart money accumulates their buy positions in this area and after that they
manipulate retail traders by a sharp sell move below open price engineering the liquidity
and targeting any old low.
Retail traders mark this manipulation move as breakout toward down side and they try
to sell the asset, on the other hand those retail traders who bought in the accumulation
get their sell stops activated below the old lows so neutralizing their buy positions.
Now smart and informed money buy the asset in discount area below its opening price
and push the price upside in distributing move targeting old highs as a liquidity, leaving
a wick below opening price.
After clearing the old highs liquidity and forming the high of the day smart money sell
their positions to close their buys and market moves back to the daily range leaving a
wick above, it closes below the high of the day.
A real market example is shown below:
ICT Power of 3 in Bearish Market
On a bearish day prices accumulate near the opening price of the day, as we discussed
earlier smart money accumulates their sell positions in this area and after that they
manipulate retail traders by a sharp bullish move above open price engineering the
liquidity and targeting any old highs.
Retail traders mark this manipulation move as breakout toward up side and they try to
buy the asset, on the other hand those retail traders who sold in the accumulation get
their buy stops activated above the old highs so neutralizing their sell positions.
Now smart and informed money sell the asset in premium area above its opening price
and push the price downside in distributing move targeting old lows as a liquidity,
leaving a wick above opening price.
After clearing the old lows liquidity and forming the low of the day smart money buy their
positions to close their sells and market moves back to the daily range leaving a wick
below, it closes above the low of the day.
A real market example is shown below:
In Which Market ICT Power of 3 Works?
ICT Power of 3 or AMD setup works in every market which follows time.
The markets which have an opening and closing time and can be monitored like Stocks,
Forex, Commodities, Indexes, Futures and Crypto market are the best to trade using
ICT power of 3 strategy.