Accumulation manipulation distribution is a trading strategy introduced by Inner Circle Trader, also known as ICT Power of 3 or AMD, which helps retail traders follow the movements of 'smart money'—large financial institutions.
It divides market activity into three key phases: accumulation, where smart money builds positions; manipulation, where false moves deceive retail traders; and distribution, where smart money drives the market in a direction favorable to them.
Accumulation Phase
The accumulation phase refers to the market fluctuating near the opening price at the start of the day, where smart money accumulates positions in this area. This phase can be identified by recognizing the areas where prices are 'trapped' within a horizontal range, indicating the potential for a larger market trend. In this phase, retail traders place buy orders at horizontal support areas and sell orders at horizontal resistance areas, while their stop-losses are placed above the highest price and below the lowest price of the range.
Manipulation Phase
The manipulation phase, as the name suggests, is about manipulating retail traders.
After accumulation, smart money will push the market in the opposite direction, like on a bearish day; they will manipulate retailers to develop towards the buyers. In a bullish scenario, they will manipulate prices towards the sellers. They do this by pushing prices above or below the accumulation phase.
The manipulation phase is also known as a false breakout of the accumulation phase. When the price breaks above the price range, the stop-loss orders of short sellers will be triggered, and bullish breakout traders will enter buy positions. When the price breaks below the range, the stop-loss orders of long traders will be triggered, and bearish breakout traders will enter sell positions.
Distribution Phase
The distribution phase is the final phase for AMD and the real initiative of the day.
After utilizing all the liquidity created by retail traders to manipulate them, smart money will increase its positions, causing the market to move in the opposite direction of what retail traders expect.
The concept behind AMD setup
ICT Power of 3 is deeply rooted in market psychology. The accumulation phase tests traders' patience, the manipulation phase provokes emotional reactions, while the distribution phase benefits those who understand the process. This cycle reflects the psychological patterns of market participants, providing a strategic advantage to traders who can recognize and adapt to it.
Bearish AMD
