ICT / POWER OF THREE
AMD · Accumulation, Manipulation, Distribution
ICT’s Power of Three framework: make consolidation, a possible false break and subsequent expansion observable and testable.
The three phases
ICT describes AMD as accumulation, manipulation and distribution: consolidation, an initial move outside one side of the range, then expansion in the opposite direction. It is an interpretive framework, not evidence of who placed orders or deliberately moved prices.
Make accumulation observable
Choose a time window in advance and mark its high and low. Define what qualifies as a valid range and when it is too wide. The chart label accumulation does not establish that institutions are buying.
Require a sweep and return
In a bullish working model, price moves below the range low, closes back inside, then breaks a previously marked local high. Only then consider a long under a tested entry rule. A sweep alone is not a buy signal. Mirror the sequence for shorts.
Expansion and invalidation
Define the target area before entry, for example the opposite side of the range. If the stop is below the sweep low, position size must accommodate that distance. A move through invalidation ends the idea. Not every range develops all three phases.
What to test in your journal
Record failed sweeps, breaks without a return and no-signal days. Otherwise attractive hindsight patterns create selection bias. For a challenge, also verify news windows, spread, slippage and remaining daily risk.
Hypothetical long model: range 100–104, a move to 99, a close back above 100, then confirmation above a local high at 101. A tested entry at 101.2 with stop 98.8 risks 2.4 points; 104 offers only 2.8 points before costs. Skip if that relationship fails your pretested plan.
Before you trade
- Mark the range before the move.
- Specify the return and structure break objectively.
- Require sufficient target room after costs.
Common mistakes
- Label every breakout deliberate manipulation.
- Fade a strong trend without confirmation.
- Collect only perfect hindsight examples.
RESEARCH & RULE CHECKS
Our examples are editorial planning frameworks. CME explains the relationship between stop distance and position size. FTMO illustrates why daily, overall and consistency rules must be read separately for the specific account.
The Inner Circle Trader / AMD ↗CME / Position sizing ↗FTMO / Trading objectives ↗Continue building your process.
Trend Following · follow the trend
Follow established trends with a defined direction filter, bounded losses and a preplanned method for trailing winners.
Open playbook ↗OPEN / BREAKOUTORB · Opening Range Breakout
Define the opening range and evaluate a confirmed breakout with an explicit session, stop and cancellation rule.
Open playbook ↗TREND / PULLBACKTrend Pullback · trade the retracement
Define a retracement, an invalidation point and when to stay out.
Open playbook ↗