The ICT Power of 3 (Po3) is a foundational trading concept in Inner Circle Trader (ICT) methodology that explains how smart money manipulates price movements throughout the trading day.
It consists of three key phases:
- Accumulation – Smart money builds positions.
- Manipulation – False moves to trap retail traders.
- Distribution – The real move in the intended direction.
This pattern is often observed in daily, intraday, and higher timeframe charts, helping traders anticipate institutional price action.
1. Breaking Down the ICT Power of 3 (Po3)
1. Accumulation Phase
- This is the phase where institutional traders (smart money) accumulate positions without revealing their true intentions.
- Price moves in a tight range, forming consolidation zones, liquidity pools, or Fair Value Gaps (FVGs).
- Retail traders often mistake this for a lack of direction.
Key Identifiers:
- Market moves sideways.
- Liquidity builds above and below the consolidation zone.
- Often occurs during the Asian Session.
Example:
- EUR/USD consolidates between 1.1000 and 1.1020 overnight.
- Smart money creates equal highs and lows to build liquidity.
2. Manipulation Phase
- This phase involves a false move (stop hunt or liquidity grab) to trap retail traders on the wrong side.
- Smart money pushes price against retail expectations, triggering breakout traders and stop-loss orders.
- This move provides liquidity for institutions to place large orders at discounted or premium prices.
Key Identifiers:
- Fake breakouts above or below liquidity levels.
- Wick rejections or false spikes.
- Happens during the London Open or New York Open.
Example:
- Price spikes above 1.1020 (previous highs), trapping buyers.
- Institutional traders sell into the liquidity, pushing price down.
3. Distribution Phase
- After trapping retail traders, smart money drives price in the intended direction.
- This phase is the real move, aligning with the overall market structure.
- It usually occurs after the manipulation phase is complete.
Key Identifiers:
- A strong directional move (trend forms).
- Liquidity voids and displacement moves confirming smart money involvement.
- Happens during the New York Session or late London Session.
Example:
- After faking an upward breakout, price drops aggressively to 1.0950.
- The downward move shows a clear institutional distribution phase.
2. Real-World Example of ICT Power of 3
1. Scenario: GBP/USD on a 15-Minute Chart
1. Accumulation:
- The price moves sideways between 1.2800 – 1.2820 during the Asian Session.
- Liquidity builds up on both sides.
2. Manipulation:
- London Open: Price spikes up to 1.2840 (fake breakout).
- Traps retail traders who go long, thinking a breakout is happening.
- Smart money sells into this move.
3. Distribution:
- New York Open: Price drops aggressively to 1.2750.
- The real trend (sell-off) begins, confirming smart money’s intent.
- Entry: After manipulation (1.2835).
- Stop-Loss: Above the fake breakout (1.2850).
- Take-Profit: Near liquidity zones (1.2750).
3. How to Trade the ICT Power of 3 (Po3)?
1. Identify Accumulation Zones
- Look for tight price ranges and liquidity pools.
- Happens during the Asian Session.
2. Watch for Manipulation Moves
- False spikes in London Open or New York Open.
- Stop hunts above key highs/lows.
- Fair Value Gaps (FVGs) and Order Blocks (OBs) can act as reversal points.
3. Enter in the Distribution Phase
- Wait for confirmation (price rejection, displacement, or market structure shift).
- Use Fair Value Gaps, Order Blocks, and Liquidity Voids for precise entries.
- Follow the New York Session move for the best results.
4. Final Thoughts on ICT Power of 3
- ICT Po3 is a roadmap of institutional trading behavior.
- It helps anticipate market moves and avoid retail traps.
- Combining Po3 with liquidity concepts, Fair Value Gaps, and Order Blocks improves trade accuracy.
- Smart traders wait for manipulation to finish before entering the real move.
Mastering Accumulation, Manipulation, and Distribution allows traders to trade in sync with institutional order flow, leading to better trade setups and higher profitability.
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