ICT Forex - Accumulation - Manipulation - Distribution

Introduction to Accumulation, Manipulation, and Distribution

The video introduces the concept of accumulation, manipulation, and distribution in trading. It explains the ICT power of three and how it can be applied to any time interval.

ICT Concepts Used in this Module

• The ICT power of three: looking for accumulation, waiting for manipulation, and then looking for a period of distribution.

• Importance of developing anticipatory price skills.

• Engineering liquidity in the market.

• Neutralizing liquidity in the market.

• Market making and pairing of orders.

Understanding Open High Low Close Bars

• Each individual bar or candle is referred to as a daily range or daily bar.

• Candlesticks are used because they make it easier to see price action compared to tick marks on traditional charts.

• A bullish open high low close bar is comparable to any bullish close candlestick.

The ICT Power 3 Concept

• The ICT power 3 is a concept of looking for accumulation, waiting for manipulation, and then looking for a period of distribution.

• This concept can be applied to any time frame as long as there is a beginning time, highest value, lowest value, and ending time.

Understanding Price Imbalance

• Opening price is the initial value price prior to any imbalance.

• Closing price is the ending value price post-price imbalance.

• Range expansion refers to the portion that makes up the range between open and closed prices. It's referred to as dynamic price imbalance.

Overall, this video provides an introduction into accumulation, manipulation, and distribution concepts in trading. It also explains how these concepts can be applied across different time intervals using open high low close bars.

Accumulation and Manipulation Cycles

In this section, the speaker discusses accumulation and manipulation cycles in a bullish market.

Long Positions Building Up

• Accumulation of long positions happens around the opening price.

• The opening price is just above or below it, no more bullish.

Hunting for Manipulation Cycle

• When anticipating a bullish range expansion to the upside, we would be hunting for a manipulation cycle immediately after the opening price.

• On a daily range that opening price if we're bullish we want to be buying at that opening price or below it.

Engineering Short Liquidity

• If a market breaks quickly below an old low there are traders that look to be a breakout entry so they'll look to sell short on a stop this engineering forces liquidity in the marketplace to sell at a very very low price.

• This run below an old low or quick sudden movement will entice triggers that are on the sidelines just watching price.

Neutralizing Long Liquidity

• Neutralizing long liquidity means knocking individuals out that would otherwise be profitable by running their stops.

• We're seeing two conditions happening at the same time:

• The opening price and below it when more bullish is knocking individuals out that would otherwise be profitable.

• It's inducing or engineering of short-term sentiment shift to bearishness by running short-term lows.

Interpretation of Manipulation Cycle

• We can see the manipulation cycle as it really is, which is a run below the opening to accumulate long positions before the big up move.

• Finally, smart money pairs its long exits selling out of their lungs with pending buy interest.

Understanding Market Manipulation

In this section, the speaker explains how market manipulation works in both bearish and bullish conditions.

Bearish Conditions

• Dynamic price and balance between opening and closing prices.

• Smart money builds short positions at or above the opening price.

• Short liquidity is neutralized by triggering sell stops, flooding the market with sellers.

• Smart money sells to buy stops triggered by a quick sudden movement higher, then rides it lower to make a profit.

Bullish Conditions

• Consolidation around the opening price leads to a decline before an up move.

• Smart money creates a fake move by inducing opposite sentiment before an up move.

• Smart money exits long positions by selling above an old high, triggering buy stops and flooding the market with buyers.

Accumulation in Bearish Conditions

• Consolidation leads to a rise in price which is manipulation knocking out short-term lows.

• Double tops are probed for buy stops that trigger allowing shorts to be profitable.

Understanding Smart Money Trading

In this section, the speaker explains how smart money traders use pair trading and short selling to make a profit in the market.

Pair Trading and Short Selling

• Smart money traders buy at a high price and sell short to those who want to buy at a high price.

• As the market moves lower towards the end of the day, we see the distribution cycle come in.

• Short holders in the smart money camp collapse their short positions by buying it back below old lows.

Collapsing Short Positions

• To have a short position, you have to buy it back.

• Look for an area to run below old lows.

• The original consolidation 20 pips below that is where smart money would be collapsing their short positions for a day trade.

Distribution Cycle

• We see the ending cycle of distribution as smart money collapses their shorts by buying it back at an area where sellers below the market would be interested in selling.

Power 3 Concept

• If you understand this concept, you can look at the marketplace like this:

• See the original consolidation here in green

• Market reaches down below consolidation into an area of liquidity which is 10 pips below equal lows there sell stocks are triggered

• Once those sell stops are tripped, they're buying below the day

• The market rallies up we have an expansion move or reins expansion up into a move of running 20 pips above old high

• Your distribution cycle goes into marketplace and there's a complete daily range using power 3 concept outlined here.

Overall, understanding these concepts can help traders identify potential opportunities in the market.