Have you ever bought a breakout at the London Open, only to watch the price immediately reverse, hit your Stop Loss, and then go in your original direction without you?
You were not wrong about the direction. You were just a victim of the Market Cycle.
The market is not random. It is engineered. Every single day, algorithms follow a specific 3-step script known as AMD or The Power of Three.
Understanding this cycle allows you to stop being the "Liquidity" and start trading with the House.
1. Phase 1: Accumulation (The Build Up)
When: Usually during the Asian Session.
What happens: Price moves sideways in a tight range.
The Institutional Goal:
Smart Money is quietly building orders on both sides. They are keeping the price stable to induce retail traders to place pending orders (Buy Stops above, Sell Stops below).
Your Job: Do nothing. Wait.
2. Phase 2: Manipulation (The Judas Swing)
When: Usually at the London Open (08:00 GMT).
What happens: A sudden, aggressive move in the opposite direction of the real trend.
The Institutional Goal:
If banks want to Buy, they need sellers. How do they get sellers?
They push the price DOWN below the Asian Range.
- This triggers the Sell Stops of breakout traders.
- It triggers the Stop Losses of early Buyers.
This creates a pool of liquidity. The Banks buy up all these sell orders at a "Discount" price.
This false move is often called the "Judas Swing".
3. Phase 3: Distribution (The Expansion)
When: London and New York Session.
What happens: The price reverses from the Manipulation leg and flies aggressively in the true direction.
The Institutional Goal:
Now that they have filled their orders, they push the price toward the next liquidity pool.
Your Job: This is where you make money. You enter after the Manipulation is confirmed.
4. The OHLC Secret (Open-High-Low-Close)
Every single Daily Candle tells this story.
If the Daily Candle is Bullish (Green), the structure usually looks like this:
- Open: The day starts.
- Low: Created by the Manipulation (False drop).
- High: Created by the Distribution (True rally).
- Close: Price settles near the high.
Golden Rule: In a Bullish Market, buy below the daily opening price. In a Bearish Market, sell above the daily opening price.
5. Why Most Traders Fail
Retail traders are taught to "Buy Breakouts".
When they see the Asian Range break down, they Sell. They get trapped.
Smart Money traders wait. They know that the first move of the day is often a lie.
6. Time & Price
This strategy relies heavily on Time.
- If the Manipulation happens at 2:00 AM (London Open), it is highly probable.
- If the Manipulation happens at 8:30 AM (New York Open), it is often news-driven.
Final Thoughts
The AMD cycle is the heartbeat of the market.
Next time you open your chart, ask yourself: "Are we in Accumulation, Manipulation, or Distribution?"
If you can't identify the phase, do not trade. You are likely in the Accumulation phase, waiting to be chopped up.
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