POWER OF THREE (AMD)

If you have ever heard the phrase "trading the trend is your best friend", you are one step closer to understanding the importance of AMD strategy in trading. But what is it and why does this approach conquer more and more traders? Let's find out.

What is AMD? 

AMD (Accumulation, Manipulation, Distribution) is a method of analysing price movements based on understanding the actions of the big players. This strategy helps to determine where the "smart money" collects positions, where they make false moves to throw off the stops of retail traders, and where the real distribution of the asset begins.

A (Accumulation) - accumulation

At this stage, large players slowly and cautiously gain positions. Usually, the price moves in a narrow range, without sharp bursts. An observant trader will notice that the volumes are gradually growing, but the movements remain restrained.

M (Manipulation) - manipulation

The most insidious stage. The price sharply breaks out of the accumulated range, making less experienced traders panic. False breakouts up or down are signals that big players are preparing the ground for a real move.

D (Distribution) - distribution

This is where the real movement begins. The "smart money" starts selling the asset, having capitalised on the false movements. It is at this point that we can catch the trend wave and join the winning side.

Let's move on to examples:

On the diagram you see a weekly full-body candle. On a lower timeframe it will be a full-fledged sideways candlestick. This example will be viewed through the prism of a weekly candle, so it will be easiest to understand the logic of this concept. Until the moment the distribution starts, the price accumulates, i.e. large capital accumulates its position. This is usually depicted on the chart as a squeeze and sideways movement, also, it can look like a descending or ascending channel. The position can be accumulated for both longs and shorts. 

The idea is that when a week opens, the price starts trading near the opening for a few days (2-3 days approximately), after which there is a movement in the opposite direction to mislead traders, and the final stage will be distribution (distribution) 

By looking at the weekly candle alone, you will be able to predict the future price direction for at least a given week.  

Here are some examples of AMD

In these examples you can see bullish and bearish scenarios, in them consolidation is marked in yellow colour, it is called accumulation. 

The above examples were on the 1h and 1D timeframe. 

IMPORTANT: AMD is in all markets and timeframes. The higher the timeframe, the higher the probability of this instrument working out.

NOW LET'S LOOK AT THE AMD/PO3 FORMATION SITUATION IN MORE DETAIL

After manipulation there is an aggressive markup. This is done so that no one can come in and buy already at the top, and the big player at this time sells out the position. After that, the greedy traders who experience FOMO are left again at a loss.

Maybe some of my readers recognised themselves when they saw an asset rising and bought in the hope that the trend would continue? Now you know how it works and hopefully save your money.  

AMD is not just a strategy, it is a way of thinking on the level of those who control the market. Once you master this technique, you will be able to anticipate market movements, not just react to them.

Remember that successful trading is playing against the crowd. Ready to reach the level of professionals? Then start learning AMD and use it in your trading!

Profit, everybody!