Power of Three (AMD) and Daily Bias in Smart Money Concepts: Accumulation, Manipulation, Distribution
Lesson 8 of 10 · Advanced
The Power of Three idea
Power of Three, or PO3, is an idea from ICT material which says that any candle, especially the daily candle, can be divided into three phases, summarised in the common version by the letters AMD:
- Accumulation: price moves in a relatively narrow range near the open.
- Manipulation: a move against the day's main direction occurs, usually taking the liquidity on one side and forming one of the wicks of the daily candle.
- Distribution: the day's main move develops in the direction opposite to the manipulation, and the candle closes near the end of it.
In an ideal bullish day from the PO3 viewpoint, price dips a little after the open and makes the low of the day, then rallies and closes near the high. Most of the daily candle is then body, and the lower wick represents the "manipulation". The word "manipulation" here is this style's own term and should not be read as a legal or proven statement about market manipulation.
The reference open and the Judas swing
To say price is "below the open", we need to know which open. In gold there are several common references: the open of the futures trading day at 18:00 New York time, the open of the CFD broker's daily candle (which depends on the server clock), and the New York midnight price (00:00 ET), which ICT material presents as an important reference. Whichever you choose, draw its horizontal line on the chart and keep it constant.
Judas swing is a term for a false move early in a session: a move that shows the day's direction the wrong way round, pulls traders to the wrong side and then reverses. In the PO3 frame, the Judas swing is the manipulation phase and often occurs in the London kill zone or at the start of New York.
An important critical point: almost every daily candle can be explained with the AMD template after it closes, because every candle has a wick and a body. The real value of the model can only be judged in real time, when you do not yet know whether the low of the day has been made.
How is a daily bias built?
A daily bias is your hypothesis about the more probable direction of the day. In SMC it is usually built by answering a few questions:
- Where is the draw on liquidity? Toward which liquidity pool is price being drawn on the higher timeframe? The previous day's high, the weekly high, an unfilled daily FVG?
- What do daily and H4 structure say? In which direction was the last BOS and which swing is protected?
- Is price in premium or discount? Where are we within the daily or weekly dealing range?
- What happened yesterday? Did yesterday's candle take the high of the day before and return (a possible sweep), or close above it (a sign of acceptance)?
- What news is there today? Heavy-news days can invalidate any bias.
The output of this process should not be a single certain sentence but a primary scenario, an alternative scenario and an invalidation condition. For example: "Bullish bias toward the previous day's high, unless price is accepted below the London low."
A hypothetical scenario on gold
The numbers are for teaching only. The previous day's high of XAUUSD is 4,088 and its low is 4,041. H4 structure is bullish, and the last BOS broke the 4,070 high. The New York midnight open is 4,056 and the Asian range is between 4,050 and 4,062. So the primary bias is bullish, and the draw on liquidity, the probable target, is the 4,088 high.
In the London kill zone price drops to 4,046, sweeping the Asian low and moving below the open; from the PO3 viewpoint this could be the manipulation phase. Then on M5 a bullish CHoCH with displacement occurs and leaves an FVG. The primary scenario is that the distribution phase develops in New York toward 4,088.
The alternative scenario also has to be written in advance: if price is accepted below 4,046 and the M15 structure stays bearish, the real target is probably the previous day's low at 4,041 or lower, and the bullish bias for today is invalidated. In other words, what looked like "manipulation" was the main move itself.
When the bias is wrong
No method gives a correct bias every time. Certain situations are particularly hard: inside days where price stays within the previous day's range, the days before big news when the market has no direction, and days when the market sweeps both sides. On such days PO3 either does not form clearly or forms twice.
The most important skill is letting go of the bias at the right time. A trader who entered the day with a bullish bias and sees the invalidation condition occur should either step aside or work with the new scenario, instead of calling every bearish candle "more manipulation". Journal what percentage of days your bias was right, and on the days it was wrong, how quickly you abandoned it.
Common mistakes
- Explaining every daily candle with AMD after it closes and drawing conclusions about the model's accuracy
- Changing the reference open from one day to the next
- Having no invalidation condition for the bias and calling every opposing move "more manipulation"
- Building a daily bias without looking at the news calendar
- Relying on one factor such as H4 structure and ignoring premium/discount and the draw on liquidity
What does volume say here?
The three AMD phases have close equivalents in Auction Market Theory, and that similarity makes them testable with volume. "Accumulation" appears on the volume profile as a bell-shaped balance area with neutral delta. "Manipulation", if it really is a false move, is usually a failed auction: price pokes out of the balance area, little volume trades there, an excess or tail often remains and price returns quickly. "Distribution" is initiative activity, accompanied by higher volume, sustained directional delta and a migrating value area.
For the daily bias, the relationship of today's value to yesterday's value adds an objective measure. If the value area forming today builds higher than yesterday's, the market is accepting higher prices, consistent with a bullish bias; if price trades above yesterday's high but value stays lower, a sweep is more likely. Untouched POCs from previous days (naked POCs) can also serve, alongside SMC liquidity pools, as independent volume-based targets for the draw on liquidity.
📊 See real gold futures volume behind these ideas: free order flow course · today's gold volume map
Frequently asked questions
What does Power of Three mean in Smart Money Concepts?
It is the idea that the daily candle is made of three phases, accumulation, manipulation and distribution (AMD): an initial range, a false move against the direction, and then the day's main move.
How do I determine the daily bias for gold?
By examining the higher-timeframe draw on liquidity, daily and H4 structure, premium or discount position, the previous day's behaviour and the news calendar. The output should be a primary scenario, an alternative and an invalidation condition, not a certain forecast.
What is a Judas swing?
An ICT term for a false move early in a session that shows the day's direction the wrong way round and then reverses. It is hard to identify in real time and should be combined with structural confirmation and, ideally, volume data.
Education only, not a recommendation to buy or sell; we never give signals. Price examples are illustrative. Test any method on a demo account first, with strict risk management.