XAGUSD - Accumulation , manipulation and Distribution Power of 3: Accumulation, Manipulation, and Distribution (PO3) :
1. Accumulation:
Definition: Accumulation is the phase where institutional traders (also called "smart money") build up their positions (either buying or selling) without causing significant price movement. They do this quietly to avoid attracting attention from retail traders.
Purpose: During accumulation, price often consolidates, moving sideways within a range, creating a liquidity pool as both buyers and sellers participate. The purpose is to gather enough orders (buy/sell) before the next big move.
Example: In forex, accumulation can be seen when a currency pair’s price remains in a narrow range, forming a consolidation pattern such as a rectangle or triangle. Traders often wait for a breakout from this range as a signal of the next move.
2. Manipulation:
Definition: Manipulation is the phase where smart money manipulates the market to trigger retail traders' stop-losses and induce them into the wrong positions. This is often done through a false breakout or a sudden spike in price.
Purpose: The goal is to grab liquidity by triggering stop-losses placed by retail traders near obvious levels of support or resistance. This creates an opportunity for smart money to take the opposite position with minimal slippage.
Example: In forex, a manipulation phase might occur when price breaks out of a consolidation range, tricking retail traders into taking a position. After this false breakout, the price reverses, catching retail traders on the wrong side of the trade.
3. Distribution:
Definition: Distribution is the phase where smart money begins to exit their positions after successfully manipulating the market. This leads to a strong directional move as their large orders push the price significantly.
Purpose: The purpose of distribution is to unload the accumulated positions at a profit. As the market moves in the intended direction, retail traders who were manipulated into taking the wrong positions are forced to exit, adding momentum to the move.
Example: In forex, distribution is visible as a sharp, sustained price movement in one direction (either bullish or bearish). This often follows the manipulation phase and can result in significant price swings.
Disclaimer : Study is for educational purpose.
