Power of Three and the Judas Swing: How a Trading Day Often Unfolds
The Power of Three is an ICT model for how price often behaves across a day or a session. It breaks the move into three phases: accumulation, manipulation and distribution. Traders shorten it to PO3 or AMD.
It is a pattern that appears often, not a rule that appears every day.
What are the three phases?
1. Accumulation. Price moves sideways in a narrow range. For forex this is often the Asian session. Orders build up above and below the range.
2. Manipulation. Price breaks out of the range in one direction, triggers the orders resting there, and then reverses. This false move is what ICT calls the Judas swing.
3. Distribution. Price travels in the real direction of the day, often for much further than the manipulation move.
How does it look on a daily candle?
Picture a bullish daily candle. It opens, dips below the open first, then rallies and closes near its high. The dip is the manipulation and forms the lower wick. The rally is the distribution and forms the body.
A bearish day is the reverse: a push above the open first, then the fall.
What is the Judas swing?
The Judas swing is the manipulation phase seen up close. Around the start of a main session, usually London, price runs through the high or low of the earlier range. Traders who chase the breakout get filled, and traders with stops there get taken out. Then price turns.
It works because the orders it triggers provide the liquidity larger participants need to enter in the opposite direction.
How do you use the model?
- Have a bias first. Decide from the daily and 4-hour charts whether you expect the day to be bullish or bearish.
- Mark the Asian range high and low before London opens.
- Expect the false move against your bias. On a bullish day, expect a drop below the range first.
- Wait for the reversal. Look for a sweep of the range low, then a market structure shift on a lower timeframe.
- Enter on the retracement into the order block or fair value gap that the reversal leaves, with the stop beyond the sweep.
- Target the liquidity on the other side of the range and beyond.
Common mistakes
- Trading the first move of the session. That is the move this model warns you about.
- Using the model without a bias. Without a view on direction, you cannot tell manipulation from the real move.
- Forcing it. On trend days and news days, price may run in one direction from the open with no false move at all.
Frequently asked questions
Does Power of Three only apply to a day?
No. The same three phases can be seen in a week, a session, or a single 4-hour candle.
What time does the Judas swing happen?
Most often around the London open, and sometimes again around the New York open. Check the times against your own time zone.
How do I know which phase I am in?
You often cannot be sure until it is over. That is why you wait for the sweep and the structure shift before entering.
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*This article is educational and is not financial advice. Trading forex and gold carries a high risk of loss.*
