A lot of people overcomplicate Po3 and STDV and make it very hard to understand for new traders and even some professional traders. I have passed multiple prop firms and got multiple Payouts using this strategy. Here is a simplified way to look at PO3 and STDV and how I use it in my trading. Like Save and Share This thread to help others.
A Thread🧵
In this document you can expect me to explain what PO3 is and the components of the ICT Power Of Three. There are many factors that make this a very high probability trading Strategy but I'll make it as Simplified as possible.
First thing I like to talk about when mentioning STDV and PO3 is where to place your Fib to get you STDV Projections. We use the Manipulation of a Move to project a manipulation move as well as a Distribution move. The most Discernable Low to high(If Bullish), or High to Low(If Bearish) of an Accumulation leg is used to project a Manipulation leg.
Below is an Example of a Bearish PO3xSTDV model. This model happens everyday and can Be traded on Timeframes from the 15 Minute Down.
Below is an Example of a Bullish PO3xSTDV model. This model happens everyday and can Be traded on Timeframes from the 15 Minute Down.
How to Identify Accumulations: We have two types of accumulations, we have a sideways Accumulation or a Consolidation and we also have a Creeping Accumulation.
How to Identify Manipulations: Another Important factor of this PO3 model is knowing how to identify manipulations and where these manipulations are going to happen. How I determine where these Manipulations are going to end is by using the Steps below.
How to Identify Distribution: Another Important factor of this PO3 model is knowing how to identify Distributions or expansions. How I determine when these Distributions are going to start and when the CISD is complete is by using the Inverse FVG.
This is a Bullish Example of trading the Manipulation leg of a PO3.
Another Bullish Example of The Model. In some instances as in this instance you will have two stages of accumulation but that is an advanced topic for this teaching.
Below is a Bearish PO3 Example, Showing all the stages and how to Map out the Levels and project the STDV Projections.
How to know when the next candle will be a large distribution
Using Wick Formation Area Logic
Thread🧵
why is this important and how can we do this?
we know that:
- large expansion candles have small wicks
- very large expansions have smaller wicks
- and reversal signatures have much larger wicks and smaller bodies
So what characterizes a larger distribution candle over a regular distribution candle?
the 25%, and the 50%.
here is the logic, we stay over the 50% of the previous bullish candle, we can expect still a distribution candle.
the logic though is that the large wick will have a much bigger wick to open area taking it longer to make the body.
the longer it takes to make the shift above the open, the less likely the body distribution is likely to be.
Why is trading the correct asset so important and why it applies not only to ES and YM and NQ but also to other correlating assets.
Here today I was offside with my bias. Was it a reason because the model didn't work? No it is not It was a human error.
Here you can see the difference between the US100 8h chart and the NQ 8h chart. based on the data I am collecting on CFDs and Futures I trade both.
What happened was I was so focused on US100 and I did not check the NQ to see the movement of price. What I failed to remember at that time was the US100 will form a new 8h candle at 9Am and that is the expansion for the AM session.
But the NQ will form its new 8h candle at 10AM providing better opportunity.
Looking at the US100 8h chart, was there any closure to invalidate my bearish narrative on the 8h chart? No there wasn't because the new candle forms at 9AM and trades until the new candle at 17:00
The only way I could confirm this would be by using the hourly 9AM candle as my anchor candle and then trading the expansion from that.
But I was not confident in that 1h framework as my narrative was not bullish, I wanted to see an 8h confirmation.
How to trade against higher timeframe bias
ICM tape read $NQ
Thread🧵
At first look on the 8h going into the 10AM candle, we can see that we had Low resistance liquidity lows.
Along with this we can also see that our draw on liquidity was met (PDH). From here our narrative would be to trade towards the low resistance lows.
But the market had not yet shifted to confirm bearishness, so we wait for that to be confirmed.
We then would use our framework for our ICM model. If we were going to move higher, then we would eventually form the in the upper portion of the previous candle.
If we break through the upper portion of the previous candle then that is first indication that the market is not looking to continue higher within our framework.
Once we break through the 50%, then we would be like to break lower. This is how we confirm reversals.