the Power of Three and New York PM session provide traders with a reliable framework for understanding institutional order flow and timing precise entries. These concepts focus on how price behaves throughout the trading day and highlight key moments when liquidity shifts and market participants adjust their positions. Traders who understand these principles can better align with smart money movements and capture high-probability setups.
This article explores how to apply the Power of Three and spot lucrative trading opportunities during the New York PM session—a period when institutional flows often produce significant market moves.
The Power of Three: Unraveling Daily Price Action
The Power of Three describes the three phases of daily price movement—accumulation, manipulation, and distribution. This concept reflects how institutions accumulate positions, manipulate price to grab liquidity, and ultimately distribute positions as they push the market in the intended direction.
1. Accumulation Phase
- Timeframe: Typically during the Asian session or the early hours of the London session.
- What Happens: Price consolidates within a tight range as institutions quietly accumulate buy or sell orders. This phase sets the stage for a breakout in the next phase.
- How to Trade It: During this phase, avoid aggressive trades—use it to mark highs and lows of the range as potential liquidity targets for later sessions.
2. Manipulation Phase
- Timeframe: Occurs near the London or New York session open.
- What Happens: Institutions engineer false breakouts to trigger stop-losses, grabbing liquidity from retail traders. This is where price moves sharply in one direction before reversing toward the true trend.
- How to Trade It: Watch for liquidity hunts—price might breach the Asian range highs or lows, only to reverse shortly after. Enter the trade after confirming that the liquidity grab is complete.
3. Distribution Phase
- Timeframe: During the New York session, particularly in the afternoon PM session.
- What Happens: The true trend unfolds as institutions distribute their positions, driving price in the intended direction. This phase offers the clearest opportunity to trade with confidence.
- How to Trade It: Enter trades in the direction of the trend established during the distribution phase. Use retracements into order blocks or fair value gaps (FVGs) to refine your entry.
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Benefits
New York PM Session: Key Time for Institutional Trading
The New York PM session (12:00 PM – 4:00 PM EST) is a prime window for trading, as it marks a period when institutions reposition and adjust their orders before the end of the day. This session often confirms or reverses the moves made during the London session, creating high-probability setups for precision traders.
Why the New York PM Session is Important
- Order Flow Continuation: Institutions often use this session to extend trends initiated in the London session.
- Liquidity Injections: U.S. economic data releases or market adjustments before the close can generate sharp movements.
- Trend Reversals: If the London session created a false move, the PM session provides a chance for a structural shift to align with the true trend.
Trading Opportunities in the New York PM Session
Here are three types of setups to look for during the New York PM session, each aligned with ICT principles.
1. Retracement into a New York Order Block
Order blocks formed during the London session often act as magnets during the PM session, providing an ideal place to enter trades in the trend’s direction.
How to Trade It:
- Identify an Order Block: Look for a key bullish or bearish order block on the 15-minute or 1-hour chart, formed during the earlier part of the day.
- Wait for a Retracement: Let the price retrace into the order block during the New York PM session.
- Enter with Confirmation: Use price action signals like pin bars or engulfing candles to confirm institutional activity.
- Set Stop-Loss and Take-Profit: Place your stop-loss beyond the order block and target the next liquidity pool or swing high/low.
2. Market Structure Shift (MSS) in the PM Session
If the London session produced a liquidity grab or false breakout, the PM session often provides a market structure shift (MSS) that confirms the true direction of the trend.
How to Trade It:
- Wait for the Structure Break: Monitor the market for a break above or below the most recent swing high or low, signaling a shift in structure.
- Look for a Retest: Enter on the retest of the broken structure or a newly formed order block.
- Ride the Trend: Set your profit target at a significant liquidity zone or fair value gap (FVG) further along in the trend.
3. Liquidity Hunt and Reversal
Institutions often engineer a liquidity hunt during the PM session, targeting retail stop-losses before reversing in the opposite direction.
How to Trade It:
- Identify Key Liquidity Pools: Mark the highs and lows of the London session—these levels often contain stop-loss orders.
- Watch for a Liquidity Grab: During the PM session, price might spike above or below these levels, triggering stop-losses.
- Enter After Reversal: Once the liquidity grab is confirmed (e.g., with an engulfing candle), enter a trade in the opposite direction.
- Manage Risk: Place your stop-loss just beyond the liquidity grab and aim for the next swing high/low as your take-profit.
Tips for Trading the Power of Three and New York PM Session
- Start with the Higher Timeframe Context: Use the 4-hour or daily chart to determine the larger trend, then align your PM session trades accordingly.
- Focus on Key Levels: Mark the highs and lows from earlier sessions—these are likely liquidity targets during the PM session.
- Wait for Confirmation: Always wait for price action confirmation (e.g., an engulfing candle or market structure shift) before entering a trade.
- Manage Risk Carefully: Use tight stop-losses, as the PM session can be volatile with sharp reversals.
Common Mistakes to Avoid
- Chasing the First Move: Don’t enter trades based on the initial breakout—wait for a liquidity grab or pullback into an order block.
- Ignoring Session Timing: The timing of trades is critical. Focus on the New York PM session for higher accuracy and alignment with institutional flows.
- Overlooking Market Structure Shifts: Always monitor for shifts in market structure, as they indicate that the trend direction is changing.
Conclusion
The Power of Three and New York PM session trading opportunities offer precision technicians a structured way to navigate daily price action. By understanding how the accumulation, manipulation, and distribution phases unfold, traders can anticipate smart money moves and align with institutional order flows.
Focus on order block retests, market structure shifts, and liquidity grabs during the New York PM session to capture high-probability trades. With patience and discipline, these strategies will help you trade confidently and profitably in the dynamic Forex market.
