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Chapter 02

The AMD cycle

Accumulation, manipulation, distribution: the skeleton of the trading day.

12 min read

A day has a shape

The previous chapter explains where price wants to go. This one explains how it gets there, and above all when it’s reasonable to try to get on board.

Most days follow the same three-part shape: price settles, it sets a trap, then it goes. That shape is called AMD, for accumulation, manipulation, distribution.

The three phases

Accumulation, manipulation, distribution
A

1. Accumulation

Price consolidates in a narrow range. Nothing is made here, and that’s normal: this phase isn’t for trading, it’s for drawing the boundaries. Note the range high and low, those are what will matter. On a typical day this phase covers the Asian session.

The point of the model isn’t to predict: it’s to tell you which phase you’re in, and so what you’re allowed to do. During accumulation, you watch. During manipulation, you prepare. During distribution, you hold.

The cycle on real hours

The same cycle, laid over the hours of a day
ASIALONDONNEW YORKSWEEP
AsiaNarrow range, little volume. Note its boundaries and don’t trade.
LondonThe European open brings the volume that makes the manipulation possible.
NYThe US open most often carries the distribution.
It’s not a clock: some days have no clean manipulation, others make it at a different time. The cycle is a way of reading the day, not a train timetable.

This timing isn’t a law. It’s just common, because volume arrives at fixed times: Asia is quiet, London brings the first real European volume, New York brings the rest. Chapter 03 covers these hours in detail.

When the model doesn’t show up

An honest method has to show its days without a setup. Not every break is a manipulation, and nothing tells you which it is while it’s happening.

The break that wasn’t a manipulation
A
breakoutPrice leaves the range and keeps going, never coming back.
Here, waiting for the return into the range would have missed the whole move. That’s the normal cost of the method, and it’s why you don’t enter on the break itself: better to miss than to guess.