Recently, I’ve been studying a pretty interesting trading framework called Power of Three, which many professional traders use to read the market. To put it simply, it’s about understanding how big money plays in the market, divided into three stages.

First is the accumulation stage. You’ll notice the price repeatedly oscillates within a certain range, looking like nothing is happening, but in reality, big institutions and smart money are quietly building positions at this time. They don’t dump in all at once; instead, they slowly accumulate liquidity, stay low-key, and avoid drawing attention from the market.

Next is the manipulation stage. This stage tests your mindset the most. Big funds will create some fake breakouts—for example, suddenly driving the price downward and breaking through the prior lows, triggering stop-loss orders and scaring retail traders out. It looks like a crash is coming, but actually it’s just clearing out the floating positions.

Only then comes the distribution stage. The price suddenly reverses and moves upward, even hitting new highs. At this point, big funds start slowly distributing, selling the positions they accumulated in batches to subsequent buyers. This stage often has the most aggressive upside, and it’s also the easiest time for people to chase the move.

When analyzing using the PO3 framework, you need to focus on a few key locations: the opening price, the low (usually manipulated), the high (distribution zone), and the closing price. Once you connect these four points, you can basically see the intentions of big funds.

I’ve used this method to analyze several rounds of market action myself, and it really can help you judge the market’s rhythm in advance. Instead of being swept along and following passively, it’s better to actively understand the rules of the game—so you can trade with more confidence.

Have you used similar analysis methods before? Or do you have different views on Power of Three? Feel free to discuss below and let’s dive deeper into market logic together.