When Investment Banks and Financial Institutions (I.E. Market Makers) hold price in a tightly confined price range, it is the beginning stages of Accumulation. This is the stage that they collect orders to be used later for manipulation. As the Retail Trader begins placing trades (and stop orders) in this seemingly unimportant area, the Market Makers to put it simply, are doing the same. These areas are essentially where Market Makers are layering their own trades. They are looking for, like all Retail Traders, the best entry they can get. The only difference is they require vast amounts of liquidity to place their trades.“What does Accumulation look like?”
Accumulation is generally preceded by a push, followed by setting a tight box shaped area of price action. It can build straight to the right, or be slightly slanted long or short. What’s important is that it is a confined area of price. An Accumulation is not affected by time, they last as long as the Market Maker sees fit.
“What do I do once I’ve Identified it?”
The easiest way to take advantage of identifying an Accumulation is by drawing a line straight through the middle of it. This line represents the Average Price of buyers and sellers in that zone. Since Market Makers are also getting into their own trades in these areas this is an important price to track. If you have identified it correctly, you will be amazed at how often there is a clear rotation off of these prices. Market Makers will often bring price back to the accumulation at some point to knock out Retail Traders. They will take it far enough for stop taking, but not so far as taking themselves too far out of the money. Following a clean rotation off an Average Price line the Market will often run several hundred pips in the opposite direction. The other benefit of identifying Accumulation is knowing that some sort of Manipulation is eminent. It is from the Accumulation area that the Market Makers will begin to manipulate the Market usually by taking price through prominent highs/lows near the accumulation against the overall bias. This is the time that is usually best to place a trade. After Retail Traders have already been taken out. Thanks for tuning in! Next week will finish off the 3 Part series of Identifying Market Manipulation! To stay up to date on any cutting edge Market Manipulation tactics be sure to subscribe.
-Shane Guth, Director of Smart Money Course
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