Lesson 6 Accumulation Distribution Block

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Transcript

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So in this lesson we are going to be discussing the distribution block and the accumulation block. Now before we begin you wouldn't have heard this terminology before especially if you're familiar with ICT concepts.

I coined this term many years ago when I was

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doing research on market maker models. Now since then ICT has spoken about this concept but the terminology has never been clearly defined.

Now the reason I have called it accumulation blocks and distribution blocks is because it's

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specific to which side of the curve of a market maker buy or sell model we are referring to. Essentially, they are inversion levels.

But when we are referring to accumulation blocks, we're talking about arrays on the left side of a market maker buy model. And when we

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refer to distribution blocks, we refer to arrays on the left side of a market make a sell model. Now, what do I mean by that?

Well, let's get into it and I can explain this in a little bit more detail. So, here we have our generic market

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maker sell model. when prices on the sell side of the market make a sell model where we have the sell side delivery and the sell program is underway and we've already witnessed a break in market structure.

We have seen price retrace back up into a breaker and

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mitigate and then we anticipate another stage of distribution. Now what is happening inside of this retracement leg higher in our second stage of distribution?

Smart money is buying the sell stops below the swing low on the buy side of

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the market maker model. So in this example, this is our first stage of accumulation.

So smart money is buying the sell stops below that first stage of accumulation and they pair those sell stops with long positions and offset those longs to the

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buy stops in the form of willing buyers above a short-term high and or rebalance inside the expansion leg that broke below the first stage of accumulation inside of this area. Once we have ran

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stops and or rebalanced, there will be another stage of mitigation where the previous longs in the retracement leg higher will be mitigated inside of old areas of accumulation on the buy side of the market maker sell model. And they

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will do this inside of the lowest down close candles. Remember, there can be one or more stages of accumulation dependent on what you can see in the charts at the time.

The highest probability setups will form in the discount end. So the lower 50% of the

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distribution block. Price can travel up and reach the premium end of the distribution block and it will still be valid.

Pairing this distribution block with a fair value gap on the sell side of a market maker sell model will give you a very high probability setup. So

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the consecutive down close candles inside of an accumulation stage on the buy side of a market maker sell model is where we will find our distribution block. We do not need to see a high low higher high like we do in the breaker.

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So it has slightly different characteristics to the breaker although it is very similar and essentially is doing the same job. If you are using the distribution block for an entry, since the market can retrace back to the premium high of the distribution block, it is best advised to place your stop

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above the premium high. We reverse this for a market maker buy model where on the sell side of a market maker buy model where we have a sell program underway, the highest up close candles inside an area of old distribution is

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where we would find our accumulation block. Again, smart money will mitigate previous shorts inside of the accumulation block.

The high to the mean threshold will be the most sensitive area, but price can retrace all the way to the discount end of the accumulation

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block. If we pair this accumulation block with a fair value gap on the buy side of a market make a buy model, this is where high probability long entries will form.

So, your homework is to go back through your charts and where you

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see your market maker model, look for old areas of distribution inside of a market maker buy model and old areas of accumulation inside of a market maker sell model. Extend the distribution or accumulation blocks to the right and

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pair these areas with stops or fair value gaps and see how many times you will find setups. So, I hope you found this one insightful and I will catch you again in the next lesson.