Playing the Initial Balance

[TinGull]

I want to start a little discussion about the initial balance on MP. I've been noticing lately some patterns that are very interesting to me, and I wanted to get some other folks thoughts on it all.

So what is the initial balance? Its the range of trading over the first hour of the session. My sessions I have starting at 8:30am and closing at 5:01 for the YM. What I've been noticing is the size of the IB range and the explosiveness of the day. Also, the move to the outside of the IB range can have it's explosiveness told by the size of the IB usually. I know MrPaul trades with respect to an initial balance, though I don't know for sure his trading strategy with it.

So, here's a couple charts I wanted to post up over the last few days. It's interesting stuff and I think definitely warrants a discussion.

I'll post a series of pics, each of a different MP chart from the past 10 days or so of the YM. The IB lasts from 8:30 to 9:30 AM EST. This is very similar to Rauls Morning Breeze strategy, in that it's a kind of bracket strategy.

[TinGull]

Also, in the screenshots, the IB is the blue area at the left of the first round of TPO's. Sometimes there's a little fakeout, but if you do get faked out, so far it's looking like the other direction will provide you with more than enough to make up for the fakeout loss.

[Trader_JG]

TinGull, Do you trade directly after the IB at 9:30EST, or do you wait a half hour to an hour for all the overnight orders to get filled.
The 1st hour (2nd hour if you count premarket IB) the market is open is very volatile so I am still trying to figure out how to trade it

Thanks,
Jonathan

[Soultrader]

	Quote:	Trader_JG
	TinGull, Do you trade directly after the IB at 9:30EST, or do you wait a half hour to an hour for all the overnight orders to get filled. The 1st hour (2nd hour if you count premarket IB) the market is open is very volatile so I am still trying to figure out how to trade it Thanks, Jonathan

The first 30 minutes is one of my favorites. However, if you are still learning this game it can be quite difficult to initiate a trade during the initial opening minutes. Alot of emotions pass through. It helps if you understand how to read order flow or tape. Markets usually go only 2 ways at the open. Up or down. Usually they can go up, down, and sideways. So the opening has cut 3 options down to 2. My advice is to watch order flow and price carefully the first 3-5 minutes. Price is extremely jumpy around this time and is deciding which way to go. It may decide to test one level first before it reverses in the opposite direction. It is very fast and you must be able to see this on tape. You can look at the direction of TICK's. If TICK's open up negative and can not lift above the zero line on the first attempt, there is a good chance price will decline. However, the TICK can be a little tricky at the open as well so these are tools you willl need to become familiar with. Another method I use is taking the overnight high/low as the reference point for the opening. Let's say price open a few ticks below the overnigth high. At the open, price lifts to this reference point and sells off. This would be a quick short for me.

Hope this gives you an idea.

[TinGull]

JG, the IB is from 930-1030 EST, and I dont take the IB break often. IF the IB is extremely small, then the break of it is a great trade to take. That doesn't happen too often, though.

I'll ditto what Soultrader said

[Trader_JG]

Thanks for the replies guys.
TinGull, in your 1st post of this thread you said the IB was from 8:30-9:30, and now you say it is 9:30-10:30.

Which one is correct? I am taking the Cisco short course and the IB time frame still confuses me. They mention the 1st hour is the IB but sometimes show the pre market on the MP which makes me think it is the 8:20-9:30. Yet not much volume goes off at this time which makes me think it should be the later time frame.

JG

[TinGull]

I used to use 830-930, but then I realized I should be using the actual market open, which is at 930.

[Trader_JG]

Thanks TG!

[TinGull]

youre welcome!