Lecture Notes: Initial Balance Indicator Update

Introduction to the Initial Balance Indicator

• Sam introduces the latest updates to the initial balance indicator.
• The indicator has been in the market for over three years.
• Enhancements are subtle and aim to illuminate trading strategies for those unfamiliar with the initial balance.

Definition of Initial Balance and Opening Range

• Initial balance: first 60 minutes of trading.
• Opening range: first 30 minutes of trading.
• Concept originates from Market profile traders using 30-minute increments.

Overview of Indicator Features

• Chart Display Options:
  • Shows market open, first 30 minutes (opening range), and initial balance.
  • Users can customize colors and preferences.
• Color Coding:
  • Initial balance high and low are color-coded based on whether they are touched.
  • Example: Green if untouched, changes to white if touched.

Using the Initial Balance Indicator

• Allows display of all days or current day only.
• Options to show pre-market high, mid, and low.
• Indicator Customization:
  • Highlight initial balance via a dropdown menu.
  • Option to show extensions, usually calculated as 100% of the IB range.
  • Users can see price levels or just the levels without prices.

Statistical Analysis with the Indicator

• Shows percentage of days IB was broken (high or low).
• Displays average break percentages.
• Provides insight into market trends (e.g., down market scenario).

Importance of Initial Balance in Trading

• In a consolidation day, higher time frame traders may lose interest if contained within IB.
• Breaks in IB draw interest from higher time frame traders.

Strategy and Trade Examples

• First test of the initial balance high is primarily a scalp trade.
• Discussed approach using three lots, with stops reduced after initial scalp gain.
• Importance of leaving a runner for larger moves.

Algorithmic Influence in Market

• Algorithms use initial balance levels for decision making.
• Impact of large trades or "whales" trying to break IB.

Practical Tips and Observations

• Use of various market indicators like nice tick during trades.
• Importance of footprint charts to see inside candles.
• Encourages users to trial the indicator and analyze market data.

Conclusion

• The initial balance and VWAP are crucial daily levels.
• Encourages testing and personal adaptation of trading strategy with the new indicator.
• Offers free trials to explore and understand the system better.