Nifty – MarketProfile trading strategies

The Initial Balance

Continuing our series on evaluating Nifty ranges, today we shift our attention to the Initial Balance.

 

For those of you who missed our first article on the ranges, you can find it here : http://www.vtrender.com/content/nifty-daily-stats-1

 

The Initial Balance and other market profile concepts are discussed at – https://vtrender.com/what-is-the-market-profile/

 

The IB is the first hour of the day. It generally has  the biggest longer time frame participation who move in and establish value for the day.

 

A proper understanding of IB will include knowing about the type of Open, the opening swing ( different from Opening range) and the highs and the lows of the First Hour.

 

Once the IB is complete, the rest of the day can be easily managed based on this range.

 

Here’s some stats which show what happens once the IB is done and the market moves outside it.

Nifty - MarketProfile trading strategies 1

The first pane is the Price bar

The green pane is the IB breakout on the higher side

The red pane is the IB breakout on the lower side

The blue pane is when IB broke on both sides that day ( neutral day)

The greyish green was when there was no breakout

And the last pane represents the days evaluated for the exercise which in this case is 288 working sessions.

As can be seen...

a) the Nifty always breaks IB. It has failed to do so only 4 times.

 

b) There are more lower side breakouts than upper sides ones.

 

c) The number of neutral days is also large. It shows that once  the market fails to follow through on one side it  inevitably goes to the other side by traveling through the IB. We call this rule the IB band trade in the trading room.

Some strategies which can be done based on this

a) Wait to enter the trade after the IB hour is done

b) Enter on the exit of IB with a stop at the other end

c) If the market fails to follow through on the IB break and comes back inside, reverse the trade ( IB band Trade)

d) Targets for the breakout are 2IB or the closest POC

For more information on how to use the information from the Market Profile and generate actionable trading strategies join up for a Level 2 model of advanced Market Profile strategies.  Visit- https://Vtrender.com/trading-room/

Leave a Reply

avatar
  Subscribe  
Notify of