Initial balance (IB)

What it is

The initial balance is the high and low of the first part of the session, usually the first hour (the first two 30-minute Market Profile brackets). Trading beyond it later in the day is range extension.

How far the day extends beyond the initial balance is what Market Profile day types are built on. A normal day stays mostly inside it. A trend day extends a long way, often more than twice its height, and closes near the extreme.

It differs from the opening range used in breakout strategies: the opening range is often 5 to 30 minutes and is traded as a breakout, while the initial balance is a full hour and is used to read the type of day. On 24-hour markets like forex, the initial balance depends on which open you choose.

How to spot it

• Mark the high and low of the first hour after your market's main open (09:30 New York for US index futures).
• Note whether price breaks out early or keeps rotating inside it.

How to use it

• A narrow initial balance often comes before a bigger range extension; a very wide one often means a quieter rest of the day.
• Use the IB high and low as reference levels, and multiples of its height as possible extension targets.

Common mistakes

• Treating it as the same thing as a 15-minute opening range.
• Using a different start time from one day to the next.

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