Thread by @Am_Shai

It's the weekend & I'd like to share with you a money making strategy in the #MarketProfile approach to trading the markets

And No ! I won't ask you to grab a cup of coffee & read this

Weekends are for more than coffee :)

But do take notes. There is a definite edge in this

First and foremost, to all who are new to the #MarketProfile- (MP) is a robust system of trading which involves Price, Time + Volume- 3 parameters

All 3 together, hence a bigger edge to us as traders

You can start reading about the #MarketProfile at - vtrender.com/what-is-the-ma…

The strategy we are going to look at today is called the Initial Balance strategy

The name is important

What's in the name?

Lots! & the game too

The Initial Balance is the first 60 minutes of trading. Now you understand why we use the word Initial .

But Why 60 mins?

Cos it would take about 60 mins for the market to show 2 sides of trade involving both  buyers and sellers

Sometimes the market opens up strongly one way or another, up or down, and the first 20- 30 minutes are dominated quickly by one party only ( either buyer or seller).

But with a 60 minute window, we get a chance to see both a Buyer and a seller in action

When a market has both a Buyer and a seller participating together, we call it a fair auction or a balance.

The opposite of a balance is called a probe

So the words Initial Balance or IB

A free resource for the #MarketProfile is the charts section of vtrender.com.

Link at - mplite.vtrender.com

All charts are live and streaming.

Option charts of the MarketProfile are also there.

In this strategy called the Initial Balance strategy, we wait for the first 60 minutes to be over and take our first trade only with the Initial Balance or the IB is done.

Here are the steps

a)Wait for the IB to complete

b)Allow it an additional 30 minutes (can wait till 10.45)

c)Buy when it crosses above the day highs. Maintain a Stop loss below the vwap (not at or around the vwap)

d)If the market is moving lower, sell below IB lows & maintain a Sl above vwap

Done now what?

what about targets...

Once entry is done and risk is defined you need to use your phone calculator and quickly do a calculation as under. 

a) Calculate the range of the IB or the difference in the highs and the lows of the first hour.

b) You will get a number, say 40 points for the Nifty Futures ( for example)

c) Take this number and add it to the top of the first hour range.

d) Say the first hour range was 40 points and the Nifty value at the end of the first hour was 16000. So after you add the range of the IB you get a number which is 16040.

e) 16040 is now the target.

f) If the market moves lower, then add the range of the IB to the Initial balance lows .

g) Say the lows from the Open to the first hour were at 15960. So from 15960 you reduce 40 points for the IB range and now you get a target which is 15920 for the sell side.

It's a simple strategy and has magical results.

Risk in the trade is easy to manage

Keep working on it as a #process to trade and you would see the results over time

Learning and using the correct terms are important and add a certain flavor to the process we follow. 

Appropriate words help in learning and enjoying the subject.

For the trading strategy mentioned above, please note the following.

IB- Initial Balance

IBH- Initial Balance Highs

IBL- Initial Balance Lows

RE- Range extension. Movement away from IB

+2IB- Range of IB, added to IBH

-2IB- Range of IB added to IBL.

More Market Profile terminology is covered at vtrender.com/what-is-the-ma…