Why Smart Traders Watch the First Hour (Initial Balance Guide)

Quoting W0lfram

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Hi I have actually statistically tested this kind of ideas (PA/patterns), no hour is different from any other (we can state this as null hypothesis). Basically what you have here is bullish/bearish candle and after this the price excursion is symmetrical in both directions. Your expectation is ~ATR(period) - put sessions here if you trade US stocks. But it won't show direction. Good luck anyway I'm happy if someone prove me wrong (since the topic in Trading Discussion)

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Quoting TradingGod89

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Personally, don't really care about the first hour of trading that much in terms of looking for a trade. Initial balance is pretty weak these days vs 5+ years ago. I like globex. Still in this NQ trade from Sunday atm. {image}

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Quoting eadweardcap

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{quote} Hi W0lfram, Not looking to prove anyone wrong just sharing my trading experience with initial balances. I'd love to see your statistical tests on this idea, the parameters used, and more. Always appreciate feedback from anyone that comes into the Trading Discussion section of the website.

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In U.S. equity markets, the initial balance is from the 9:30 AM EST market open through 10:30 AM EST, capturing the first hour of regular trading. This period includes the reaction to pre-market news, overnight developments, and the surge of liquidity from institutional participants. Initial balance extension can be used as targets, such as 1x, 2x, or 3x the width of the initial balance projected from the breakout point, as potential profit targets.

Quoting W0lfram

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{quote} {quote} Data: NDX https://www.tradingview.com/symbols/NASDAQ-NDX/ 2023-01-01 to date Found 375 bullish IBs. Verify that identification is correct: {image} {image} High breaks first in 72% of cases. But it's false optimism, one should look at IB's upper wick size. Suppose it's intraday strategy so we'll analyze next 6 hours. {image} x-axis represents the maximum profit from the entry point within observation period y-axis - drawdawn Green dots - instances where the maximum favorable excursion was reached before the maximum adverse...

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Quoting eadweardcap

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{quote} HO. LY. CRAP. That is absolutely sick W0lfran. Thank you for sharing! Do you do this with Python or Pine Script for Tradingview? So you said "High breaks first in 72% of cases. But it's false optimism, one should look at IB's upper wick size." which is absolutely right. I try and set my profit targets relatively short, with the S&P 500 I do 10 pips, with the Nasdaq and Dow Jones I do 5 points. Now I have been reading more on the concept of initial balances, of course this comes from the auction market theory and IB is just one of the criteria...

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Quoting eadweardcap

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{quote} HO. LY. CRAP. That is absolutely sick W0lfran. Thank you for sharing! Do you do this with Python or Pine Script for Tradingview? So you said "High breaks first in 72% of cases. But it's false optimism, one should look at IB's upper wick size." which is absolutely right. I try and set my profit targets relatively short, with the S&P 500 I do 10 pips, with the Nasdaq and Dow Jones I do 5 points. Now I have been reading more on the concept of initial balances, of course this comes from the auction market theory and IB is just one of the criteria...

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Quoting eadweardcap

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{quote} HO. LY. CRAP. That is absolutely sick W0lfran. Thank you for sharing! Do you do this with Python or Pine Script for Tradingview? So you said "High breaks first in 72% of cases. But it's false optimism, one should look at IB's upper wick size." which is absolutely right. I try and set my profit targets relatively short, with the S&P 500 I do 10 pips, with the Nasdaq and Dow Jones I do 5 points. Now I have been reading more on the concept of initial balances, of course this comes from the auction market theory and IB is just one of the criteria...

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Quoting bluesteele

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{quote} Here's a short article from Edgeful...as well you may want to look at their Youtube channel as I believe some of their videos do go over metrics on the ES NQ and YM if I recall ? Certain days of the week definitely perform better than others... Tues/Thur are much higher probability days for successful IB BOs etc.. Mondays can be too...Weds and Fri can be mixed. Perhaps as well if you havent already look at some info from Al Brooks. Not IB but related He states that by the end of the 18th five-minute bar (the first 90 minutes of regular...

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Quoting vidvad

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{quote} However, smarter traders are done trading by the end of the first hour.

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Quoting bluesteele

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{quote} This IB indicator for TV works great. Plots IB extensions and gives last 20 days data on IB range. -Initial Balance by TraderDrysdale- {image} {image}

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Quoting bluesteele

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{quote} Hahaha BOOM! I like that One of the reasons why I use the Globex VP levels to trade the ES open some extra juice for those ORB trades ! But we dont talk about that lol...shhhhhhhhhhh Off to help a friend with a little home project and then out for some good old chicken fried steak and eggs ! Gotta love a 3oclock breakfast lol... my kinda schedule Cheers !

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Quoting W0lfram

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Hi I have actually statistically tested this kind of ideas (PA/patterns), no hour is different from any other (we can state this as null hypothesis). Basically what you have here is bullish/bearish candle and after this the price excursion is symmetrical in both directions. Your expectation is ~ATR(period) - put sessions here if you trade US stocks. But it won't show direction. Good luck anyway I'll try to find old code and results but no guarantees I'm happy if someone prove me wrong (since the topic in Trading Discussion)

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