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Technical Trading Strategy: Large Initial Balances

DAX and STOXX Large IB’s on 5 February 2018

The Initial Balance is the trade within the first hour of a market opening and typically takes place before the ‘cash‘ open. This is a time when positions held overnight are often squared and early positions for the day are put on, as such the activity seen in the Initial Balance can give some very big clues as to the day ahead.

In this live AXIA daily debrief we look at the size of the IB and consider its implications for trading the rest of the day, explaining why a large IB, perhaps counter-intuitively, produces limited range extension and more two-way trade. By understanding the opening activity, trading strategies can be adjusted and expectations modified, in this instance reversal strategies would be favoured over a more aggressive breakout style.

Market and Volume Profile Analysis is one of the tools widely used on a daily basis by our professional traders and is taught both in our 8-week Intensive Career Programme, as well as in our on-demand Volume Profiling with Strategy Development course.

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