What is the Average Initial Balance?
I've seen traders ask the question: "What is a wide/narrow/average Initial Balance?" In my opinion you should never need to ask this question. As part of your homework and effort at learning Market Profile you should find out and know this information. You should have already done these calculations on the instrument that you trade or want to trade.
It is remarkably easy to do this. I will demonstrate with eSignal:
- Open up a chart with the instrument that you trade. I will use the ER2.
- Set the time template on the chart to the time when the Initial Balance occurs. My computer is set to EST so I create a time template that runs from 09:30 to 10:30. (Right click chart: Time Templates -> Edit)
- Now set the timeframe on this chart to 60 minutes. (Type 60 while the chart has focus)
- What you now see is 1 bar for each day and the height of this bar (from high to low) is the Initial Balance (ignore the open/close and the color of the bar). This will give you a visual representation of the wide, narrow and average Initial Balance bars. You can save this chart and open it at the end of the first hour to "get the current picture."
- You can also type in a different symbol to see what the IB on other instruments looks like.
- To make this slightly more accurate and mathematical I suggest that you now right click on the chart and select Tools -> Data Export
- Uncheck the Date, Time, Open, and Close columns because you don't need these and then click on "Save as CSV..." button and save this file to your hard disk.
- Now open this same file with Excel and put in a formula that calculates the first hour range and at the bottom of that column put in the average formula and you will see what the average Initial Balance is for this symbol.
- You can also put in the Min and Max formulas and this will give you the extremes during the period you examined.
- For those of you that are lazy and who trade the E-mini Russell 2000 here is a spreadsheet that I've done for you with data up to and including the 14 February 2005. (This spreadsheet can also be used as a template for other symbols.) ER2 IB Calculations