Double Initial Balance
Calculating DIB in Market Profile
Calculating Double Initial Balance (DIB) is easy:
1. Wait for the Initial Balance (IB) to form. This is usually the first hour of trading.
2. From this we get the IB High and Low: IBH and IBL. (The high and low during the first hour of trading.)
3. Calculate the IB Range (IBH - IBL) from these two figures. Let's call that IBR.
4. Add the IBR to the IBH and this gives us the Double Initial Balance High: DIBH
5. Subtract the IBR from the IBL and this gives us the Double Initial Balance Low: DIBL
Triple and Quadruple the IB can also be calculated. Add and subtract the IBR to and from the DIBH/DIBL to get the etc. to get the subsequent levels.
DIB levels are used in Market Profile trading as support and resistance lines. We usually look for the market to turn at these lines which make them counter trend trades.
DIB appears to be more effective when the IB is normal to large in size and not as good with small IBs. (This has not been quantified in tests but is the general belief in Market Profile.)