Who this entry is for — For anyone who uses POC and Value Area but does not know when to mean-revert and when to follow the trend. Steidlmayer separates two market regimes with different operational rules: equilibrium and imbalance.
Source: Steidlmayer, Markets and Market Logic (1986); Jim Dalton — Auction Market Theory and balance/imbalance classification. Raw:
raw/sources/steidlmayer/.
Prerequisites
Steidlmayer tradition introduction, Auction Market Theory, Value Area.
Two states, two logics
The auction alternates periods where buyers and sellers find agreement on a price band (equilibrium) and periods where they fail to agree and push price towards new zones (imbalance). Confusing the two states is the most costly mistake in the Steidlmayer method: in equilibrium you seek rotation; in imbalance you seek continuation towards new value.
| State | AMT name | Behaviour | Typical strategy |
|---|---|---|---|
| Equilibrium | Balance | Rotation around POC, VA extremes as boundaries | Fade at VA extremes, target POC |
| Imbalance | Imbalance | Directional trend, previous POC left behind | Follow direction, enter on pullbacks |
| Transition | Breakout from balance | Exit from VA with acceptance | Wait for retest or new VA |
In plain terms — In equilibrium the market «debates» inside a box. In imbalance it has decided to move and the old box no longer holds.
How to recognise equilibrium
Operational signals of balance in the current or multi-day session:
- Price oscillates above and below the POC without net extension.
- Value Area narrow and overlapping the previous one (overlap).
- Initial Balance contained, with no sustained breakout.
- Volume distributed symmetrically at VA edges.
- b (bracket) or P (normal) day type probable.
Example — Three consecutive sessions with POC within 4 ticks of each other and VAs overlapping by >50%: multi-day balance. Operationally: short at VAH targeting POC, long at VAL targeting POC — until a volume breakout invalidates the structure.
How to recognise imbalance
Operational signals of imbalance:
- Open outside the previous VA and no return within ~90 minutes.
- Initial Balance extended beyond 1.5× the average (see Initial Balance).
- Session POC forms at the extremes, not at the centre.
- Value Area narrow and shifted relative to yesterday (value migration).
- T (trend) day type probable.
Frequent mistake — Shorting the VAH just because «it is resistance» on a bullish trend day. In imbalance yesterday's VAH is often support on pullbacks, not a ceiling — the market has accepted higher prices.
Operational rules
| Condition | Action | Logical stop |
|---|---|---|
| Balance confirmed, price at VAH | Fade short towards POC | Above VAH + buffer |
| Balance confirmed, price at VAL | Fade long towards POC | Below VAL + buffer |
| Bullish imbalance, pullback at LVN | Long towards IB extension | Below LVN or below session POC |
| Breakout from balance with volume | Wait for VA or POC retest | Inside previous VA |
| Uncertain transition | Stand aside until new VA forms | — |
Card — Regime checklist
- VA overlap: yes → balance bias; no → imbalance bias.
- Return to previous VA: within 90 min → balance; absent → imbalance.
- POC: central → balance; at extremes → imbalance.
- Day type: P/b → balance; T → imbalance.