Who this entry is for — For anyone who opens trades at the start of a session without a structural filter. The Initial Balance (IB) — often the first 60-minute interval in CBOT material — defines the initial discovery area and guides expectations for the rest of the session.
Source: Steidlmayer & Koy, Markets and Market Logic (1986), pp. 80–82; Chicago Board of Trade, CBOT Market Profile®, Part I (1996), pp. 9–16, 36. Cross-check:
raw/sources/steidlmayer/files/chapters/cbot/part-01-lettura-grafico.txtandraw/sources/steidlmayer/files/_extract-markets-and-market-logic.txt. Initial Balance duration depends on the market: a first-hour period is a CBOT example, not a universal rule.
Prerequisites
Market Profile, Steidlmayer tradition introduction, Day types.
What the Initial Balance is
The Initial Balance is the price area formed during the first interval in which the short-term participant finds two-way trade. In CBOT material that interval is often one hour, but it can change with the contract and session length. Buyers and sellers thereby define the initial parameters; everything that follows — extension, rotation, or trend — is read relative to the IB.
| Element | Definition |
|---|---|
| IB High | High of the first 60 minutes |
| IB Low | Low of the first 60 minutes |
| IB Range | IB High − IB Low |
| Period A | First half-hour (letter A in TPO) |
| Period B | Second half-hour (letter B) |
In plain terms — The first hour draws the day's «box». If price stays inside, a sideways day is likely. If it exits and does not return, a trend is likely.
Extension rules
The CBOT uses extension size relative to the IB to describe session control. The bands below are a teaching guide, not rigid thresholds:
| Extension | Operational meaning | Probable day type |
|---|---|---|
| Inside IB | Rotation, no direction | b (bracket) |
| 1× IB | Single extension above/below | P (normal) or start of T |
| 1.5× IB | Significant extension | T (trend) probable |
| 2× IB or more | Strong directional day | T confirmed |
Example — IB Range = 12 points (ES). At 10:30 price extends 12 points above IB High without re-entering: 1× extension upward. Bullish intraday bias — look for longs on pullbacks towards IB High or session POC, not shorts at the high.
Narrow IB vs wide IB
| IB type | Characteristics | Implication |
|---|---|---|
| Narrow IB (< 20-session average) | Contained discovery, low initial volatility | Probable later extension; IB breakout often significant |
| Wide IB (> average) | Already extended discovery | Probable rotation or consolidation; less extension margin |
| IB = previous VA | Open in balance | P or b day probable |
| IB outside previous VA | Open in imbalance | T day probable |
Frequent mistake — Trading IB breakouts in the first 5 minutes of the second hour without volume/TPO confirmation. Steidlmayer waits for the extension to be **accepted** — at least one complete TPO period beyond IB — before considering it valid.
Operational rules
| Signal | Action | Stop |
|---|---|---|
| Price inside IB after 90 min | Range trade IB High / IB Low | Beyond IB + buffer |
| Breakout IB High with volume | Long on IB High retest | Below IB Low |
| Breakout IB Low with volume | Short on IB Low retest | Above IB High |
| Narrow IB + breakout | Wait for 1×–1.5× extension | Mid IB |
| Wide IB, price at centre | Avoid chase; wait for new VA | IB extremes |
Card — Initial Balance
- Period: first 60 minutes of regular session.
- Function: intraday bias filter and day type.
- 1× extension: directional signal; 1.5×+ → trend probable.
- Comparison: IB vs previous VA for balance/imbalance regime.