Who this entry is for — Anyone reading Market Profile who cannot tell whether a move «makes sense» vs yesterday's value. The CBOT Study Guide classifies longer-term trader activity as responsive (expected) or initiating (unexpected).
Source: Chicago Board of Trade, CBOT Market Profile®, Part I: Reading the Market Profile Graphic (1996), pp. 44–45 — Initiating and Responsive Activity. Cross-check:
raw/sources/steidlmayer/files/chapters/cbot/part-01-lettura-grafico.txt(PDF pages 46–47); theoretical comparison: Steidlmayer & Koy, Markets and Market Logic (1986), pp. 74–76.
Prerequisites
Operational POC and Value Area, Value Area.
Three price positions vs value
Today's price can only be:
- Above the reference Value Area (usually prior session)
- Inside the Value Area
- Below the Value Area
From this Steidlmayer derives whether longer-term buying or selling is expected or unexpected.
Initiating / responsive table
| Activity | Position vs value | Type | Relative strength |
|---|---|---|---|
| Buying | Below value | Responsive | Expected — seeks «discounted» value |
| Buying | Above value | Initiating | Unexpected — believes value is higher |
| Selling | Above value | Responsive | Expected — offers above fair value |
| Selling | Below value | Initiating | Unexpected — believes value is lower |
| Buy/sell | Inside value | Judgment call | Context decides |
Practical rule — Initiating activity signals the longer-term trader is pushing toward new value. The more initiating, the more imbalanced the market — and the further it must travel to reach equilibrium (or find opposite response).
Why it matters for day traders
- Responsive often supports mean-reversion toward POC/VA
- Initiating supports trend and range extension
- Initiating activity that fails to facilitate trade → negative information (fragile move)
Focus on the longer-term trader does not exclude short-term players: they break balance and create measurable directional opportunity.
Session checklist
- Where does the open sit vs yesterday's VA?
- Is the high/low extreme responsive or initiating?
- Is there initiating inside value (hidden accumulation) or only at edges?
Quick card
- Responsive = expected behaviour → favours rotation
- Initiating = surprise → favours direction
- Reference: prior session Value Area (or your operating timeframe)