The Initial Balance (IB)—the range formed in the first 60 minutes of the cash session (09:30–10:30 ET)—is a simple but powerful framework. It anchors day type, sets risk boundaries, and defines where initiative buyers/sellers must prove control.
IB 101 (Fast)
- IBH / IBL: The high/low of the first hour.
- Range Extension (RE): Any move beyond IBH/IBL later in the session.
- Day Type Lens:
- Balanced/Normal: Price respects IB; responsive fades to VWAP/POC work.
- Trend/Trend-from-Open: Fast RE that holds beyond IB with acceptance.
Why Traders Care
- Context First: IB tells you if we’re rotating or discovering new value.
- Risk Lines: Stops live just beyond invalidation around IB edges.
- Timing: Many sessions show clearer intent after the IB is set.
Core Setups
1) IB Fade (Responsive)
Context: Rotational day; price rejects IBH/IBL with excess, VWAP near center.
Trigger: Reclaim back inside IB + order-flow confirmation.
Stop: Beyond the excess wick.
Targets: VWAP → opposite IB edge (seek ≥2R).
2) RE Break & Hold (Initiative)
Context: Strong impulse through IBH/IBL with volume.
Trigger: Retest of IB edge that holds (IBH turns support, or IBL turns resistance).
Stop: Back inside the IB (invalidates the drive).
Targets: Measured move, prior day H/L, or trail along VWAP/structure for runners.
3) Failed RE Reversal
Context: RE pokes beyond IB but fails (quick reclaim inside IB).
Trigger: Back inside IB + absorption against the breakout side.
Stop: Slightly beyond the failed extreme.
Targets: VWAP → opposite edge.
Confluence That Improves Odds
- VWAP / Anchored VWAP (retests at IB edges)
- Volume Profile: POC, VAL/VAH, LVNs
- Prior References: ONH/ONL, prior day H/L
- Order Flow: Delta shift, absorption at IB edges
Sizing & Risk (Futures-Friendly)
- Risk 0.5–1% per trade.
- Size via: Contracts = floor( AccountRisk $ ÷ (StopPoints × $2 per MNQ point) )
- Daily guardrail: 2–3R. If hit, you’re done.
30-Second IB Checklist
Mark IBH/IBL, VWAP, POC, ONH/ONL.
Day leaning balance or trend?
Setup = IB fade, RE hold, or failed RE?
Stop = invalidation, target ≥2R, size by formula.
News windows checked; alerts set.
Journal tags ready (setup + notes).
Bottom line: IB gives you a clean intraday map. Trade from context to trigger, not the other way around—let the first hour define the battlefield, then execute with risk discipline.