DRIVING INPUT:
The Initial Balance is set and we’ve already extended the Initial Balance. This trade seeks entry with the participants who extended the Initial Balance, either at the developing value or favorable to it (If buying, dVPOC would be above entry)
4 QUESTIONS FOR IBGP:
- What is the Opportunity? Initial Balance has been extended on a rotational day and we see a likely target for the controlling players to take the auction, which may be either inside the Initial Balance or beyond it. Entering believing that the auction will rotate favorably with the participants who extended the Initial Balance.
- If entering at the Developing VPOC, likely targeting extended Initial Balance extreme or beyond
- If entering near Value Area extreme opposite extended Initial Balance, likely targeting a return to the VWAP or Developing VPOC
- What am I willing to Risk? With the target pre-determined, the target should offer at least 3X the risk.
- What would tell me that I’m right? The auction only extends the Initial Balance in one direction and auction rotates to the other side of value or is able to accept outside the IB in the direction of extension.
- What would tell me that I’m wrong? Auction goes neutral before finding the trigger. Or, if triggered, trades back through the stop.
ADDITIONAL CRITERIA FOR EXECUTION:
- Non-directional open (open auction)
- Rotational day (no one-time framing)
- We have achieved 75% of the expected range in the session
- The IB is average or wide
- The DVPOC is in the middle of the IB range
- Prior session was directional (supporting rotations in this session)
- There is a noticeable slope to the DVWAP?
- Have we hit 1.5 the IB yet?
