Initial Balance is defined as the first hour or whatever of trading. This is completely arbitrary when applied to today's markets, but back when this method of visualizing the market was developed, the first hour's range was measured because long-term participants, e.g.,., institutions, hedgers, were not active in the first hour. And those in the pit were the biggest and most dominant short-term traders. If the initial balance was intact during the day it meant no to little outside paper coming into the pit (and this could be gauged by action nearing the range extremes), but if the traders in the pit saw strength at the extremes and outside them, they would know that paper was entering and it would just be up to them to gauge the paper's strength and the potential size of the order using other contextual clues. But none of that is relevant today. Institutions don't wait till after the first hour to put on positions and they don't trade through pits. Pit traders no longer exist. Today institutions work orders from whenever: from an open, over an overnight session, at the open, at the close, over lunch, etc.
If there was somehow a way to work out when lower time-frame participants were active (within the day) and higher were not, and if there was someway to work out if you're the most dominant short-term player and know who else was a dominant short-term player because he sat next to you, then you would be able to draw up an initial balance. But I see no way to do that. The closest thing now to an initial balance is someone just playing a breakout of a chart range and having some reasons to believe that it's not just a technical break, but one that has reason to be sustained, but that's not really trading within the day anymore. And that's not the same concept as "initial balance."
If there was somehow a way to work out when lower time-frame participants were active (within the day) and higher were not, and if there was someway to work out if you're the most dominant short-term player and know who else was a dominant short-term player because he sat next to you, then you would be able to draw up an initial balance. But I see no way to do that. The closest thing now to an initial balance is someone just playing a breakout of a chart range and having some reasons to believe that it's not just a technical break, but one that has reason to be sustained, but that's not really trading within the day anymore. And that's not the same concept as "initial balance."
