I am posting twice today so that those following only Market Profile will easily find this explanation of a 3I Day.
To understand the nature of a 3I Day, you need to understand the concept of Initiating Activity and the elements of the structure of a traditional Market Profile.
- Initiating Activity is abnormal activity. For selling activity this means that as prices move lower, instead of attracting buyers, the market attracts sellers. The question is lower than what”? Peter Steidlmayer referenced the previous day’s Value Area. So, any activity that is within or below the previous day’s Value Area, is described as Initiating Activity.
- The elements of a traditonal Market Profile are: Extremes, Range Extensions and TPO Counts. (See Mind Over Markets).
FIGURE 1 is a profile of Friday March 7. It shows a marginal 3I Day (the Volume and TPO Counts are almost even). A 3I day is a Free Exposure Day: sellers initiating positions in the previous day’s value area, ought to be able, at worst, to scratch the trade during the Initial Balance.
FIGURE 1 Profile Friday March 7