Market Profile 3I day

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.

  1. 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.
  2. 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.

03-10-2008-mkt-profile.jpg

FIGURE 1 Profile Friday March 7

4 thoughts on “Market Profile 3I day”

  1. Ray

    Thank you for expanding on 3I (or 3i) day.

    I believe it is clearer now when you speak of Initiating Activity relative to activity that is within or below the previous day’s Value Area.

  2. Is it really that clear cut range extension to the downside since it was a neutral day (extension to the upside first in the 3rd period of friday)?

  3. Hi Nasdaq

    Thanks for your query.

    My IB is the first 3 periods rather than two – for reasons explained in “The Initial Balance Two or Three 30-Minute Periods?”

    Hence, Friday had only one range extension and that was down.

  4. Ray,

    As one new to MP, I am reading Mind Over Markets. Chapter 4 is certainly terse with new ideas! I’ve never heard you mention the Liquidity Data Bank (LDB) in the blog before, and I’m wondering about some of the elements in it, such as the CTI%, etc… are there such numbers available for the electronically traded ES? I notice Market Delta has the “volume footprints”… is this in the same vein or even a candidate replacement for the LDB?

    Thanks,
    Jeff

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