Protocol: The Initial Balance (Entry 3)

Trading the opening range on hope is expensive. The first hour is where most traders donate.

Scroll TikTok or YouTube and you’ll hear the same advice: “Just buy the breakout of the first hour.”

That works—right up until it doesn’t. Most “breakouts” in the first hour are just stop runs and emotion. In VolMike terms, we don’t trade the break. We trade who is behind the break.

You don’t need to calculate this manually. In the Terminal, VolMike plots the Initial Balance as two gold lines. These lines lock in at 10:30 AM ET:

• IB High = the ceiling of the sandbox
• IB Low = the floor of the sandbox

As long as Mike stays between those lines, the sandbox is intact and the locals can keep rotating you.

The Other-Timeframe Logic (Who Moves the Market)

The market only really trends when a bigger player steps in—funds, institutions, banks. That’s the Other Timeframe.

• Locals prefer Mike stays inside the sandbox so they can scalp rotation.
• Other Timeframe breaks the sandbox when they want to reprice the asset.

Your edge isn’t guessing direction. Your edge is waiting for Range Extension and then asking one question:

Was the break accepted… or rejected?

The Signal: Entry 3 + The Horse

A verified break of the Initial Balance is Entry 3.

Entry 3 is aggressive by design, but it only counts when one condition is present:

The Horse = Relative Volume showing real fuel (RVOL > 1.3).

Why? Because fuel is the simplest proxy for “other timeframe showed up.”

• No fuel = locals hunting stops
• Fuel = the auction is changing

Scenario A: The Fake-Out (No Horse)

Mike pokes above IB High (or below IB Low), but volume is light.

• Read: locals probing for stops, not a real reprice
• Tell: the break can’t hold; Mike slides back inside the sandbox
• Result: breakout buyers get trapped inside the range

Scenario B: The Extension (Horse Arrives)

Mike drives through the IB line and the Horse prints as the break happens.

• Read: other timeframe is participating
• Tell: Mike doesn’t just break—it holds outside and starts building value outside the range
• Result: the sandbox is broken, and the day often shifts into trend / expansion mode

The 10-Second Checklist (Entry 3)

Before you take an IB breakout, run this:

1. Wait for 10:30 AM ET — let the IB finish forming
2. Mark the gold lines — IB High and IB Low in Terminal
3. At the line, check fuel — does the Horse (RVOL) show up as the break happens?
   • No Horse: stand down (often a probe + trap)
   • Yes Horse: Entry 3 is live

Confirmation tip: after the break, look for a hold. If Mike can’t stay outside the IB line for a few bars and instantly re-enters, treat it as a failed attempt.

Practical Note

The Initial Balance is more than a range. It’s a sentiment test.

• If we spend most of the day inside the IB: the market is undecided → expect chop
• If we break and hold outside with the Horse: the market is making a decision → expect expansion

Follow the decision. But make sure the Horse is pulling the cart.

FAQ (Quick Answers)

What is Entry 3 in VolMike?

Entry 3 is a verified Initial Balance break: Mike breaks IB High or IB Low with fuel, confirmed by the Horse.

What is Range Extension?

Range Extension is simply breaking the sandbox:

• RE Up: break above IB High
• RE Down: break below IB Low

What does “accepted vs rejected” mean?

• Accepted: Mike breaks and then stays outside the IB line (builds outside value)
• Rejected: Mike breaks and quickly returns inside the IB (trap / probe)

Why is the Horse required?

Because fuel filters fake-outs. RVOL > 1.3 is your quick proxy that the other timeframe is present. No fuel usually means locals are just running stops.

Based on TPO concepts from James Dalton, Mind Over Markets (Chapter 3).