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Lessons › Module 1: Auction Market Theory › Lesson 1.4

Lesson 1.4 · about 5 minutes

Who's Trading: Day Timeframe vs. Other Timeframe

ObjectiveAfter this lesson you can explain the difference between day-timeframe and other-timeframe traders and spot range extension.

Concept

Not every trader has the same goal. Day-timeframe traders open and close positions within the session. Other-timeframe (OTF) traders, such as funds and swing traders, hold for days, weeks or longer, and their larger orders can move price much further. The first hour (periods A and B) forms the Initial Balance (IB), which is often set mostly by day-timeframe trading. When price later trades beyond the IB, called range extension, it is a clue that other-timeframe participants have become active. The profile never names the traders. It shows their footprints.

TPO profile from 100 to 108. A red bar marks the Initial Balance 100-104; a purple arrow shows range extension up 4 points to 108; POC line at 106. A A B A B C A B C D B C D D E F D E F G H E F G H F G 108 107 106 105 104 103 102 101 100 POC 106 IB high 104 IB low 100 range ext. +4 XYZ (hypothetical): Initial Balance and range extension Hypothetical data · red = Initial Balance (A+B) · purple = range extension
XYZ (hypothetical): Initial Balance and range extension. Hypothetical, synthetic data generated from code. TPO profile from 100 to 108. A red bar marks the Initial Balance 100-104; a purple arrow shows range extension up 4 points to 108; POC line at 106.

Worked example

Hypothetical XYZ. Period A trades 100–103 and B trades 101–104, so the Initial Balance is 100–104. C stays inside the IB at 102–104. In D, price trades up to 106, above the IB high: range extension. E, F and G keep building higher, and F reaches 108, so the session's range is 100–108, or 4 points of range extension above the IB high of 104. The POC is 106 (5 letters: D, E, F, G and H), above the IB. That footprint suggests longer-timeframe buyers were active.

Key takeaway

The IB is the first hour. Range extension beyond it is a footprint of other-timeframe traders.

Check yourself

Pick an answer to see instantly why it is right or wrong.

Question 1 of 3

Which periods form the Initial Balance (IB)?

Question 2 of 3

In the XYZ example, how many points of range extension are there above the IB high?

Question 3 of 3

How is range extension best interpreted?

Not financial advice. Educational content only, not financial advice. All tickers and prices are hypothetical, synthetic data. Market Profile is an organizing tool, not a trading system or a prediction. Trading involves substantial risk of loss.