Letters To S&C
BALANCE OF MARKET POWER
I read with interest the August 2001 article by
Igor Livshin on the balance of market power (BMP) and decided to implement the indicator. After some observation, it turns out that all the formulas for this indicator turn out to be, after making all the summations:
BMP := (C-O)/(H-L)
Thatís it ó the balance of market power is simply the difference between the close and the open, divided by the daily range. What is most curious, because it was not apparent during my reading of the philosophy behind the indicator, is that BMP is the same for the same difference (closeopen), independently of the position of this difference relative to the daily range.