What it is
BOP was described by Igor Livshin. It asks one simple question of each candle: did buyers or sellers win the time between open and close, and by how much of the full range? A candle that opens at its low and closes at its high scores +1.
Smoothing over several candles turns that into a steady read on which side is in control, without using volume, which makes it handy on markets where volume is only tick volume.
How it is calculated
1. For each candle: (close minus open) divided by (high minus low). This gives a value from -1 to +1. 2. Smooth those values with a 14 period moving average. 3. A candle with no range (high equals low) is counted as 0.
Settings
| Setting | Default | Range | What it changes |
|---|---|---|---|
| Smoothing | 14 | 1 to 100 | How many candles are averaged. Set to 1 to see raw candle-by-candle values; higher gives a smoother line that crosses 0 less often. |
How to read it
How to trade it
- 1
Choose the trend on a higher timeframe, for example 4 hour gold above its 50 EMA.
- 2
On the 15 minute chart, wait for BOP to dip below 0 during a pullback.
- 3
Enter long when BOP crosses back above 0 and the candle closes above the prior candle's high.
- 4
Stop below the pullback low, for example 5 to 8 points on gold.
- 5
Target the previous swing high or 2 times the stop.
The long is cancelled if BOP drops back below 0 within two candles, or if price closes below the pullback low.
WickSpeak writes a plain-English reading of Balance of Power on the live candle: what it measures, which side is winning the candles right now, how to trade it and what would prove it wrong. In Playbook, a condition can check when BOP crosses above or below zero, stays above or below zero, or is rising or falling.
Best markets and timeframes
Works on any market because it only uses open, high, low and close. Most useful on 15 minute to 4 hour charts of gold and indices. On 1 minute charts the raw values are very noisy, even when smoothed.
Common mistakes
- Using it unsmoothed and reacting to every candle.
- Expecting it to call tops. It shows who is winning now, not when that will change.
- Ignoring gaps. Index CFDs can open far from the previous close, and BOP only sees the open of each candle, not the gap.
Works well with
Questions traders ask
What does Balance of Power measure?
It measures how much of each candle's range was covered by its body and in which direction. A strong close near the high gives a high positive value; a strong close near the low gives a negative one.
What is a good setting for Balance of Power?
A 14 period smoothing is the common default. Shorter smoothing reacts faster but gives more false zero crosses.
Does Balance of Power use volume?
No. It only uses the open, high, low and close of each candle, so it works the same on markets with real or tick volume.
What is the difference between BOP and Qstick?
Qstick averages the body size in points, while BOP divides each body by its range so every candle scores between -1 and +1. BOP is easier to compare across markets.