Internal Bar Strength and Stochastic Oscillator Relationships
Summary
The document identifies a ratio locating a period's close, or possibly its open, within that period's high-low range. The close-based version is described as the internal bar strength indicator, also called position within range. Its value indicates whether the close is near the low or high of the bar; expressing the position as a percentage maps it onto a 0-to-100 scale.
The answers relate this measure to the fast stochastic oscillator and to Williams %R, noting that the latter uses a reversed scale. One answer cites research discussing mean reversion in equity ETFs, but the document provides no study details, performance evidence, or rules for using the indicator. It also leaves ambiguity about whether the questioner's remembered, person-named indicator refers to the open-based version or another related oscillator. Treat the naming and claimed historical attribution as contextual pointers rather than a tested trading conclusion.
Key ideas
- The close's location within a bar's high-low range is called internal bar strength or position within range.
- The open can be measured within the same range using an analogous ratio.
- The percentage form resembles a one-period fast stochastic reading and is related to Williams %R on a reversed scale.
- The document mentions research on mean reversion in equity ETFs but supplies no supporting results or trading rules.
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Full text
# What is the official name for this indicator?
# What is the official name for this indicator?
I distinctly remember that this type of indicator was named after a person. With reference to a particular period e.g. a week or month, it is computed as:
$$Ratio1(t) = \frac{Close(t) - Low(t)}{ High(t) - Low(t)} $$
or possibly associated with a similar formula such as:
$$Ratio2(t) = \frac{Open(t) - Low(t)}{ High(t) - Low(t)} $$
## Answer by AKdemy (score 3, accepted)
https://quant.stackexchange.com/a/77057
I suppose you could call it a one period stochastic indicator.
I neither use, nor have any knowledge about technical indicators but a quick google search of the term "(close - low)/(high -low)" indicates it is called the `internal bar strength indicator`. Alexander Pagonidis claims in “The IBS Effect: Mean Reversion in Equity ETFs” (2013) that he is the first to discuss this indicator in the academic literature.
In general, it seems a fast stochastic indicator (%K) requires a period, not the same day. Adding to @nbbo2, this should be closely related to Williams %R, except it should be on a scale 0 to 100 instead of -100 to 0. Meaning if Williams %R is -45, you will get a reading of 54 in the %K and so forth. This is also supported by Wikipedia's entry about stochastic oscillators where it is stated that Williams %R is the equivalent of %K, mirrored around the 0%-axis.
## Answer by nbbo2 (score 4)
https://quant.stackexchange.com/a/77055
In simple terms it is the position of Close (or Open) within the range, i.e. [Low,High]. It equals 1 if the Close is at the High, and equals 0 if you Close at the Low. The rest of the time it is in ]0,1[. And similarly for the Open.
It is useful in many contexts. At my shop we just called it "position within range".
## Answer by Enk9456 (score 1)
https://quant.stackexchange.com/a/77048
It is called a "fast stochastic oscillator" when expressed as a percentage, and is a building block for the general stochastic oscillator, developed by George Lane.Shown in full with attribution under the source's licence. Licence: CC BY-SA 4.0 (Stack Exchange)
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.