Normalizing orderbook data

Hello guys,

I am simply trying to understand the relationship between price and buy/sell orders.

The formula I am using was:

buys-sells/buys+sells so the data is in between -1 and 1. However, a friend of mine suggested doing the same formula in log2 in order to better study the relationship. Since I am just a starter, I couldn't understand the difference.

So, my questions are what is the difference between my formula and log2 while studying the relationship? What kind of model is the best to study relationships (and importance) of order book data and price?

Sorry if it is not the right place to ask. Just wanna learn more about learning simple statistics and comparison models.

Submitted August 31, 2019 at 04:48PM by eneskaraboga

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