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A balanced line consists of three connections: earth or ground and a positive and negative version of the signal being transmitted. This allows any noise picked up on the line to be cancelled out at the receiving end by subtracting the positive from the negative signal to end up with twice the signal and no common-mode noise.

Balanced lines also typically run at low impedance (that is, high current to voltage ratio) to reduce further the risk of interference.

To further elaborate on what a balanced line does:

Take, for example, a standard three-prong XLR cable. One is ground and the other two are positive and negative, also called hot and cold. At the point of input, say a Shure SM58 microphone, the hot and cold lines are placed 180 degrees out of sync, so that, were they to be placed together again, they would create destructive interference:


    _         _         _
   / \       / \       /
  /   \     /   \     /  Hot
 /     \   /     \   /
/       \_/       \_/

               +                        =    ------------------
         _         _ 
\       / \       / \
 \     /   \     /   \  Cold
  \   /     \   /     \
   \_/       \_/       \_

If the line picks up any interference, or noise on its way to, say, a standard Peavey pre-amp, that interference is in the same phase in both the hot and cold lines, so it creates constructive interference:


    _         _         _
   / \       / \       /
  /   \     /   \     /  Hot       _   _   _   _   _
 /     \   /     \   /            / \_/ \_/ \_/ \_/
/       \_/       \_/                    interference
                                                                          _       _       _
               +                                                     =   / \     / \     /
         _         _                                                    /   \   /   \   /
\       / \       / \                                                        \_/     \_/
 \     /   \     /   \  Cold      _   _   _   _   _                   unwanted interference
  \   /     \   /     \          / \_/ \_/ \_/ \_/
   \_/       \_/       \_               interference

What the preamp does is shift the cold and hot lines 180 degrees a second time so that now the audio signal amplifies itself and the unwanted interference cancels itself out:


    _         _         _
   / \       / \       /
  /   \     /   \     /  Hot      _   _   _   _   _                    __                  __                  __
 /     \   /     \   /           / \_/ \_/ \_/ \_/                    /  \                /  \                /
/       \_/       \_/                   interference                 /    \              /    \              /
                                                                    /      \            /      \            /
               +                                             =     /        \          /        \          /
    _         _         _                                         /          \        /          \        /
   / \       / \       /                                         /            \      /            \      /
  /   \     /   \     /  Cold       _   _   _   _               /              \    /              \    /
 /     \   /     \   /           \_/ \_/ \_/ \_/ \_            /                \__/                \__/
/       \_/       \_/                   interference                                  Pure signal!

[Editor's Note, 2/21/2005: Removed unsightly excess whitespace inside the <pre> tags. Removed <br> tags and added <p> tags.]

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