Identity method - a new tool for studying chemical fluctuations

Event-by-event fluctuations of the chemical composition of the hadronic system produced in nuclear collisions are believed to be sensitive to properties of the transition between confined and deconfined strongly interacting matter. In this paper a new technique for the study of chemical fluctuation, the identity method, is introduced and its features are discussed. The method is tested using data on central Pb-Pb collisions at 40$A$~GeV registered by the NA49 experiment at the CERN SPS.