Two new applications of homogeneous balance (HB) method are presented.It is shown that HB methodcan be extended to search for the Backlund transformations and similarity reductions of nonlinear partial differentialequations.The close relations among the HB method,Weiss-Tabor-Carnevale method and Clarkson-Kruskal directreduction method are also found.KdV-MKdV equation is considered as an illustrative example,and its one kind of Backlund transformation,three kinds of similarity reductions and several kinds of travelling wave solutions are obtained by using extended HB method.