12. Premium / Discount

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Maintained by Nix Young

12.1 P/D Usage

Community insights

When trading a retracement, the reference EQ can be used as the take-profit target. — Garrett — "A Deeper Dive into SMT Divergence", 34:00
When a fair value gap straddles EQ (part in discount, part in premium), only the portion of it in premium is the actionable side for a sell — be patient and either wait for price to reach that upper part of the gap, or rest a limit there rather than treating the whole gap as equally valid. — MMXM Trader — Euro CAD $4,000 review, 2:12
How deep into a higher-timeframe dealing range price goes isn't just about a clean 50% or the nearest PD array — price is seeking a lower-timeframe range (its own buy-side/sell-side stop pool) nested inside that higher-timeframe range. It can overshoot an existing order block or fair value gap entirely if a lower-timeframe range's liquidity sits deeper, then reverse from there instead. — MMXM Trader — Range Is Amplified, 0:52
For judging equilibrium inside an active expansion leg specifically, measure candles wick-high to wick-low — a different convention than the body-to-body EQ used for CiSD/order-block work. — TTrades — "You Are Using Discount and Premium Wrong! - EQ For Expansions", 0:41
Premium/discount ranges are nested and expanding: as a new swing forms, re-draw/extend the working equilibrium range to track it — a single chart section can contain several valid, overlapping discount/premium ranges at once, not just one fixed range. — TTrades — "Discount & Premium - ICT Concepts", 1:10
The OTE zone's exact Fibonacci construction: 0, 0.5, 0.62, 0.705, 0.79, 1 — the 'OTE zone' itself is the 62–79% retracement band, with 70.5% as its midpoint. — TTrades — "Optimal Trade Entry (OTE) - ICT Concepts", 0:38
When trading a weekly-key-level setup, wants to be a buyer below the weekly candle's opening price (if bullish) or a seller above it (if bearish) specifically so the trade captures the whole weekly range move rather than entering mid-range. — $niper — "The Trade Model That Got Me Profitable - The Forever Model Workshop", 38:46

Premium / Discount should not be used mechanically.

Afyz rules:

P/D should only be used during retracement PoP.
P/D can be used to judge the probability of Universal Model key level + CiC reversal.
P/D during expansion PoP can be used as an invalidation tool.
SS confirmation is required.
EQ discipline is looser on lower timeframes than on higher ones — treat the “don’t consolidate at EQ” red flag as a stricter requirement on the HTF and a softer guideline on the LTF.

12.2 Avoid

Community insights

A personal-conviction rule: never take entries right at the equilibrium (midpoint) of an established range — regarded as one of the lowest-probability places to trade — trading only at the range extremes instead. — Jokerszn — "Daily Orderflow - ICT Daily Bias", 27:49
Explicitly excludes premium/discount from the entry checklist entirely — reasoning that price can continue expanding through premium or discount alike, so it isn't treated as a necessary filter for this particular model. A direct minimalist counterpoint to the site's premium/discount framework, not a refinement of it. — $niper — "The Trade Model That Got Me Profitable - The Forever Model Workshop", 37:15

Do not long in premium.
Do not short in discount.
You do not know whether price will retrace / reverse, or where it will happen.
Exception: on a fast, driver-driven expansion day that leaves no meaningful retracement at all, entering at a technically unfavourable premium/discount location can be the only realistic option — treat this as deliberate discretion, not as license to ignore the rule generally. The worst version of this is entering deep in both an already-spent lower-timeframe discount and a higher-timeframe premium at the same time; avoid that combination specifically.

Advanced P/D:

one asset trades back into the range but remains in premium;
another asset manipulates the opposite range edge;
this often creates SS.

12.3 Advanced Premium / Discount Sequence

Community insights

In a retracement, the leading asset barely retraces, the middle asset retraces into its OTE, and the lagging asset doesn't retrace at all — it reverses off the opposite range extreme instead. That difference in retracement depth is itself a validation tool. — Afyz — "Advanced Premium/Discount Sequence" (Lecture 12), 3:44
The three legs of the advanced premium/discount triad sequence each map onto a distinct Universal Model variant: the leading and middle assets are both playing out an IRL-to-ERL continuation, while the lagging asset — the one that doesn't retrace and instead reverses off the opposite extreme — is specifically an ERL-to-ERL range-protocol reversal. — Lathyrus Masterclass — The Lathyrus Model — Lecture 12: Advanced P&D, 9:18
A numeric grading scheme for the dealing range (measured from the smart-money reversal point back to the original consolidation): below the 0.25 level is the 'low-risk buy/sell' zone; just above 0.25 is the first distribution; a second distribution forming below the 0.5 mark is high-probability, with the rule that the next re-accumulation leg should move fast and never revisit 50% — a return to 50% invalidates the idea. — DayTradingRauf — "ICT MMXM Models", 13:29

During a retracement, the three assets in a triad typically retrace to different depths, and that difference is itself a validation tool:

The leading asset retraces the least, staying high in the range (near the extreme, barely past the 25% level) — this shows the strongest willingness to continue.
The middle asset retraces deeper, typically into the optimal trade entry / 50%+ area.
The lagging asset does not retrace at all — instead of pulling back, it reverses off the opposite range extreme (the range low, for a bullish case), the weakest asset in the triad.
Validate that the range low is really about to reverse — rather than continuing lower — by requiring a strength-switch SMT or strength-switch PSP on the lagging asset specifically: the asset trading lowest in its range should close back stronger, confirming institutional intent to reverse rather than continue.
Once that strength switch confirms, trade the leading or middle asset towards their draw — avoid trading the lagging asset itself, since it is too deep in its range and its own reversal does not support a continuation to the same target.

12.4 Gap Filtering by Premium / Discount

Community insight

The "X model": after a run of the previous daily high (or low), wait for a 15-minute market structure shift paired with SMT, then target a 1-hour fair value gap sitting around 50% of that previous daily candle's full range as the draw on liquidity — a secondary entry opportunity often exists around the 25% level too. If no 1-hour gap exists near that 50% level, drop to the 15-minute timeframe for the target instead, but never lower — if there's no gap on the 15-minute either, the model isn't valid for that range. — MMXM Trader — The X Model, 0:35

Use two premium/discount ranges together to decide which continuation gaps are trustworthy:

The current expanding candle’s own range (its low to its high as it forms): the stop loss / swing formation should sit in this candle’s discount, not its premium.
The higher-timeframe dealing range the candle sits inside: below equilibrium of that range, any gap that forms is acceptable, since the market is still expanding away from a reversal. Above equilibrium — in premium of the higher-timeframe range — demand that the gap also sits in discount of the current candle’s own range before trusting it; otherwise a swing at the high of an already-premium range is not a relevant swing.

Personal study notes, shared as-is and in good faith. Educational material only — nothing on this site constitutes financial advice.