What is Premium / Discount Zone?

Identify a price range — the most recent significant swing high to swing low. Divide it in half. The upper 50% is "premium" — price is relatively expensive compared to recent range. The lower 50% is "discount" — price is relatively cheap.

The simplest application: buy in discount, sell in premium. The 50% midpoint (equilibrium) is the decision line. Above equilibrium = bias toward shorts. Below equilibrium = bias toward longs.

This is fundamentally a value framework. Even without complex price action, traders avoid buying at peaks and shorting at valleys.

The combined framework: identify the higher-timeframe range, draw the equilibrium line, then look for Order Blocks in the favored zone for your bias.

Example: if higher-timeframe trend is bullish and price is in discount (below equilibrium of the most recent leg), the bullish Order Blocks in discount become high-probability long zones. Bullish OBs in premium are lower-probability — you'd be buying after price has already moved up.

This filter alone removes a huge amount of poor trades from a typical retail trader's books.

Premium and Discount are symmetric: in a downtrend, "discount" zones (below equilibrium of the most recent leg) are where SELLS make sense, not buys. Don't blindly buy discount in a falling market.

The rule restated correctly: in an uptrend, buy in discount; in a downtrend, sell in premium. The direction of overall trend determines which side of equilibrium you favor.