Premium / Discount Market
Also: premium market, discount market, equilibrium, 50% level, above/below equilibrium, cheap market, expensive market
A Premium Market exists when price is trading ABOVE the 50% equilibrium level of a defined range (from a significant swing low to a significant swing high). In a premium market, prices are "expensive" — institutions look to SELL (go short) in premium conditions. A Discount Market exists when price is trading BELOW the 50% equilibrium level of the same range. In a discount market, prices are "cheap" — institutions look to BUY (go long) in discount conditions. The 50% level is the Fibonacci 50% of the defined range (measured from the swing low to the swing high using a standard Fibonacci tool). Above 50% = premium (sell zone); below 50% = discount (buy zone); at 50% = equilibrium (avoid entry, wait for directional confirmation). The defined range can be any timeframe's high-to-low range — weekly, daily, or intraday. ICT uses this concept in the 2022 mentorship extensively for index futures (ES/NQ/YM) to filter entries: long entries are preferred in discount (below 50% of the range); short entries in premium (above 50%).
Identification6
- Define the range: identify the most recent significant swing low and swing high on the operating timeframe.
- Apply Fibonacci from swing low (0%) to swing high (100%). The 50% level = equilibrium.
- Above 50% (between 50%–100%): price is in premium — expensive, institutions are selling here.
- Below 50% (between 0%–50%): price is in discount — cheap, institutions are buying here.
- At 50%: equilibrium — avoid taking new positions directly at equilibrium; wait for price to move away from it.
- Intraday application (Ep 13): 'I'm looking for discount market — low to high and below 50%. Yes, I'm inside the order block.'
Entry4
- Long entries: prefer to enter when price is in a discount (below 50% of the range) — buying cheap.
- Short entries: prefer to enter when price is in a premium (above 50% of the range) — selling expensive.
- Combined with order block and FVG: a bullish OB in a discount zone with daily bullish bias = highest probability long setup.
- Combined with order block and FVG: a bearish OB in a premium zone with daily bearish bias = highest probability short setup.
Target2
- From a discount entry (long): target premium levels — old highs or the top of the range (premium zone).
- From a premium entry (short): target discount levels — old lows or the bottom of the range (discount zone).
Invalidation1
- The range boundaries are exceeded (new swing high or new swing low) — recalculate the range with the new boundaries.
Inferred Conditions (Unvalidated)
- The premium/discount filter works fractally — applies on the daily chart, the hourly chart, and the 5-minute chart simultaneously. Higher timeframe premium/discount confirmation strengthens the lower timeframe setup.
- An FVG sitting in the premium zone of a bearish daily range is a high-probability bearish entry; an FVG in the discount zone of a bullish daily range is a high-probability bullish entry.
- Ep 15 (vacation trade): 'There's a fair value gap at the 680 level, and it's above equilibrium, so it'd be a premium market. So that's why I'm gonna be targeting the ad level.' — demonstrates targeting the premium FVG from a discount entry.
ICT Quotes
"Above 50% of the range — that's premium. Expensive. If I'm bearish I want to be selling in premium. Below 50% — that's discount. Cheap. If I'm bullish I want to be buying in discount. At 50% that's equilibrium — don't trade there, wait for it to move."
"I'm looking for discount market — low to high and below 50%. Yes, I'm inside the order block. Yes. The equities opening has happened. I'm bullish and it has traded lower."
"There's a fair value gap at the 680 level, and it's above equilibrium, so it'd be a premium market. So that's why I'm gonna be targeting the ad level."
Timeframes
Version History1 version
ICT YT - 2022-01-22 - ICT Mentorship 2022 Episode 2.srt
""Above 50% of the range — that's premium. Expensive. Bearish traders sell in premium. Below 50% — that's discount. Cheap. Bullish traders buy in discount. At 50% — equilibrium. Don't trade there.""
Premium/Discount Market framework formally applied to ES/NQ/YM index futures in the 2022 mentorship from Episode 2 onwards. Used as a mandatory context filter for all entries — do not go long in premium; do not go short in discount. The concept likely existed in earlier ICT content (implied by references to "buying at a discount") but is formalized as a named, Fibonacci-anchored framework in 2022.
Notes
This concept is distinct from but related to mean-threshold.yaml — the mean threshold is the 50% midpoint of a specific ORDER BLOCK's body range. The premium/discount market is the 50% level of the ENTIRE PRICE RANGE from swing low to swing high. They are calculated the same way (Fibonacci 50%) but applied to different reference price structures. The premium/discount concept applies to every timeframe simultaneously — a daily premium zone may contain multiple intraday discount zones within it. The higher- timeframe context (daily premium/discount) takes priority for trade direction; the intraday premium/discount filters the specific entry location. ICT specifically instructs students to use TradingView's Fibonacci tool for this measurement in the 2022 mentorship. See also: mean-threshold.yaml, fair-value-gap.yaml, order-block.yaml
Asymmetry Notes
Asymmetrical by design: discount (below 50%) = buy zone; premium (above 50%) = sell zone. The Fibonacci 50% level serves as the equilibrium boundary between the two zones.