Premium and discount: buy cheap, sell expensive with the dealing range

Every trader knows "buy low, sell high". Premium and discount turns that into a rule you can see on the chart. Take a range, split it in half, and you know at once whether the current price is expensive or cheap for that range.

The dealing range

A dealing range is the space between a clear swing low and a clear swing high, usually ones that formed when liquidity was taken and structure shifted. Draw a line at the 50% level, called equilibrium:

Premium: above 50%. Price is expensive within this range: a place to look for sells.
Discount: below 50%. Price is cheap within this range: a place to look for buys.

The rule

In a bullish bias, only look for buys in discount. In a bearish bias, only look for sells in premium. A buy setup that appears in premium may still work, but you are paying more and your stop is further away for the same target. Skipping those trades removes many poor entries.

Picking the right range

Higher time frame: the daily or 4-hour range tells you whether the market as a whole is cheap or expensive.
Trading range: the swing that made the latest structure shift is the one to use for entries.
Update it: when price breaks out and makes a new swing, the range changes with it.

How it fits with other tools

The OTE zone (62-79%) sits deep in discount for a buy and deep in premium for a sell. A fair value gap or order block on the right side of equilibrium is worth more than one on the wrong side.

In ICC Charts

Switch on the Dealing Range (premium / discount) or Premium / Discount + OTE layer in the terminal to shade both halves of the current range. Several scanner models, such as the Silver Bullet, only accept an entry on the correct side of the range. See the models page for details.

Education only. Trading involves risk; practise on a demo account first.

Try it on a live chart

Open ICC Charts in your browser, free, with the ICT and VSA layers and the model scanner.

Open the terminal →