Premium vs Discount ICT — Smart Money Price Logic Explained 2025

Why Premium / Discount Matters

Most traders spend their time looking for the perfect entry signal — an Order Block, a Fair Value Gap, a CHoCH, or displacement. But they often ignore the most important question: “Is price expensive or cheap right now?” This single question decides whether your trade has a high probability or a high risk of failure.

In ICT logic, Premium vs Discount is the foundation of every setup. It tells you exactly where institutions want to sell, where they want to buy, and where retail traders get trapped. Without understanding this concept, every other SMC tool becomes unreliable.

The mistake beginners make is simple: they trade signals, not locations. Price can form the cleanest Order Block, the sharpest displacement, or the prettiest FVG — but if it forms in the wrong zone (premium for buys or discount for sells), the trade is already weak. This is why traders get stopped out even when the setup “looks perfect.”

Premium and Discount fix this problem by giving you context:

• Premium = price is expensive → ideal for sells
• Discount = price is cheap → ideal for buys
• Equilibrium (50%) = no-man’s land → low probability

This concept is not about Fibonacci, indicators, or patterns. It’s about market logic: institutions accumulate positions when price is cheap and distribute when price is expensive. Once you understand how to define premium and discount inside a dealing range, the entire chart becomes easier to read. You’ll know where to avoid trades, where to expect reversals, and where the highest-probability entries truly form.

By the end of this article, you will understand:

• What premium and discount actually mean
• How to draw dealing ranges correctly
• Where smart money buys and sells
• How liquidity interacts with premium/discount
• How to avoid trading inside equilibrium
• How to read trends and reversals using this framework

Premium / Discount is the backbone of smart money trading. It is the concept that gives meaning to every other ICT model.

The Core Idea: What Premium and Discount Really Mean

Premium and discount are two of the simplest concepts in ICT — yet they’re the ones traders misunderstand the most. Many believe premium/discount is about Fibonacci tools or technical indicators. It’s not. Premium and discount represent fair pricing inside a dealing range. They show you where institutions want to buy and where they want to sell, based on pure logic, not emotion.

1. Simple Definition (Real ICT Logic)

• Discount = Price is cheap → Buy zone
• Premium = Price is expensive → Sell zone

That’s all it is. No indicators. No Fibonacci dependency. Just understanding whether price is currently cheap or expensive relative to its dealing range.

2. Why Institutions Buy Below Equilibrium (Discount)

Institutions work with enormous capital. They cannot buy randomly because they need:

• Maximum risk-to-reward
• Deep liquidity pools
• Low drawdown entries

Buying high (in premium) exposes them to reversals and reduces profitability. That’s why they wait for price to move into discount. In discount zones, institutions can:

• Accumulate long positions cheaply
• Mitigate previous orders
• Grab sell-side liquidity
• Build positions without pushing price prematurely

Discount = institutional accumulation zone.

3. Why Institutions Sell Above Equilibrium (Premium)

To sell effectively, institutions need:

• Buyers to sell into
• Liquidity resting above highs
• Optimal pricing (expensive levels)

Premium zones are where:

• Buy stops get triggered
• Breakout traders enter long
• Smart money distributes short positions

Premium = institutional distribution zone.

4. Why Retail Does the Opposite

Retail traders act emotionally. They typically:

• Buy breakouts (in premium)
• Sell breakdowns (in discount)
• Chase impulsive candles
• Enter after displacement instead of before retracement

Retail trades momentum. Institutions trade value.
That is why retail buys high and sells low — while professionals do the opposite.

5. The Concept of the Dealing Range & Equilibrium (50%)

A dealing range is simply the distance between a swing low and a swing high. The midpoint between them — the 0.50 level — represents equilibrium, meaning “fair value.”

• Above 50% → Premium (expensive)
• Below 50% → Discount (cheap)

This equilibrium line reveals:

• Where smart money is likely to buy
• Where smart money is likely to sell
• Which setups to trust
• Which setups to avoid
• Whether a CHoCH or BOS truly matters

You don’t need Fibonacci to mark this level. Simply measure the swing high and swing low, mark the midpoint, and the entire chart becomes readable instantly.

How to Draw a Dealing Range Properly

Most traders misuse premium and discount because their dealing range is drawn incorrectly. ICT’s approach is simple, but it requires precision and awareness of context. The dealing range defines the boundaries within which price is currently trading. Without drawing it correctly, premium/discount logic will never make sense.

1. Draw From Swing High → Swing Low OR Swing Low → Swing High

A valid dealing range always comes from a significant swing high and swing low, never from random candles.

• In a bearish market, draw from swing high → swing low.
• In a bullish market, draw from swing low → swing high.

This defines the current macro environment. Minor internal swings do not define the main dealing range unless supported by HTF structure.

2. When to Use Internal vs External Range

This is the most common area of confusion. You must know when to use each type:

External Range (Major Swing High & Swing Low)

Use the external range when:

• The HTF is setting long-term direction.
• Price is still inside a large macro structure.
• No BOS or CHoCH has reset the narrative yet.

The external range provides the primary premium/discount framework.

Internal Range (Shorter-Term Swings)

Use the internal range when:

• Price breaks structure internally (BOS or CHoCH).
• You want refined entry zones.
• You need short-term premium/discount for LTF setups.

Rule: The HTF external range tells the story. The LTF internal range gives the entry.

3. When to Reset a Range (BOS or CHoCH)

You reset a dealing range only when a meaningful structure break occurs.

Reset on CHoCH (Trend Reversal)

If price breaks the opposing side of structure, a new dealing range begins in the opposite direction.

Example: Downtrend → CHoCH upward → New bullish dealing range forms.

Reset on BOS (Trend Continuation)

If price breaks structure in the direction of the trend, extend or redefine the range using the new swing points.

Example: Uptrend → BOS upward → Extend the range higher.

Never reset a range inside chop, consolidation, or minor pullbacks. Ranges reset only when the narrative resets.

4. Why Equilibrium Is the Most Important Level on the Entire Chart

The 50% line (equilibrium) determines everything:

• Below 50% = discount → institutional buy zone
• Above 50% = premium → institutional sell zone

It tells you whether your trade idea has logical pricing. Most traders lose because they take trades on the wrong side of equilibrium:

• Buying in premium → late, risky, low RR
• Selling in discount → early, weak, likely to fail

Once you mark equilibrium, the entire market becomes readable:

• Below 50% → Look for buys
• Above 50% → Look for sells

This single rule eliminates over 70% of emotional, low-probability trades.

Premium Zone Explained (Where Smart Money Sells)

The premium zone represents the upper half of the dealing range — the area above the 50% equilibrium level. In ICT logic, this is where price becomes expensive, meaning institutions prefer to sell, not buy. Most retail traders misunderstand this and end up buying tops, falling straight into the distribution traps engineered by smart money.

1. Why Price Above 50% Is Considered “Expensive”

The market is always seeking fair value. When price trades above the midpoint of the dealing range, it enters an area where:

• premium pricing is offered
• buyer risk increases dramatically
• reward for sellers is optimal
• institutional distribution becomes logical

Once price enters premium, algorithms anticipate movement back toward discount unless the market is in aggressive expansion. Retail traders buy breakouts here, believing continuation is imminent. Institutions, meanwhile, sell into that enthusiasm because pricing favors them.

2. How Institutions Use Premium to Distribute Orders

Institutions do not accumulate at highs — they accumulate in discount and distribute in premium. In the premium zone, institutional behavior includes:

• hedging or unloading large positions
• engineering liquidity above highs
• creating inducements to trap breakout buyers
• slow upward grinding to accumulate liquidity

Smart money uses this zone to build distribution phases before markdown. Once their activity is complete, the market leaves premium aggressively through bearish displacement, revealing true intent.

3. Behavior Signs That Price Is Operating in Premium

Premium comes with predictable footprints. When price enters this zone, these behaviors often appear:

a. Liquidity Above Highs

The market creates equal highs, inducement levels, and buy-side liquidity. These highs are targets, not breakout signals.

b. Weak Pullbacks

Pullbacks appear shallow, slow, and unable to create strong bullish structure — evidence of distribution rather than accumulation.

c. Bearish Displacement

After distribution ends, price rejects premium sharply with:

• powerful bearish displacement candles
• clean downside FVGs
• clear narrative shift

These behaviors confirm that premium is a sell zone, never a buy zone.

4. How Premium Identifies Valid Bearish Setups

Premium forms the foundation for all high-probability ICT sell setups. Bearish setups are valid only when:

• price is trading above equilibrium
• liquidity has formed or been swept
• bearish displacement confirms the shift
• an FVG or OB forms inside premium
• retracement returns to premium for mitigation

In premium, the following ICT models become extremely reliable:

• Breakers
• Bearish Order Blocks
• Reversal FVGs
• CHoCH-on-top patterns

When these elements align inside premium, you’re no longer selling randomly — you’re selling with institutional pricing, timing, and intent.

Discount Zone Explained (Where Smart Money Buys)

If premium represents expensive pricing where institutions prefer to sell, the discount zone is the opposite — the area below the 50% equilibrium level of the dealing range. This is where price becomes “cheap” in algorithmic logic, meaning smart money is far more interested in accumulating, not distributing.

Retail traders often panic when price drops into discount, believing the market is breaking down. Institutions see the same movement as an opportunity to quietly build long positions. Understanding this difference is what separates emotional traders from narrative traders.

1. Why Price Below 50% Is Considered “Cheap”

When price trades under equilibrium, the market is offering better-than-fair value for buyers. In discount:

• risk is lower
• potential upside is higher
• buying becomes more efficient
• institutional accumulation occurs

Just like in real life, you don’t want to buy products at peak price — institutions avoid buying in premium. They wait for price to drop into discount, where they can build positions quietly and efficiently.

Below equilibrium, algorithms naturally expect price to seek premium again — especially when liquidity and displacement align.

2. How Institutions Accumulate in Discount

Discount is the perfect environment for accumulation. Instead of aggressively entering with large buy orders, institutions:

• slowly build long positions
• absorb retail-driven selling pressure
• engineer liquidity beneath lows
• stabilize price around OBs, inefficiencies, and key levels

Retail sees this slow grind downward as “bearish weakness,” but in reality, it’s often the foundation of a strong bullish expansion.

Accumulation typically completes when:

• a final liquidity sweep occurs
• displacement shifts bullish
• an FVG or OB forms as the footprint of intent

This is the transition from accumulation → expansion.

3. Behavior Signs That Price Is Operating in Discount

Certain recognizable behaviors appear whenever price trades inside discount:

a. Liquidity Below Lows

The market forms equal lows or inducement structures. These lows are targets for sweeps, not bearish breakdown signals.

b. Strong Bullish Displacement After Sweeps

Once liquidity beneath the lows is taken, institutions often show their hand with:

• explosive bullish displacement
• clean FVG formation
• momentum surging away from discount

This is the first confirmation that buyers are in control.

c. Retracements Respecting OBs/FVGs

After displacement, retracements into:

• bullish Order Blocks
• bullish FVGs
• mitigation blocks

often hold extremely well. This signals that institutions are defending their newly built positions.

4. How Discount Gives Safe, High-Probability Buy Entries

Discount is where every reliable ICT bullish model begins. High-probability buy setups appear when:

• price is below equilibrium
• sell-side liquidity has been swept
• a bullish CHoCH confirms the shift
• bullish displacement shows intention
• retracement returns to discount OB/FVG

This creates ideal conditions for:

• long-term swing buys
• intraday bullish setups
• trend reversals
• dealing range expansions

When all these elements align, the buy entry becomes:

• cheap
• protected
• narrative-aligned
• displacement-confirmed

Institutions accumulate in discount for a simple reason: they expect price to eventually return to premium — and now, you’re entering at the same logical point they are.

Why Premium and Discount Matter More Than OB, FVG, or BOS

Most new ICT traders obsess over Order Blocks, Fair Value Gaps, CHoCH, and BOS. But none of those concepts work consistently unless they align with premium and discount. This is the foundational context of the entire algorithm.

Price delivery logic always begins with one question:

“Are we in premium or discount?”

If you get this wrong, every other concept loses accuracy. If you get it right, most setups become clearer, simpler, and far higher probability.

1. Order Blocks in the Wrong Zone = Low Probability

A bullish Order Block sitting in premium is not a buy setup — it is a liquidity trap. A bearish Order Block sitting in discount is not a sell setup — it is a trap designed to catch impatient traders.

The OB itself does not matter unless it is positioned correctly within the dealing range:

• Bullish OB must be in discount
• Bearish OB must be in premium

Institutional algorithms are programmed to buy low and sell high — never the opposite. OBs only become reliable when they respect this principle.

2. FVG in the Wrong Zone = Liquidity Trap

Many traders see a clean FVG and immediately treat it as an entry zone. But FVGs formed in the wrong half of the dealing range are usually:

• liquidity inducements
• trap gaps
• extensions into exhaustion levels
• engineered moves to attract breakout traders

A bullish FVG above equilibrium often signals a move toward external liquidity, not a safe entry. A bearish FVG below equilibrium often reflects downside exhaustion, not institutional selling.

Premium/discount instantly separates real FVGs from trap FVGs.

3. BOS Without Correct Zone = False Bias

A break of structure alone means nothing. Price breaks structure constantly — but without premium/discount, you cannot tell:

• whether the BOS is continuation
• whether it is a stop hunt
• whether it is a reversal trap
• whether it reflects real displacement

A bullish BOS in premium may still be a bearish environment.
A bearish BOS in discount may still be bullish context.

Premium/discount determines whether the BOS has true narrative value.

4. Premium/Discount Filters 70% of Bad Setups

Most losing trades come from:

• buying in premium
• selling in discount
• misreading BOS
• trading meaningless OBs
• chasing weak FVGs

When you filter everything through premium and discount, you immediately eliminate the majority of low-probability setups. Your chart becomes cleaner, your bias sharper, and your trades more controlled.

5. This Is the Context All ICT Concepts Depend On

Every ICT concept operates inside the dealing range. Premium/discount defines the boundaries of that range. It gives meaning to:

• Order Blocks
• Fair Value Gaps
• Liquidity sweeps
• Displacement
• CHoCH and BOS
• Retracement levels
• Trend continuation
• Reversal structure

Without premium/discount, you’re trading patterns.
With premium/discount, you’re trading narrative — and narrative is what institutions follow.

Premium and discount are not indicators. They are the logic that reveals why price should move, where it should move, and when a reversal or continuation makes sense.

Liquidity + Premium/Discount: The Perfect Narrative

Premium and discount become truly powerful when you combine them with liquidity. Liquidity shows where the market wants to reach, while premium/discount shows where the market wants to react. Together, they form the backbone of ICT’s narrative logic — the story that explains why price moves the way it does.

Once you understand how liquidity aligns with premium/discount, every sweep, displacement, and retracement becomes logical and predictable.

1. Liquidity Almost Always Sits Above Premium and Below Discount

Liquidity forms where traders place their stops:

• Above highs → Buy-side liquidity (BSL)
• Below lows → Sell-side liquidity (SSL)

Because dealing ranges are split at equilibrium:

• Premium (above 50%) naturally holds highs → clusters of buy-side liquidity.
• Discount (below 50%) naturally holds lows → clusters of sell-side liquidity.

This means liquidity is built into the structure of premium and discount. Price is always drawn to liquidity, but it only reacts meaningfully when it reaches the correct half of the range. This tells you where the sweep is likely to occur — and where the reaction will happen.

2. Sweep in Premium → Sell

When price reaches premium, it becomes expensive. This is where:

• breakout traders buy
• late buyers chase
• trend followers enter too late
• stops accumulate above obvious highs

Institutions use premium to distribute. So when price sweeps buy-side liquidity in premium, it often signals:

• a shift in narrative
• a bearish CHoCH
• downward displacement
• the beginning of a new dealing range

The sweep provides the fuel. Premium provides the location. The reversal provides the entry.

3. Sweep in Discount → Buy

Discount represents cheap prices — the accumulation zone. Liquidity builds under:

• equal lows
• swing lows
• Asian session lows
• inducement points

When price sweeps sell-side liquidity in discount, institutions finally have the fuel to push price upward. A strong bullish displacement often follows, confirming:

• accumulation below equilibrium
• rejection of lower prices
• a new bullish narrative

The sweep provides the entry signal. Discount confirms the directional bias.

4. Liquidity Gives the Fuel — Premium/Discount Gives the Location

Liquidity alone does not tell you where to trade. Premium/discount alone does not tell you when to trade. Together, they create perfect narrative clarity:

• Sweep in premium → bearish reversal opportunity
• Sweep in discount → bullish reversal opportunity
• Sweep in equilibrium → usually noise

Premium/discount adds crucial context to liquidity, transforming random stop hunts into predictable behavior.

5. The Complete Model: Liquidity → Displacement → Premium/Discount → Entry

This is ICT’s core sequence for high-probability setups:

Step 1 — Liquidity
Price hunts stops above highs or below lows to gather fuel.

Step 2 — Displacement
Strong momentum confirms smart money’s intent.

Step 3 — Premium/Discount
Retracement returns to the appropriate half of the dealing range:
• Buy only in discount
• Sell only in premium

Step 4 — Entry
Reaction occurs at an OB, FVG, imbalance, or mitigation point.

This model appears in reversals, continuations, trend initiations, session plays, and dealing range transitions — across every timeframe.

When you combine liquidity + displacement + premium/discount, the entire market becomes readable, structured, and dramatically easier to trade.

How to Use Premium/Discount for Reversals

Premium and discount are not just continuation tools — they are some of the most reliable filters for spotting true reversals. Almost every major reversal in ICT logic begins at the extremes of the dealing range, not in the middle. When price reaches deep premium or deep discount, the probability of a major turning point increases dramatically.

Reversals do not begin randomly. They begin where the market becomes inefficient, overextended, and filled with liquidity. Premium and discount help identify these extremes and protect you from false reversals inside equilibrium.

1. Recognizing Exhaustion in Deep Premium or Deep Discount

A reversal is most likely when price presses into the outer edges of a dealing range. Deep premium means price is expensive, overbought, and running out of buyers. Deep discount means price is cheap, oversold, and running out of sellers.

When the market pushes into these extremes, exhaustion behavior begins to appear:

• long wicks into liquidity
• slowing momentum
• engineered equal highs or equal lows
• clusters of stops waiting to be taken

This environment is where institutions prepare to flip direction. Reversals rarely begin in the middle of the range — they form from imbalance and emotional buying/selling at the extremes.

2. Confirming Reversal With CHoCH + FVG in the Correct Zone

Price entering premium or discount is not enough to confirm a reversal. You need structure and displacement to validate the shift. The most reliable confirmation sequence is:

CHoCH → Displacement → FVG in the premium/discount zone

Examples:

• In Premium: Sweep buy-side liquidity → bearish CHoCH → bearish FVG → reversal confirmed
• In Discount: Sweep sell-side liquidity → bullish CHoCH → bullish FVG → reversal confirmed

Premium/discount tells you where the reversal should occur.
CHoCH and FVG tell you when it is occurring.
This combination filters out weak shifts and prevents premature entries.

3. Why Most Reversals Begin at the Extremes of the Dealing Range

The edges of a dealing range naturally hold liquidity:

• Above premium → buy-side stops
• Below discount → sell-side stops

Institutions need this liquidity to justify flipping the market. A true reversal requires fuel, and that fuel is almost always found at the extremes.

This is why ICT emphasises that:

• reversals begin after sweeps in deep premium
• reversals begin after sweeps in deep discount
• the outer 25% of the range is where major turning points occur

The middle of the range rarely produces strong reversals because liquidity is insufficient to initiate a structural shift.

4. Why Reversals Inside Equilibrium Should Be Avoided

Equilibrium — the 50% midpoint — is the most neutral area of the chart. Price is balanced here, and significant reversals are uncommon. Attempting to trade reversals inside equilibrium often leads to:

• consolidation chop
• entering against the true trend
• reacting to meaningless internal sweeps
• falling for weak CHoCH signals
• chasing structure shifts without displacement

Equilibrium is no-man’s land.
Reversals formed here lack narrative and liquidity support.

Why This Reversal Model Works

This method mirrors institutional behavior:

• They push price into extremes to gather liquidity.
• They shift structure only after collecting enough fuel.
• They print displacement and FVG to confirm intention.
• They deliver price toward the opposite side of the range.

Premium/discount gives the map.
Liquidity provides the fuel.
CHoCH + FVG provides the confirmation.

Together, they form one of the cleanest and highest-probability reversal models in ICT trading.

Premium/Discount in Trending Markets

Premium and discount are not just reversal tools — they form the backbone of trend trading. In trending environments, price continuously rotates between zones where it becomes cheap (discount) and expensive (premium). Understanding these rotations transforms trend trading from emotional guessing into a logical, structured process.

Every trend “breathes.” It expands, retraces, and expands again — and each stage respects premium/discount logic with surprising precision.

Premium/Discount in an Uptrend

In an uptrend, institutions accumulate only in discount. They never buy during expansions or when price is expensive. Discount provides optimal pricing, liquidity, and risk-to-reward conditions.

In an uptrend:

• Discount = Buy Zone
When price retraces below the 50% equilibrium of the dealing range, institutions accumulate. Pullbacks into discount tend to be controlled, orderly, and efficient — the clearest buying opportunities.

• Premium = Take-Profit Zone
Once price rises into premium, it becomes too expensive for new longs. Liquidity sits above highs, profit-taking begins, and the market prepares for a pullback. Buying here often leads to drawdown, traps, or immediate reversals.

This logic teaches you to stop chasing green candles and start buying where smart money prefers to operate.

Premium/Discount in a Downtrend

In a downtrend, the logic flips. Institutions wait for price to retrace into premium before they sell. Selling in discount is one of the most common mistakes retail traders make — it exposes them to reversals and weak entries.

In a downtrend:

• Premium = Sell Zone
Retracements into the premium zone give institutions optimal pricing to distribute short positions before delivering the next bearish leg.

• Discount = Take-Profit Zone
Discount is where shorts should take profits — not initiate new sells. Price is cheap, liquidity rests below lows, and the market is primed for a bullish retracement.

This framework prevents premature short entries and aligns your trades with institutional order flow.

The Rhythmic Cycle of All Trends

Every trend, across every timeframe, follows the same repeating cycle:

Discount → Expansion → Premium → Expansion → Discount

This rhythm is the heartbeat of price delivery:

• Price falls into discount, where institutions accumulate.
• Strong expansion follows as price is delivered higher.
• Price enters premium, where institutions distribute.
• Another expansion begins as the cycle continues.

In downtrends, the exact same cycle occurs — but in reverse.

Once you understand which phase the trend is currently in, entries no longer feel random. You begin anticipating expansions before they happen. You stop fighting the trend and start flowing with it.

Premium/Discount + OB/FVG: The Precision Entry System

Premium and discount tell you where to trade. Order Blocks (OB) and Fair Value Gaps (FVG) tell you exactly where inside that zone to enter. When combined, these concepts form a complete institutional model — one that filters bad trades, sharpens entries, and offers tight stop-losses with high-probability continuation.

Premium/Discount gives context. OB/FVG give precision. CHoCH gives confirmation. Together, they form ICT’s core precision-entry system.

OB in Premium = Sell Zone

A bearish setup becomes valid only when price trades into premium. This is the area where institutions distribute and where smart money looks for sell setups.

Inside premium, you will often see:

• A bearish Order Block forming
• Strong bearish displacement creating an FVG
• Exhaustion or structural rejection at the top of the dealing range

When all three appear in premium, you are not just “selling an OB.” You are selling from an expensive institutional zone. This prevents you from entering early, selling lows, or chasing bearish impulses that were never intended to continue.

OB in Discount = Buy Zone

A bullish Order Block becomes meaningful only when price returns to discount. Discount is where institutions accumulate, mitigate positions, and prepare for the next expansion.

When price trades into discount and responds with:

• A bullish OB
• Bullish displacement that prints an FVG
• A clean LTF CHoCH signaling reversal

…you have a high-probability, narrative-aligned entry. Buying in discount means buying cheap — not chasing expansions.

FVG Confirms Displacement in the Correct Zone

An Order Block alone is not enough. A true institutional OB must create displacement. That displacement leaves behind an FVG, which acts as proof of institutional activity.

For example, in premium:

• Price taps a bearish OB
• Strong bearish displacement follows
• A clean bearish FVG forms

This sequence confirms:

• Institutions sold from that OB
• The premium zone is being respected
• The new direction is authentic
• A retracement into the FVG offers the ideal entry

The exact logic applies in discount for bullish setups.

Refining Entries With LTF CHoCH Inside Premium/Discount

The safest, most precise ICT entries come from waiting for a lower-timeframe CHoCH inside the premium/discount zone.

In premium (for sells):

• Price enters premium
• Rejects from OB or FVG
• Prints LTF CHoCH downward
• Displacement confirms
• Retracement gives the entry

In discount (for buys):

• Price trades below equilibrium
• Taps OB or FVG
• Prints CHoCH upward
• Displacement confirms intent
• Retracement gives the entry

This layered approach ensures:

• The zone is correct (premium/discount)
• The footprint is real (OB/FVG)
• The direction is confirmed (CHoCH)
• The move is genuine (displacement)
• The entry is optimal (retracement)

How This System Connects All ICT Concepts

Premium/discount is the map.
Order Blocks and FVGs are the locations.
CHoCH is the signal.
Displacement is the commitment.
Retracement is the entry.
Liquidity is the target.

When these concepts operate in harmony, trading stops feeling random. Every entry has structure. Every move has purpose. Every continuation or reversal has logic.

This is the complete precision-entry system ICT designed — a consistently reliable method rooted in institutional price delivery.

Premium/Discount in Breaker, Mitigation, and Rebalance Models

Premium and discount don’t just refine trend entries — they determine whether advanced ICT concepts like Breakers, Mitigation Blocks, and Rebalancing models actually work. Many traders focus on the pattern itself, but the pattern only becomes powerful when it appears on the correct side of the dealing range. When these models align with premium/discount, they turn from random formations into reliable institutional tools.

Breakers Only Work When Positioned in the Correct P/D Zone

A Breaker Block forms when an Order Block fails, gets violated, and then acts as support or resistance on the opposite side. However, traders often misuse Breakers by expecting them to work everywhere. The truth is simple:

A Breaker is only reliable when it aligns with premium/discount narrative.

• In a downtrend: The best Breakers form in premium, where price is expensive and ready to reverse downward.
• In an uptrend: The best Breakers form in discount, where price is cheap and ready to launch upward.

If a Breaker forms near equilibrium or in the wrong zone, it almost always fails. Smart money does not anchor positions there, so the pattern has no institutional backing. Correct location gives the Breaker its meaning.

Mitigation Blocks Gain Power Only in the Right Zone

Mitigation Blocks mark the zones where institutions return to mitigate previous orders. But mitigation is not random — it only happens when price returns to a zone that makes economic sense for smart money.

• Mitigation in Premium (downtrend): Price pulls back upward into premium to mitigate old sell-side positions before dropping again.
• Mitigation in Discount (uptrend): Price dips into discount to mitigate buy positions before expanding upward.

When mitigation aligns with premium/discount:

• The block holds more reliably
• Retracements become predictable
• Expansions become stronger and cleaner

Mitigation in the wrong side of the range often fails because institutions have no reason to defend those levels.

Rebalancing Frequently Targets Equilibrium First

After heavy displacement, the market often leaves inefficiencies behind. Before choosing its next narrative direction, price commonly returns to rebalance these inefficient areas — and almost all rebalances target one level first:

Equilibrium (the 50% midpoint of the dealing range).

Why equilibrium? Because it represents “fair value” inside the range. Institutions often use it as:

• A midpoint target during retracement
• A temporary decision zone
• A platform for sweeping liquidity
• A stabilization area before the next expansion

This is why so many OB mitigations, FVG rebalances, and structural retests gravitate toward the 50% level. When you understand equilibrium’s magnetic pull, your expectations for retracement and continuation become far more accurate.

Why This Section Matters

Breakers, mitigation blocks, and rebalancing are not stand-alone tools. Without premium/discount alignment, they become inconsistent and misleading. But when placed correctly:

• Breakers act as powerful reversal engines
• Mitigation blocks serve as precision entry levels
• Rebalancing becomes predictable and structurally sound

Premium/discount is the filter that turns these advanced models into high-probability ICT setups.

Advanced Concept: Multi-Timeframe Premium/Discount

Premium and discount become truly powerful only when you understand them across multiple timeframes. Many traders make the mistake of drawing a dealing range only on the timeframe they are actively trading — but institutions operate according to higher-timeframe liquidity and HTF premium/discount zones. This means:

• HTF Premium/Discount controls the narrative (macro direction).
• LTF Premium/Discount refines the execution (precise entries).

When the two align, you get some of the highest-probability setups in the entire ICT framework.

HTF Premium/Discount Dictates the Market Direction

The higher timeframe (4H, 1H, or Daily) defines the macro dealing range. This shows where the market is within its broader cycle:

• If price is in HTF discount, institutions are looking to accumulate and drive price higher.
• If price is in HTF premium, institutions are likely distributing and preparing for a bearish move.

HTF P/D reveals the intent of the market. It gives you the big-picture bias that should guide all lower-timeframe decisions. Traders who buy in HTF premium or sell in HTF discount often get trapped because they trade against the macro narrative.

LTF Premium/Discount Gives Refined, Precise Entries

Once HTF bias is established, you zoom into the lower timeframe (15M, 5M, 1M) to hunt for:

• refined dealing ranges
• clean OB or FVG entries
• micro liquidity sweeps
• LTF CHoCH confirming direction

LTF P/D acts like a microscope, letting you enter:

• earlier
• with tighter stop-loss
• at optimal pricing
• with greater precision

This is how you convert HTF narrative into actionable trades with minimal risk.

HTF + LTF Alignment = Highest Probability Trades

The best setups occur when both HTF and LTF premium/discount zones align.

Bullish Example:

• HTF shows price in discount
• LTF retraces into discount
• LTF prints CHoCH → Displacement → FVG
• Liquidity below LTF lows is swept

This alignment creates a highly reliable buy setup.

Bearish Example:

• HTF shows price in premium
• LTF retraces into premium
• LTF forms CHoCH + bearish displacement

This forms an optimal sell model.

When both timeframes agree, continuation is strong, drawdown is minimal, and confidence is justified.

When HTF and LTF Conflict — Avoid or Reduce Size

Conflicting premium/discount zones create uncertainty. For example:

• HTF in premium (macro bearish)
• LTF in discount (local bullish retracement)

This often leads to choppy price action or incomplete setups. During these periods:

• Avoid full-size entries
• Treat LTF setups as countertrend
• Wait for alignment before committing

This single rule eliminates a large portion of avoidable losses.

Why Multi-Timeframe P/D Is a Core Skill

Understanding P/D across timeframes turns price action into a clear, layered narrative. It tells you:

• where the market is heading (HTF intent)
• where entries are safe (LTF execution)
• where risk is minimized
• when momentum aligns
• when a setup is worth taking
• when a setup should be skipped entirely

This is the difference between trading random OBs or FVGs versus trading institutional logic across the entire market structure.

Three High-Probability Premium/Discount Setups

Premium and discount become truly powerful when applied through repeatable, high-probability setups. These three models appear across all pairs, timeframes, and sessions — forming the backbone of ICT’s directional logic. Each setup combines liquidity, structure, displacement, and premium/discount into one clean narrative.

1. Sweep → CHoCH → Discount Entry → Trend Begins

This is one of ICT’s most accurate reversal models. It captures the exact moment price transitions from accumulation to expansion.

The sequence:

• Price sweeps liquidity below a key low, grabbing sell-side liquidity (SSL).
• A CHoCH forms upward, confirming the sweep was intentional.
• Strong bullish displacement appears — the first sign of real commitment.
• Price retraces into discount of the newly formed dealing range.
• An entry forms at an OB, FVG, or a combination inside this discount zone.

Buying after liquidity, after structure shift, and inside discount creates a low-risk, high-precision entry. This setup often marks the start of major bullish trends.

2. Premium Rejection → Displacement → FVG Entry

This setup is extremely effective in trending markets and countertrend pullbacks, especially when aligned with HTF bias.

The logic:

• Price pushes into premium — the expensive half of the range.
• Liquidity forms above highs and gets swept.
• Price rejects premium with strong bearish displacement.
• The displacement creates a fresh FVG.
• Retracement taps into the FVG or an OB inside it.
• Continuation unfolds as price targets discount.

This works because premium is where institutions distribute. Displacement confirms rejection, and the FVG gives a precise entry point. It produces some of the cleanest bearish plays.

3. HTF Premium + LTF Premium + OB → Perfect Sell Setup

This multi-timeframe setup is one of the most reliable bearish entries in ICT trading. It synchronizes macro and micro premium conditions.

Why it works:

• HTF premium signals expensive pricing on the macro scale.
• LTF premium refines the exact zone for efficient execution.
• Both timeframes agree that institutions prefer selling here.

The entry model:

• HTF places price inside premium → macro bearish bias.
• LTF pulls back into its own premium zone → refined sell region.
• A bearish OB forms and displacement confirms the rejection.
• A bearish FVG prints — the footprint of institutional intent.
• Retracement fills into the OB/FVG, giving the perfect, high-RR sell entry.

This alignment creates extremely sharp moves because both HTF and LTF contexts flow in the same direction.

Why These Three Setups Matter

These setups combine:

• Liquidity
• Structure shifts
• Premium/discount zones
• Displacement
• OB/FVG precision
• Multi-timeframe alignment

This combination eliminates guesswork and turns your trading into a repeatable, mechanical process. Mastering these three models unlocks the ability to trade exactly where institutions operate and anticipate the next expansion phase with confidence.

How to Avoid Premium/Discount Mistakes

Premium and discount are extremely powerful, but only when used correctly. Most beginners misunderstand these zones, draw incorrect dealing ranges, or apply premium/discount without narrative context. These errors lead to buying high, selling low, and misreading the entire market structure. This section fixes the most common mistakes so you can apply premium/discount with confidence and accuracy.

1. Marking the Wrong Dealing Range

The most damaging mistake traders make is choosing the wrong swing high and swing low for the dealing range. If your dealing range is incorrect, then your premium/discount zones are automatically wrong — and every decision becomes misaligned.

The correct range must be drawn from the most relevant swings, depending on narrative:

• Internal range → used for short-term setups
• External range → used for the broader trend narrative

Whenever a BOS or CHoCH occurs, the dealing range must be reset. Never rely on outdated ranges — they distort your entire bias.

2. Trading Inside Equilibrium (The No-Man’s Land)

Equilibrium — the 50% midpoint — is the most dangerous place to trade. Price is neither cheap nor expensive here.

Why it’s risky:

• No clear buy or sell advantage
• Most failed trades originate near the 50% line

Avoid trading when price hovers around equilibrium unless your setup involves a deeper retracement into true premium or discount.

3. Using Micro Dealing Ranges

Many beginners use tiny low-timeframe dealing ranges and try to apply premium/discount logic to them. Micro ranges form constantly and mean very little unless they align with higher-timeframe structure.

If your range is too small, everything appears to be premium or discount — creating confusion and false signals.

Always define HTF range first, then refine with LTF.

4. Ignoring Higher-Timeframe Zones

Higher-timeframe premium/discount zones override everything happening on the lower timeframe. If the HTF is in deep premium, macro bias is bearish. If the HTF is in deep discount, macro bias is bullish.

Beginners often make the mistake of:

• Selling in HTF discount
• Buying in HTF premium

This leads to fighting the trend instead of aligning with institutional narrative. The HTF always wins.

5. Confusing Retracements With Trend Shifts

A move into premium or discount does NOT automatically mean a reversal. Many traders assume every deep retracement signals a new trend, but reversals require:

• Liquidity sweeps
• CHoCH
• Displacement

Retracement = normal behavior.
Reversal = structural change.

Premium/discount helps you interpret whether price is offering an opportunity or signaling a true shift.

6. Selling in Discount or Buying in Premium

The most common — and most damaging — mistake is violating the core rule:

Premium = sell zone
Discount = buy zone

Selling in discount means you’re shorting at the bottom — where price is cheap and often ready to reverse upward.

Buying in premium means you’re longing at the top — where price is expensive and often preparing to pull back.

These mistakes feel exciting but carry the lowest probability and highest risk.

Why Avoiding These Mistakes Matters

Premium/discount is not just another tool — it is the contextual foundation behind every ICT concept. OBs, FVGs, displacement, sweeps, CHoCH, BOS — all of them derive their meaning from correct premium/discount interpretation.

When you avoid these mistakes:

• Your entries become cleaner
• Your narrative becomes clearer
• You avoid impulsive trades
• You stop buying highs and selling lows
• You begin trading with institutional logic

Premium and discount become less confusing and more like a precise compass guiding every decision.