Premium and discount zones
Split a swing in half. Buy cheap, sell expensive.
What it is
Take the range between the most recent swing low and swing high. The 50% midpoint is equilibrium. Above it is premium (relatively expensive); below it is discount (relatively cheap). In an uptrend you want to buy in discount; in a downtrend you want to sell in premium.
It keeps you from buying the top of a move and ensures a better reward-to-risk because your stop sits closer to the origin of the swing.
How to use it
- Mark the swing low and swing high on the trend timeframe.
- Draw the 50% level.
- Look for long setups only below it (shorts only above it).
- Combine with a zone (FVG, order block, level) inside the discount.
Better price, tighter stop, bigger reward.
Common mistakes
- Buying in premium because “it is going up”.
- Using a swing that is too small or too old.
- Treating 50% as exact instead of a zone.
Practise it in TradeDesk X
Volume-profile value area edges (VAL/VAH) and the POC are the volume-based version of discount, fair and premium.
Related lessons
🎯
Fair value gaps (FVG and iFVG)
A three-candle imbalance. Price often returns to fill it before continuing.
📊Volume profile: POC, VAH and VAL
Shows how much traded at each price. The busiest price is a magnet; value area edges act as levels.
Educational content only. Nothing here is financial advice or a recommendation to buy or sell anything. Trading leveraged products can lose more than you deposit. Practise with paper trading first and never risk money you cannot afford to lose.