| name | premium-discount |
| description | Measure price location within a chosen swing range using ICT premium/discount terminology. Use when testing whether above/below-midpoint location adds value to an existing directional setup. |
| license | Apache-2.0 |
| metadata | {"author":"ske-labs","version":"4.0"} |
Premium & Discount Trading
This convention labels price above a selected range midpoint "premium" and below it "discount." It describes relative location, not fundamental value, equilibrium, or an obligation to oscillate.
Core Concept
Equilibrium = (Swing High + Swing Low) / 2
| Zone | Location | Action |
|---|
| Premium | Above 50% | Upper half of selected range |
| Midpoint | At 50% | Arithmetic midpoint |
| Discount | Below 50% | Lower half of selected range |
Trading Zones
- Test long and short filters separately; below/above 50% is not an entry by itself.
- If evaluating OTE, compare the Fibonacci band with continuous location and equal-width control bands.
Workflow
- Identify the swing range using a fixed pivot/timeframe algorithm and only information available at the timestamp:
get_candles_around_date(symbol=<symbol>, exchange=<exchange>, interval="1d", date=<date>)
- Draw Fibonacci using
draw_chart_analysis with fib_retracement (0% = Swing High, 100% = Swing Low)
- Determine current position: Above 50% = Premium, Below 50% = Discount
- Mark levels using
draw_chart_analysis: equilibrium with support/resistance, OTE zone with demand/supply
- Combine with a separately defined direction hypothesis and report conflicts.
- Apply a predeclared entry trigger; range location alone is
watch, not a trade.
- Use a fixed execution timeframe and closed bars; avoid hindsight swing changes.
Evidence and Validation
- Treat the setup as a testable hypothesis, not a prediction. Define thresholds, entry, invalidation, and exit before evaluating outcomes.
- Calibrate on the same instrument, venue, session, and timeframe. Use closed candles and a held-out or walk-forward sample; record every variant tried.
- Include spread, fees, slippage, borrow or funding, partial fills, and latency. Reject the setup when net expectancy is not positive or depends on one narrow parameter.
- Return observed inputs, missing data, cost assumptions, entry, invalidation, exit, and a valid, watch, or no-trade status.
- Research basis: Empirical Fibonacci research does not support special standalone bounce power for retracement ratios; the 50% split is a descriptive range location, not fundamental value.
Key Rules
- Do not infer institutional accumulation/distribution or a "retail trap" from range location.
- Permit both directions in either half when a separately validated strategy does; test the filter incrementally.
- State range endpoints, confirmation status, timeframe, and midpoint explicitly.
- Treat 50% as arithmetic, not an empirical decision boundary or fair value.
Related Skills
- optimal-trade-entry — OTE provides the precise entry within premium/discount zones
- market-structure-shift — Structure determines whether to look for entries in premium or discount
