premium-discount

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

1. 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>)
   

2. Draw Fibonacci using draw_chart_analysis with fib_retracement (0% = Swing High, 100% = Swing Low)
3. Determine current position: Above 50% = Premium, Below 50% = Discount
4. Mark levels using draw_chart_analysis: equilibrium with support/resistance, OTE zone with demand/supply
5. Combine with a separately defined direction hypothesis and report conflicts.
6. Apply a predeclared entry trigger; range location alone is watch, not a trade.
7. 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