Premium and discount: buy low, sell high, properly

Take the most recent clear swing low and swing high. The middle, the 50% level, is equilibrium. Above it is premium; below it is discount.

Institutions want to buy at a discount and sell at a premium, like any business. If your bias is bullish, the best buys come in discount. Buying in premium means paying the expensive price and taking a wider stop.

Gold rallied from 4,100 to 4,180 and is now pulling back. The 50% level of that move is 4,140. Above 4,140 is premium, below is discount.

Your bias is bullish, so buying at 4,165 means buying in premium, close to the top of the range, with a wide stop. Waiting for price to dip below 4,140 and find an order block there gives a better price, a tighter stop and a better risk to reward.

Sometimes price never reaches discount and runs higher without you. That is fine. Missing a trade costs nothing; buying in premium and getting stopped out costs money.

• Using the wrong swing. Draw the range from the swing that created the current move, not a random high and low.
• Buying in premium because of fear of missing out. There will always be another setup.
• Treating 50% as a magic entry. It is a filter. You still need a zone and confirmation.
• Forgetting the bias. In a downtrend, discount is where sellers take profit, not where you buy blindly.

Discount tells you which half of the range to buy in. The OTE band narrows it further: the 62% to 79% retracement of the last swing. Pullbacks in a healthy trend often end there, which gives you a deep entry with a small stop below the swing low.

Premium and discount is a filter, not an entry. Use it to choose which order blocks and FVGs are worth watching, then wait for confirmation inside the zone.