Premium and discount in ICT: expensive and cheap within a price range

Premium and discount is a concept from ICT/SMC (Inner Circle Trader / Smart Money Concepts) that splits a chosen price range, from a significant low to a significant high, into two halves. The midpoint is 50% of the range (equilibrium). Price above it is considered “premium,” i.e. expensive, and below it “discount,” i.e. cheap.

The idea is that it is better to consider longs in the discount zone and shorts in premium, because the risk-to-reward ratio can then be more favorable. It is still a heuristic: the outcome depends on which extremes you pick as the range boundaries, and in a strong trend price can stay in the “expensive” zone for a long time. Splitting a range in half is not a proven law of the market.