Premium & Discount: Buying Cheap and Selling Expensive

One of the most important thoughts of ICT is: **Never buy in the high price area (Premium) and never sell in the low price area (Discount)**. To do this, we need to determine the average value (Equilibrium - 50%) of the most recent trading wave.

1. Definition of Premium and Discount

• Equilibrium (Balance Point): Is the exact level of 50% of the most recent rising or falling wave rhythm (measured from the top of the Swing High to the bottom of the Swing Low).
• Premium Zone (Expensive Zone): Located **above** the 50% level. Only look for Sell setups here.
• Discount Zone: Located **below** the 50% level. Only look for Buy setups here.

2. Mandatory Trading Rules

When the market has an increasing structure, we must patiently wait for the price to retrace from the peak to deep below the Discount zone (below 50%) before activating buying at OB or FVG located at Discount. Purchasing in the Premium area always comes with an extremely high risk of being stopped-loss swept.