All lessons
Premium and discount: choose the ruler first
The same price can look cheap or expensive under different ranges.
Calculate a fixed range midpoint without mistaking it for fundamental value.
Pick a completed low and high before evaluating a pullback. ICT vocabulary calls the lower half discount and the upper half premium.
These words describe location within that chosen range. They do not establish fair value, a bargain or an automatic reason to buy.
Keep the anchors until a written replacement condition occurs. Changing them after each price move changes the answer to suit the story.
A daily range and a minute swing can classify the same price differently. Name the timeframe and retain both observations if they disagree.
Let’s work through it
- Mark the reference before revealing the outcome.
- Calculate a fixed range midpoint without mistaking it for fundamental value.
- Record the result and the conditions that would reject the idea.
Let’s use numbers · hypothetical example
Range 100–120 has midpoint 110; 108 is in its lower half. Range 104–110 has midpoint 107; the same 108 is now in the upper half.
Easy mistakes to watch for
- Mistaken assumption: Above midpoint 110.
- Changing the definition after seeing the result.
- Ignoring spread, slippage or the loss limit.
Keep in mind
This is a hypothetical study, not a signal. A chart label cannot identify institutional intentions or guarantee a result; include costs and a predefined loss limit.
Your turn
Draw two ranges around the same price and explain the different classifications.
A quick check before we move on
Where is 108 in the 100–120 range?
- Below midpoint 110, in its discount half.
- Above midpoint 110.
- Guaranteed to rise to 120.
Check answer
Below midpoint 110, in its discount half. The midpoint is 110; location is not a forecast.
Sources and further reading
Content reviewed: 29 October 2026
Educational material with hypothetical examples. Trading can cause substantial losses. A course, pattern, stop order or past result cannot guarantee a profit or limit every loss. Practise in simulation and check current rules and product terms in your jurisdiction.
