Premium and Discount Explained: Buy Cheap, Sell Expensive

Premium and discount describe where price is inside a range. The idea is simple: aim to buy in the cheaper half and sell in the more expensive half.

The maths

For a chosen dealing range:

equilibrium = (range high + range low) / 2
price > equilibrium → premium
price < equilibrium → discount

Choosing the dealing range

The range must be meaningful. Common choices are the swing from the last major low to the last major high on H1, or a recent multi-day range. BlessedForex uses the high and low of the last 48 H1 candles (plus recent execution candles) and makes the length configurable.

How it is used

• Bullish setups should generally originate in discount.
• Bearish setups should generally originate in premium.

This is a strategy condition, not a universal rule: strong trends often stay in premium for a long time, and the condition can be switched off. BlessedForex evaluates it against the planned entry price.

Why it helps

It stops you buying the top of a range just because a pattern appeared. Combined with liquidity sweeps and structure shifts, it pushes entries toward better locations and improves risk-to-reward.

Example

Range 3306.5 – 3350.4 → equilibrium 3328.45. A long entry at 3312.65 is in discount (passes); a long at 3340 is in premium (fails the condition).

Limits

• Different ranges give different equilibria.
• In a breakout, "premium" can keep getting more premium.
• Do not use it alone as a reason to trade.