ICT Decoded · Premium, Discount and Equilibrium
What Are Premium and Discount in ICT Trading?
By Steve H — reads every firm’s official rulebook, checks prices and codes daily, and maintains the Enigma Score · Methodology · Editorial policy · Last updated October 31, 2026
ICT concepts were created and are taught by Michael J. Huddleston, The Inner Circle Trader (X · YouTube). This lesson is FundedEnigma’s own summary, not affiliated with or endorsed by ICT.
In short: ICT premium and discount split a dealing range at its 50%, called equilibrium. Mark a clean swing low to swing high: above equilibrium is premium, where price is expensive; below it is discount, where price is cheap. Longs are looked for in discount and shorts in premium.
Premium vs Discount: How to Find Cheap and Expensive Prices (ICT Equilibrium) · 5:44 · published October 31, 2026 · part of the ICT Concepts Decoded playlist
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The full video is embedded above this article: Premium vs Discount: How to Find Cheap and Expensive Prices (ICT Equilibrium). This page is the written version, with every chart walked through step by step. Jump to any part of the video:
Key facts: premium, discount and equilibrium at a glance
| Term | What it is | How it is used |
|---|---|---|
| Dealing range | A clean swing low to swing high, or swing high to swing low | The range you measure everything against |
| Equilibrium | The 50% of the dealing range | Price in balance: neither cheap nor expensive |
| Premium | The half above equilibrium | Where shorts are looked for |
| Discount | The half below equilibrium | Where longs are looked for |
| Optimal trade entry | The 62-79% retracement of the leg, 70.5% in the middle | The deepest part of discount (or premium) |
| End of the range | A trade beyond either edge | That range is done; mark the new one |
Last verified 2026-10-31. All charts below are real historical CME NQ futures data, shown in New York time.
Here is the idea on one chart. On January 21, 2026, NQ rallied almost 470 points between 07:00 and 11:12. The pullback did not stop after a few points and did not give the whole move back: it stopped about three quarters of the way down the leg, deep in the bottom half. By 15:00 price was more than 150 points above the 11:12 high.
What is a dealing range in ICT?
A dealing range is a clean swing low to a swing high, or a swing high to a swing low: the leg price has just delivered. Its two edges are the reference for premium and discount.
What is equilibrium in ICT?
Equilibrium is the 50% of the dealing range. It is price in balance: neither cheap nor expensive. Everything above it is premium; everything below it is discount. One line splits the range into two halves, not thirds.
How do you set a Fibonacci for premium and discount?
Draw it from the high to the low of the dealing range and keep only the 0.5 level. All you need are the two edges and the middle.
Why buy in discount and sell in premium?
Because of risk. The deeper into discount a long is taken, the closer the range low sits below it while the high stays where it is.
With the January 21 range: a long at equilibrium (25,259.625) sits 234.625 points above the range low (25,025.00) and the same 234.625 points below the high (25,494.25). The same long at the 12:15 low (25,142.00) sits only 117.00 points above the range low, with 352.25 points to the high. Shorts are the mirror: the higher into premium, the closer the range high above. This is an illustration of where risk sits, not a trade result.
How do you trade the discount zone and premium zone?
Look for longs in discount and shorts in premium, and want a reason inside that half. Buying in premium means paying up; selling in discount means selling cheap.
- The half tells you where to look. A fair value gap, an old high or low, or another price level inside that half gives the reason.
- The deepest part has a name. The 62-79% retracement of the leg, with 70.5% in the middle, is the optimal trade entry band.
When does a dealing range end?
When price trades beyond either edge. That range is done, and you mark the new one from the new swing.
Ranges and pitfalls
- Ranges sit inside ranges. A daily range holds hourly ranges, and those hold smaller ones. Always know which range you are measuring.
- A small, choppy range is no dealing range. In tight chop, premium and discount do not mean much.
- Not every pullback reaches discount. In a strong move, price can carry on from the top half. Discount tells you where a long is cheap, not that price has to get there.
What do premium and discount look like on real charts?
One long side, one short side, both on the 15-minute chart.
Example 1: the long side, NQ 15-minute, January 21, 2026
- The dealing range runs from the 07:00 low at 25,025.00 to the 11:12 high at 25,494.25.
- Equilibrium sits at 25,259.625. Above it is premium; below it is discount.
- At 11:51 price slips below equilibrium, into discount. At 12:15 it bottoms at 25,142.00, about 75% of the way down the leg, inside the optimal trade entry band.
- From there it rallies. At 14:37 it trades above the 11:12 high, and at 15:00 it reaches 25,653.50. The range low is never touched.
Example 2: the short side, NQ 15-minute, March 5, 2026
- Price drops from the 10:00 high at 25,209.75 to the 10:32 low at 24,930.50.
- Equilibrium sits at 25,070.125. By 10:40 price is already back above it, in premium.
- The rally tops out at 12:06 at 25,123.00, about 69% of the way back up, in premium and inside the optimal trade entry band for a short.
- Price rolls over. At 12:29 it trades below the 10:32 low, and at 13:33 it reaches 24,772.50.
How do you use premium and discount in your own charting?
Measure one clean range, find its 50%, and only work the half that matches your idea. Discount is where a long is cheap; premium is where a short is expensive.
- Say which range. Name the swing low and swing high you measured, and the timeframe.
- Skip the chop. No clean range, no premium or discount.
- Pair it with market structure and liquidity: the range tells you where price is cheap or expensive; structure and liquidity tell you which way it is likely heading.
More concepts in the series are on the ICT Concepts Decoded hub. If you trade futures with a prop firm, you can look up a firm's rules on the challenges page or set two firms side by side on the compare page.
Frequently asked questions
What is the 50 percent level of a range?
It is equilibrium: the halfway point between the dealing range's high and low. Above it is premium, below it is discount.
Is premium and discount the same as support and resistance?
No. Support and resistance are price levels; premium and discount describe which half of a measured range price is in.
Which timeframe should I use for the dealing range?
The timeframe you are reading. The examples here use 15-minute ranges; a daily range holds many smaller ones, so say which you used.
Do I need a Fibonacci tool?
No. You only need the range high, the range low and the middle. A Fibonacci tool with the 0.5 level just draws it for you.
How is the optimal trade entry related to discount?
For a long, the optimal trade entry band (62-79% of the leg) sits inside discount; for a short it sits inside premium. It is the deepest part of that half.
Does price always reach discount before going higher?
No. In a strong move price can continue from the upper half. Discount tells you where a long is cheap, not that price must get there.
Sources
- Concept: premium, discount, equilibrium and the dealing range as taught by ICT (The Inner Circle Trader, Michael J. Huddleston), who originated these terms. The explanation, examples and charts on this page are our own.
- Data: every chart is real historical CME Nasdaq-100 E-mini (NQ) futures data, shown in New York time.
- Video: Premium vs Discount: How to Find Cheap and Expensive Prices (ICT Equilibrium), FundedEnigma.
Last verified: 2026-10-31. Written by Steve H.
Disclaimer: This page is for education only and is not financial advice. Trading futures involves substantial risk of loss. Past price behaviour does not guarantee future results.
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