Premium-discount

Question 1

What is Premium/Discount used for?

Answer 1

1. CT TP’s
2. POI filtering

Premium/discount can be used as extra confluence to see when (statistically speaking) BFI’s are going to enter the market to add to their positions to continue the trend.

In a bearish trend, price will most often retrace past the 50% of the swing points before continuing.

We can then filter our POI’s to zones that are on the other side of the 50% level to get the highest probability zones.

Question 2

How can we use P/D to help trade pullbacks?

Answer 2

Since price typically retraces to the 50% before continuing the move, we can target the 50% when trading CT which gives us a HP TP.