Premium and Discount Explained — Trade shape (PDF Guide)

You waited for price to reach discount before buying, exactly as taught. Sometimes it worked and sometimes price kept falling straight through the level as though it were not there. It was not there. The line is a convention, and nothing about the market changes when price crosses it.

Premium and discount split a leg at its midpoint: above is expensive, below is cheap. Measured across 573 major legs on 35,944 bars of real history, the rate at which price turns rises SMOOTHLY with how deep the retracement is, with no step at 50% and no step at the edges of the optimal entry zone. The levels are a convention. What survives measurement is the geometry - entering deeper puts you closer to what invalidates you - and that is arithmetic that needs no special level to work. This is a 36-page PDF that teaches Premium and Discount from the first thing you see on the screen through to a written strategy with an entry, a stop and an explicit rule for when the trade is wrong.

Nothing is taught underneath a chart. Every label sits on the candle, the line or the level it is describing, on real market data. There are three quizzes on real charts, each followed by the same chart re-shown annotated with the reasoning, plus faded practice pages where the first steps are filled in and you finish the rest.

WHAT'S INSIDE

• How to price a leg — Pick the two ends, split at the midpoint, and know exactly what choice you made - because choosing the leg is the whole judgement.

• Whether the levels are special — Measured across six retracement depths. The curve is smooth: no step at 50%, none at 62% or 79%.

• What actually survives — The geometry. Deeper entry means a shorter distance to invalidation, which is true by arithmetic rather than by behaviour.

• How often you get filled — 95.29% of legs retrace to equilibrium and 90.4% reach the optimal entry zone - so the rule costs you far less in missed setups than people assume.

• The sobering number — 68.59% of legs are fully retraced within 80 bars. Most legs you draw this on get completely undone.

WHAT YOU'LL BE ABLE TO DO

• Price any leg into premium and discount, and state which leg you chose.

• Say whether a level is special, with a measurement rather than a belief.

• Use the framework for trade shape instead of as an entry trigger.

• Know how often a retracement actually reaches the zone you are waiting for.

• Explain why price sometimes goes straight through equilibrium.

AN HONEST NOTE

Premium and Discount is a clue, not a crystal ball. It describes what price has already done. This guide contains no win-rates, no backtest results and no promises about what you will make, because nobody can verify those and you should not trust anyone who prints them. What it hands you instead is a set of rules you can test yourself on TradingView in an afternoon. Educational, not financial advice.

Instant download. 36 pages, PDF.