Premium Discount Array Matrix - newsqlguru/ict-index GitHub Wiki

Defining Premium Discount Arrays

Why track Premium Discount within a Range of Price Action?

  • On any time frame chart we are looking for price in a premium or discount market.

    • There are two elements we think of as a trader, we think in terms of price as valued at too low of a price (discount) or too high of a price (premium).

  • The algorithm has similar processes built into it, a premium and discount market.

  • Once the price gets to an area of to much discount or premium, then the price will need to have a premium or discount built into it, and the price will move higher or lower.

  • The algorithm will do this moving back and forth, gyrating between premium and discount, until something of significant impact enters the market and drives the market to be one sided in price action.

  • This creates a strong imbalance, otherwise the market is going to move back in forth between premium and discount looking for liquidity based on premium or discount conditions.

  • The understanding is that price can't remain at the same level, it will be moved by big players that benefit from the movement.

  • We don't control time, how long it takes for price to move to a price level.

The PD Array Matrix provides a framework to understand what to look for to understand price action.
  • Define current trading range
    • Most recent old high (Premium)/low (Discount).
    • 50% is equilibrium
    • If bullish we expect price movement to the opposite array, price should move to discount, encounter an array and move into premium.
    • If bearish we expect price movement to the opposite array, price should move to premium, encounter an array and move into discount.

ict-pd-array-matrix

PD Array POI Order of Precedence, from Equilibrium

  • Bearish Premium Arrays

  • Premium Extreme

    • (7) Old Low/High
    • (6) Rejection Block
    • (5) Bearish Order Block
    • (4) Fair Value Gap
    • (3) Liquidity Void
    • (2) Bearish Breaker
    • (1) Mitigation Block

  • 50% Equilibrium

    • (1) Mitigation Block
    • (2) Bullish Breaker
    • (3) Liquidity Void
    • (4) Fair Value Gap
    • (5) Bullish Order Block
    • (6) Rejection Block
    • (7) Old Low/High

  • Discount Extreme

  • Bullish Discount Arrays

  • If we don't see the POI look to the next POI in the list, 1-7.

    • A Mitigation Block will most likely prevent price from moving to Liquidity Void.
    • A Liquidity Void will most likely prevent price from moving to an Order Block.

  • Breakers are the first thing price will encounter and may not make it past the breaker.

  • This applies to each POI, there is a hierarchy of importance in the PD Array Matrix.

  • Old high/low are included in each side P/D.

    • i.e. we may trade up in premium to an old low, or in discount down to an old high.

  • In summary, this is the order of significance

    • Look left on our charts for POIs from equilibrium, find mitigation blocks, breaker blocks, liquidity voids, fair value gaps, order blocks, rejection blocks, old highs/lows.
    • POIs can and will prevent price from moving further into the PD Array.
Reference of Block types