Discount Zone

Discount is the cheap half of the dealing range you defined. In an uptrend, SMC teaching wants longs initiated in discount, because the stop under the range low is nearer relative to a target back at the range high, and because you are not the trader chasing the high. In a downtrend, discount is where you do not want to initiate new shorts. You are selling the cheap half. The same price can be discount inside a small range and premium inside a larger one. The word is always relative to a stated swing. Said without the swing, "price is in discount" means nothing.

Mark the external swing. Shade below the midpoint. Look for your long trigger, a sweep of a low, a return into an order block, a reclaim of a fair value gap, only inside that shade if discount is part of your rule. If the trigger prints above the midpoint, the discount rule says no. You may still have a valid breakout rule. Do not quietly switch rules. When a new external swing forms, recompute. The old discount zone belongs to the old range. Holding a zone from a range that has already broken is how traders buy "discount" all the way down a markdown.

Use discount as a location requirement for pullback longs and as a place to take profits on shorts. A short that began in premium and reaches discount has travelled half the range. That is a rational scale-out even if you think the market goes lower. A long that never dips into discount is a long you do not get, if that is your rule. Record the missed trades. A filter that you never check against the trades it vetoed will feel wise and may simply be late.

Buying every touch of discount with no trigger and no higher-timeframe support. The lower half of a range still has room to the low, and through it. Also calling a new low "deeper discount" and adding. Below the swing low you are no longer inside the dealing range. You are outside it, and the range thesis is the thing that just failed.

Discount can vanish in a trend that does not pull back 50 percent. The filter then keeps you out, which is correct for a pullback system and fatal if you thought you had a trend system. The midpoint also ignores where the volume traded. A value area sitting entirely above the midpoint means the market considers the "expensive" half to be fair. Believe the volume if you have it. The midpoint is only geometry.