Zones · Intermediate · 3 min read
Premium, discount and the OTE zone
Cut a price leg in half: above is premium, below is discount, and 62 to 79% back is the 'optimal trade entry'.
Take the last clear move, from a swing low to a swing high. SMC cuts it in half.
- The middle (50%) is equilibrium.
- Above it is premium: price is expensive for this leg, a place to look for sells.
- Below it is discount: price is cheap, a place to look for buys.
- The OTE (optimal trade entry) is the band 62% to 79% back down the leg, a Fibonacci zone.
- An upward leg: from the swing low at 61 884 to the swing high at 63 221 (+2.2 %).
- The middle of that range, 62 552, is 'equilibrium'.
- Above it is premium (expensive, where SMC traders look to sell), below it is discount (cheap, where they look to buy).
- The OTE ('optimal trade entry') is the band 62% to 79% back down the leg: 62 165 to 62 392.
- Price came back into the OTE band 1 candle(s) after the high.
Flip the cards
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Quick check
In an upward leg, where does SMC look to buy?
One example on a chart is not evidence. The box below is: it counts every trade our code took on years of data.
What we measured when we tested it
SMC golden zone (Fibonacci) · Each row is one kind of market. Settings tried, share that made money after fees, markets.
| Market kind | Settings tried | Made money after fees | Markets |
|---|---|---|---|
| Crypto (perpetual futures) | 432 | 6 % | 30 |
| Stock market (indices) | 27 | 0 % | 2 |
| Commodities | 162 | 9 % | 4 |
Our verdict: No edge after costs. Read the full test →
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Education about how markets and tests work. Not financial advice.