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How I Frame Orderflow Trades Using Premium and Discount — Transcript

by Christopher Creamer | Orderflow Trader · 5,919 words · 817 segments · language en · Watch on YouTube

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0:00All right, what's up? It's Thrax. We are
0:01back for another video. And in this
0:03video, I'm going to be talking about one
0:05of the most important things in my
0:07trading that I use every single day when
0:10I get on the charts, and it's premium
0:11and discount. Now, we're going to talk
0:14about premium and discount today through
0:16auction market theory. Now, some context
0:18is I know that most traders are actually
0:20going to recognize premium and discount
0:22through ICT content and that that it
0:25basically made it popular as a concept.
0:27I get it. In this video, I'm not here to
0:31debate who invented it or taught it. I'm
0:34just going to explain essentially what
0:36it represents, and we're going to view
0:38it through auction theory and order
0:40flow. And then I'm going to talk about
0:42some tools that I use and how I actually
0:44use it on a day-to-day basis. And then
0:46we'll take a look at the charts so you
0:48can get a better idea on how I use it in
0:50my trading. And maybe it can help you.
0:52So, the auction market theory
0:53foundation,
0:55the idea is essentially this. Markets
0:57are auctions. So what is the market's
1:00job? Well, the market's job is to
1:02facilitate trade, to discover value, and
1:05then to incentivize participation when
1:07imbalance occurs. So price moves to
1:10essentially solve imbalance. Really in
1:12the market, we have two major
1:17states of the market. We have a balanced
1:19market and we have an imbalanced market.
1:21So what is a balanced market? Well,
1:24balance markets are essentially where
1:25you see price with an established high
1:27and established low and we're
1:29essentially rotating in between uh the
1:31mean. It's where we have an agreement on
1:33value where we have that rotational
1:36behavior and then you'll often notice
1:38that there is large accumulation of
1:40volume in these areas. Now, an imbalance
1:43is different than a balance in the sense
1:45where there is a disagreement on price.
1:48Either there are more buyers than
1:50sellers or there are more sellers than
1:52buyers. they are not equal. They do not
1:54agree on price and that is what actually
1:56causes price to move or displace. So in
1:59imbalances we have directional movement
2:01and then oftent times price is then
2:03searching for liquidity. Now premium and
2:06discount only make sense once a balance
2:10exists once there is an established
2:12range. So what is actually an
2:14established range? Well, an established
2:17range is going to form when value is
2:18accepted, when the extremes of that
2:20range are defended, and then volume
2:22builds near the middle. So, this range
2:24becomes reference for relative value.
2:26What you can look for to make things
2:27easy are significant swing points. I'm
2:30not talking about every little single
2:32swing point on the market when you're
2:34looking um and it is slightly relative
2:36to time frame as well. Um but in this
2:39case, if we were to open up this chart,
2:41this is a five-minute chart on NQ. And
2:44where are the most significant swing
2:46points um for us to establish the range?
2:48Well, it's going to be this swing low
2:51and this swing high. So, we mark out the
2:53high of the range, the low of the range,
2:55and then we have the middle of the
2:57range. And then this now becomes price
2:59trading within the range. Within the
3:01high, within the low. Now, when we're
3:04talking about ranges, we need to talk
3:05about value and fair value. A lot of
3:09traders may be familiar with this. um
3:11it's expressed through volume profiles.
3:14Now value the way to understand this
3:16within the range is this is where
3:18business was actually conducted. So this
3:21is going to show up as PC you know the
3:23value area we have value area high and
3:26value area low and then we have
3:29composite distribution throughout this
3:30area. So value is not an opinion um it
3:34is volume. So we can notice where the
3:36value area is just by throwing on a
3:39volume profile. That's probably the
3:40easiest way to do it. Now, we need to
3:43define where's premium and discount
3:45because we know where the value area is
3:47at. Well, where's premium and discount?
3:49Once the range is defined and we have
3:51the value area. Now, anything above
3:53value is going to be premium and
3:56anything below value is going to be
3:58discount. Now, we do have a 50% of value
4:02area. And why does this exist? Well, the
4:0450% level is going to approximate
4:07balance. It's going to represent mean
4:09reversion tendencies where price is
4:11going to rotate between here and it's
4:13often going to align with value metrics.
4:16So this concept itself really exists
4:19across WOFF auction theory market and
4:22volume profile and of course ICT
4:25concepts. Now you don't necessarily need
4:27the volume profile. You can still
4:30identify premium and discount without a
4:32volume profile but it just helps us
4:33establish where the value area is. Now
4:36something that's important to note is
4:38premium and discount is context. Premium
4:41and discount is not a buy signal. It is
4:43not a sell signal and is not a
4:45prediction of price. It is just a
4:47location filter. We just have to
4:49understand where are we on the charts.
4:52Where are we relative to value and it's
4:55it can be used basically as a risk
4:57compression tool. If I want the best
4:59risk-to-reward
5:01for a trade, I should be looking for
5:04longs and discount and shorts and
5:06premium. And it's a way to avoid chasing
5:08price. In order flow, there is
5:11responsive and initiative order flow. So
5:14in discount, what we're looking for is
5:16we're looking for responsive buyers.
5:18We're looking for sellers to get
5:19absorbed, for sellers to fail a
5:21continuation, or for pressure or delta
5:24flips to bring it back into the range or
5:26to the equilibrium or even back into
5:28premium. In premium, we're essentially
5:31looking for the same thing on the other
5:33side. We're looking for responsive
5:35sellers. We're looking for offer
5:36stacking or buyers making failed
5:39breakouts or trapped initiative buyers.
5:41So, what is that? So, it's basically
5:43where we're in the premium of an area
5:45and buyers are stepping in trying to
5:47push price higher and they fail. Now,
5:49those buyers become trapped and then we
5:51can potentially turn around. Now, let's
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6:55code match. Now let's get back into the
6:57video. The way that I use discount and
7:00premium is I use FIBS. Now, I use the
7:03Fibonacci retracement tool and it's how
7:07I define premium and discount. Everyone
7:09has different levels. You know, some
7:11people have different levels than me.
7:13That's fine. The levels that I
7:15personally use on my range fib is the
7:180.5, the 0.62,
7:22the 705,
7:24788, the 886, and the 1.1. Now the logic
7:28behind this is that the 0.5 or the
7:31middle line or the equilibrium whatever
7:33you want to call it that's going to mark
7:35the transition between premium and
7:37discount territory. Now what I'm really
7:40focusing on when I am looking at these
7:42fibs is I am focusing on the area
7:45between the 705 to the 886.
7:48This is really the sweet spot for me.
7:50This is where I like to focus on
7:51reversals or look for responsive
7:53behavior as long as the higher time
7:55frame context is going to align. If I'm
7:58just drawing out range fibs everywhere
8:00and totally ignoring higher time frame
8:02context, then it does not matter. We
8:05need to understand on a daily, on a 4
8:08hour, weekly, monthly, whatever higher
8:10time frames we just have to understand
8:13where is price going on a higher time
8:15frame. If for example we look at the
8:18daily, the 4 hour, the 1 hour and they
8:20are all bearish. Okay, then we are more
8:24likely to be looking on a smaller time
8:27frame for areas in premium of ranges to
8:31continue that bearish momentum further
8:34down. You wouldn't necessarily be
8:36bearish on higher time frames and then
8:38be looking for looking for discount all
8:40the time trying to just buy every single
8:42discount. you're just going to get
8:43wrecked because you're ignoring higher
8:45time frame context essentially. One of
8:48the most important rules though when it
8:49comes to these fib levels is the 886 is
8:52one of the most important levels for me.
8:53And the reason why is because if price
8:56actually closes beyond the 886 level, I
8:59essentially treat that range or that
9:01area as invalidated and a touch of the
9:041.1 which is past the swing high or past
9:07the swing low is likely at that point
9:10because at that point I'm essentially
9:13expecting a continuation of momentum and
9:15I'm not looking for a reversal anymore.
9:18So these levels are just defining
9:20location. These are not entries. This
9:22doesn't mean that you draw a fib out on
9:24your chart and then anytime price
9:26touches into a 705 or a 788 or an 886
9:30that you're just going to enter there.
9:32So let's say that we have our value
9:34area, we have our premium and we have
9:37our discount. Well, typically what'll
9:40usually happen is the 705 to the 886
9:44will either be in premium or discount.
9:46Now if we draw it from swing low to
9:48swing high, we have our zone here in
9:50discount. this area between 705 and 886.
9:54If we go from swing high to swing low,
9:57now we have our range here where we have
9:59705 to 886 and it's sitting in premium.
10:02Even without the volume profile, we can
10:05still do the same thing and we get our
10:06areas. So then it makes it a little bit
10:09smaller. We're looking in this area as
10:11premium. We're looking in this area as
10:13discount. So if you ever look at my
10:15charts and you see fibs like this on my
10:17chart, now usually I don't draw out all
10:19the rest of this stuff. This is just to
10:21explain it, but I'll usually only draw
10:23the fibs. When I draw the fibs, I
10:26usually don't draw fibs on both sides.
10:29And the reason why is because I usually
10:30have a bias on which way we're going.
10:32So, if my bias is bearish, let's say in
10:35this scenario, we had a large drop, my
10:38idea for how the market is going to
10:40react off of that is we're going to
10:42rebalance higher before we continue our
10:44move down. Then, I probably wouldn't be
10:46drawing a discount zone. I'd probably
10:48only go from swing high to swing low and
10:51then I'd be looking for premium at
10:52another entry or swing high to swing
10:54low. Looking for premium at another
10:56entry to go lower. When you do see them
10:58on my chart, if I ever post it in like
11:00my daily outlooks or you see it when I'm
11:02live trading or whatever, um it's not
11:05very often where I'm going to be drawing
11:07them on both sides unless we have been
11:09ranging for a very long time and we're
11:11kind of in the middle of a larger time
11:12frame um consolidation area. But more
11:16often than not, when I'm drawing it on
11:17like a five minute time frame or a 15
11:19minute time frame, I'm usually just
11:21drawing one side because I don't want to
11:23confuse myself. Now, there is something
11:25else that I actually use when locating
11:29where I where am I actually looking for
11:31trades in premium or in discount. And
11:35the reason for that before I tell you
11:36what it is is just because sometimes if
11:39the range is large enough, the area
11:42between the 705 and the 886 can it could
11:45be massive. Like it could be 100 points,
11:48200 points. It can be huge. And so we
11:52can't just like give ourselves a 100
11:54point area. We we got to try and narrow
11:57it down a little bit and focus in a
11:59little bit. And so what I use for that
12:01is I use something called the darkpool
12:03decoder. It's an indicator that I have
12:06and it essentially will draw out a zone
12:09inside of premium or discount. So the
12:12purpose of it is just to find a focus
12:14zone inside of that 705 to 886 region.
12:18And then it narrows the attention when
12:21we're looking at location or where that
12:23responsive order flow or initiative
12:25order flow should happen and we're
12:27looking in a smaller area. So the way
12:30that I actually use it is I will and
12:32this is the darkpool decoder. The way
12:35that I actually use it is I will mark
12:37out a swing low to a swing high and it
12:40will fall in between 886 and 705. Let's
12:43say we're somewhere over here on price.
12:45I notice that we are now establishing a
12:48range. We've put in a significant swing
12:50low and a significant swing high. Well,
12:52I am going to mark out my fib. I'm going
12:55to understand where value area is at.
12:57And then I'm going to use this to draw
12:59out a zone. Now, you don't need this,
13:01but I love it. So, I use it. And what
13:04I'm looking at is I'm looking at this
13:06zone. Now, this zone technically has
13:07three levels to it. The first level is
13:09level one. This is level two. And this
13:12is level three. I'm looking for reaction
13:14out of the out of this zone at any of
13:17the three levels. If price ends up
13:19closing through this zone on the time
13:22frame I'm looking at, usually like a
13:23five or a 15 minute or sometimes a 1
13:25hour, if price closes on the other side
13:28of the zone, it's invalidated. I'm no
13:30longer looking for a reversal. I'm
13:32shifting expectations towards a
13:34continuation lower past the zone, but
13:38I'm just trying to see if this area is
13:40going to hold. If this is my bias, now
13:43what I mentioned earlier is if my idea
13:47of price is for us to make a large move
13:50down, rebalance some of this move before
13:53we actually continue and make a new low,
13:55then I probably wouldn't be using it
13:58here because why would I be looking for
14:01longs when my bias is bearish? So then
14:05in a true scenario, what I would
14:06normally do is once we put in that
14:09significant swing high and we put in a
14:12significant swing low and I may draw it
14:15even if it gets down here and then if it
14:17doesn't reach it and we make a new low
14:18then I will extend it. Now what happens
14:20is now we have an area of premium where
14:24we can be watching as location reference
14:27to understand where might be a good idea
14:30to take shorts. And it's even better
14:32when it's above previous swing highs.
14:34It's above this swing high or if it's
14:37above this swing high. We're watching
14:39this area to see if sellers are going to
14:41essentially defend this and buyers are
14:43going to fail to break out. And we are
14:46in premium. It's a good area to look for
14:48shorts. If our bias is to continue lower
14:50to take the lows, one thing is that this
14:54tool itself does not predict price.
14:57Okay? The point of this is not to
14:58predict price. The point of the fibs is
15:00not to predict price. It's just to help
15:02with structure expectations. It's just
15:05to help with how far do I think are we
15:07going to dig back into this move before
15:10we continue. Something else that I
15:12actually use when it comes to premium
15:14and discount is I use a volume profile.
15:17What does a volume profile do for
15:20premium and discount? Well, it does a
15:22couple different things. One is it
15:24mainly adds confirmation. So on a volume
15:28profile, when you're determining premium
15:30and discount from an established range,
15:32it's going to show you acceptance at
15:34value, rejections at extremes, and
15:36failed auctions. So in high volume
15:38areas, we're going to see agreement or
15:40consolidation or even some chop. And
15:43then in low volume areas, we can see
15:45rejection or even fast movement straight
15:47through it. So, this just strengthens
15:50the premium and discount context because
15:52the way that I'm actually using this is
15:55every time we have an established range,
15:58the value area is going to be where the
16:00most volume's at. And more often than
16:03not, in that area where the most volume
16:05is at, you're going to find it's
16:07basically in the middle of the range.
16:09Once we start getting out of the value
16:11area, so if you can't see it, this
16:13middle line is basically the PC. This is
16:15value area high and this is value area
16:17low. So if above value area is premium
16:20and below value area is discount.
16:23Then something that I am looking at is
16:25I'm looking at low volume nodes. We have
16:27a low volume node here. We have a low
16:30volume node here. So what happens in
16:32this low volume node? Well, we bounce
16:35off of value area low. We extend past it
16:38into the low volume area and then we
16:40pump back up. Same thing happens up
16:42here. We bounce off of
16:44value area high and then we come up into
16:47the low volume node and we can't get
16:49past it and we end up rejecting back
16:50down. You can use like this type of
16:53volume profile because you can still see
16:55the low volume node here and then you
16:58know volume drops off here. But I don't
17:00like using these big blocky ones. I it's
17:03a lot easier to identify low volume
17:05nodes when you're using like a normal
17:07volume profile, not a [ __ ] shitty
17:09Trading View one. But this is good for
17:12for essentially determining value area
17:14high and value area low. So why does
17:17this matter for orderflow traders? Well,
17:20order flow essentially is just going to
17:21tell you who is active, who's defending,
17:24who's trapped, and then premium and
17:26discount is going to tell us where to
17:27narrow our focus. It's going to improve
17:30location in terms of making a trade, and
17:34then it's going to reduce overtrading. I
17:36mean, there's plenty of times where if
17:38you don't understand location, you can
17:41have a great entry, you can have the
17:43right idea on where we're actually going
17:45to in terms of draw next, but you just
17:48get stopped out or you entered a little
17:50too early or whatever.
17:53Understanding location when it comes to
17:55where you should actually be taking the
17:57trade is going to help tremendously.
18:01It's going to help you pick the right
18:02times. It's going to help you avoid
18:04overtrading. We realistically don't want
18:06to be trading the middle of a range. We
18:09want to be trading the extremes. Now, if
18:11you use orderflow and premium and
18:13discount together, then it's going to
18:15create cleaner execution, and you're
18:18going to understand where we actually
18:19are in relation to value. Now, when
18:22people use premium and discount, there
18:25are common mislications, and there's
18:28common misunderstandings. One of them is
18:30you just draw a bunch of fibs all over
18:32the place or you mark out premium and
18:34discount all over the place because you
18:37have so many different time frames. You
18:39have all this different [ __ ] You can
18:40mark out established ranges all over the
18:42place. And then what happens is people
18:44will just like blindly buy discount and
18:47they'll blindly sell premium, but
18:49they're ignoring close beyond
18:51invalidation levels. They're treating
18:53fibs or other zones they may have in
18:55premium or discount as predictive. These
18:57are context errors. They're not strategy
19:00failures. You just need to understand
19:03that if you're using premium and
19:05discount, it must be used with context
19:08of higher time frame alignment.
19:10Essentially, where are we going? You
19:13can't just mark out a one minute range
19:15on a one minute time. Like, you can't go
19:17on a one minute time frame, mark out a
19:19range, and then we look bullish on a one
19:22minute time frame. So, you're going to
19:24be buying up the the discount on a one
19:28minute time frame range when all of the
19:30other time frames, five, 15, 1 hour, 4
19:34hour, daily, we're all obviously going
19:36lower. The draw is lower. Why are you
19:38going to be buying one minute discounts?
19:40Doesn't make any sense. So, just make
19:42sure if you're drawing premium and
19:45discount, you zoom out a little bit. You
19:47zoom out first. you do top down analysis
19:50to understand where it is that we are
19:52actually going before you start just
19:54blindly buying or selling premium or
19:56discount. So the final takeaway before
19:59we hop on the charts is just that
20:01premium and discount is auction logic.
20:04It is relative value and it's just
20:06awareness of location. And it works
20:09best, at least for me, when it's
20:11combined with consistent measurement,
20:13meaning that you are drawing and
20:16determining premium and discount the
20:18same way every time. And if you combine
20:21it with volume and then once we actually
20:23enter into those areas, if you use
20:25orderflows confirmation for the actual
20:27entries or the trades and just
20:29understanding what it represents is
20:31going to make execution like way
20:34simpler. All right, so let's say that
20:36today, this is today by the way. So it's
20:39currently uh February 3rd, 2026.
20:43This is actually a perfect example of
20:46premium and discount. Why? Because here
20:49we are in this range on a higher time
20:52frame. We're bouncing back and forth.
20:54Okay, we go from discount to premium to
20:57discount to premium. Now, Sunday opens
21:00up. We push further into discount. Now,
21:02the idea is is that we're going to come
21:04back to the equilibrium and we're going
21:06to push into premium. Now, if our bias
21:08is bearish, then what are we going to
21:11do? Well, we're going to take a
21:12significant swing high and a significant
21:14swing low, which is going to be the top
21:16and the bottom. We're going to extend it
21:19to the right for where price is going to
21:22basically print
21:24and we're going to understand that we
21:26are watching this area.
21:29We're essentially watching this area.
21:31Okay, I'm going to change this to orange
21:33so it's easier to see. If price were to
21:36get past the 886 in this scenario where
21:38we're pumping, then we're probably going
21:41to come up here and hit the 1.1. What
21:44I'll do then, if you ever see my other
21:45charts, you may see boxes on it and not
21:47know where they're coming from. Well,
21:49this is where it's coming from. If we
21:50were to take the swing high to the swing
21:53low, and we now create a zone. Well, in
21:57this zone, this is essentially where in
22:00premium I'm looking for us to
22:02potentially turn around if my bias is
22:04that we're going to go lower. So this
22:07morning specifically when we were
22:09opening up, I knew that we were here and
22:12I knew that we made this large move up.
22:14So what was my bias for the day? Well,
22:17it was to go lower. Now my bias would
22:20have flipped if we got above this area
22:22and this area. Then I would have started
22:23looking for price to potentially go
22:25higher. Now time out. Let's say, oh
22:28well, you already know what happened
22:30this day. You just cherrypicked this
22:32[ __ ] Okay, fine. But this happens every
22:35single day and I'm going to prove it to
22:36you right now. So let's say let's do
22:39this. Let's go to replay mode. On replay
22:42mode, let's go back to a random day.
22:43Let's go to November 20th at midnight.
22:46Okay, here we are in November.
22:50What does it look like here? Well, it
22:52looks like we probably are going to go
22:53lower. Why? Because we have
22:57price coming up. We now make a lower
22:59high. Lower high. Lower high. It's I
23:02would I would be looking for us to
23:04basically come lower to take these lows.
23:06Okay. So that is on a one hour time
23:08frame what I would be looking at. This
23:10would be the draw. So let's determine
23:12where should we actually be looking for
23:14a trade. So in this scenario, where is
23:17our range? Well, I would be going from
23:19this significant swing high here to this
23:22swing low here. I'm going to extend this
23:24out. We're already a little bit in
23:27premium, but we want it to go further
23:29into premium. And then what I'll also do
23:31is I'll just take this. I'm going to
23:33mark out the swing high, swing low.
23:36We're going to draw our box and we're
23:38going to put it right here.
23:41And this is the location that I'm going
23:43to be looking for to go short. And when
23:46we do go short, where are we going to
23:48target? Well, we'll target right here.
23:52This will be our draw on liquidity.
23:53Let's play it out and let's see what
23:55happens. Now, in the event, because I
23:58don't know what's going to happen. And I
23:59just chose a random day. In the event
24:02that we move up here
24:04and then we get past the top of this
24:07zone and we get past 886, I'm no longer
24:10looking for us to go lower. I'm then
24:12looking for us to go higher and I'm
24:13shifting my expectation to a bullish
24:15bias. What I'm looking for though is
24:18once we do get in here, I'd be watching
24:20order flow to determine whether or not
24:22we're going to turn around.
24:24Now, sometimes we may never actually get
24:26up into the zone. Now in this case it
24:29played out kind of quickly. What did we
24:31do? Well, we came into premium in the
24:3662. We came into our zone at the first
24:39level and we dropped. We dropped down to
24:42uh the drawn liquidity that we had. Now
24:45you might be saying to yourself, well
24:47Thrax, you knew what was going to happen
24:49that day. Well, no I didn't. But just to
24:51prove a point, I'm gonna do it again. It
24:54literally happens every day. This is how
24:56I frame this is how I frame my bias for
24:59direction besides using just normal
25:01market structure because my bias at this
25:04point was that we were going lower. This
25:05is an obvious bare trend. Lower highs
25:08and lower lows. You don't have to be a
25:09genius to figure that one out. But this
25:12is how I frame my ideas every single
25:16morning. Now we're doing it on a oneh
25:17hour time frame, but it's how I frame
25:19ideas every morning on where I should
25:21actually be looking to take a trade. So
25:23you know what? Let's drop down to a
25:2415minute time frame and let's go choose
25:27a new day. We'll go back to October.
25:30We'll go to
25:33I don't know October. No, it's a
25:35Saturday. We'll go to Tuesday, October
25:3814th. Okay. So, here we are before we
25:41even start the day. And usually I draw
25:44these in the morning after London and
25:46Asia have already been established, but
25:48I'm just going to show you what happens
25:49basically all the time. Let's just say
25:51that we take this swing low to swing
25:52high. Okay, let's move it to the right
25:56so we know what's going to happen the
25:58next day. We're going to be watching
26:00this area here. Standard, we'll make it
26:04uh orange so it's easy to see. So, let
26:07me just draw it from right here to right
26:10here.
26:12So, in this scenario, I'm looking at
26:14this area. Okay. And then let's turn
26:17this off. So, heading into this day, if
26:21I were to be bullish, which I didn't
26:23even do any type of Let's go look for a
26:26second. Okay. Well, in my mind, yes, we
26:30did have this drop lower, but just for
26:33the sake of the video, let's just play
26:34out what happens in this area. Now, we
26:36can totally just be coming down way
26:38further than this, but I'm just going to
26:41uh play it out. So, let's say we start
26:43playing out the 15-minute. I'm not
26:44looking to take a long at all until we
26:47get into this area.
26:51Okay. So, what happened right here?
26:55Here we are in our established range. We
26:57have we have the high and we have the
27:00low. Now, I would also show you what it
27:03looks like on a volume profile, but I
27:06can't really do that right now because
27:07we're just on Trading View and their
27:08volume profile kind of sucks. We're just
27:11going to talk about the fibs and the and
27:12the zones. But what what I would be
27:15doing in this scenario is we have the
27:17low and the high. So what happens if we
27:21are bullish? We think that price is
27:23going to potentially come and fill this
27:26gap which is what a new week opening gap
27:29and then potentially bounce and come
27:31back up. Then where are we looking?
27:33We're looking in this area to take a
27:35long or this area to take a long. If
27:38price gets below this box or below this
27:41886, then at that point, I would imagine
27:44that we're just going to continue to the
27:461.1. So, as price comes into here, we're
27:50on a 15minute time frame. If I'm
27:52watching this at 6:45, which is 15
27:55minutes after open, and I'm watching
27:58this happen, what am I looking at? Well,
28:01I'm looking at order flow. I'm seeing
28:03what's happening in this candle right
28:05here. I'm seeing what's happening when
28:06we got to these lows and I'm seeing what
28:08this next candle is going to do. Now,
28:11this is giving me context for location
28:12on where I should actually be looking to
28:14take a long position. We're in discount.
28:17We're in the area that I'm looking for.
28:19We touched into the 705. And now we can
28:22say the location is here. Let's look for
28:24confirmation to take it higher. Now, if
28:26you did that, well, great. You got a
28:29long and you probably made some money.
28:32Now, in the event that we came down
28:33here, we did a little bounce. I mean,
28:36you would be watching on order flow for
28:38confirmation. Again, you're not just
28:39going to take random trades because
28:41they're in this area. This is just
28:43giving you an idea for context. Okay?
28:46And again, people are going to say like,
28:49"Oh, you're cherry-picking these." I'm
28:51literally picking random days. It
28:53happens like every day. I do this every
28:55morning to determine where do I think
28:57we're going. And just so that you know
28:59I'm basically not full of [ __ ] Well,
29:02let's start marking some of these out.
29:04Okay, so let's say that we go from this
29:07swing low right here.
29:11Let's say we go from this swing low
29:12right here to this swing high. Well,
29:14where are we going to drop on this box?
29:16I don't know. Right there. Boom. Okay,
29:18let's draw out a fib. If we go from here
29:21to here, where are we? Where did we
29:23touch the 705? Okay. Well, if that's not
29:27random enough for you, let's go look for
29:28a different one. Let's look at this one.
29:31Okay, here we are. We have our range
29:33right here from here, this swing low to
29:35this swing high. Where do we touch into
29:37the 705 and 788? We're bullish. Our our
29:41bias is bullish. Okay. Well, what's
29:43going to happen when we go from swing
29:44low to swing high?
29:46It it it literally happens all the time.
29:49And this is a great way as long as your
29:52bias is correct.
29:55This is a great way to determine
29:59a good location to look for your
30:01reversals. A good location where you
30:04should actually be looking for the trend
30:06to then continue on that pullback. Now,
30:09again, you don't need this tool. It's
30:12great. It'll help you out, sure. But
30:13let's just imagine we don't have it.
30:15Okay.
30:17Now, let's say that we're just looking
30:19at this. Well, then we're just going to
30:22be looking at this this area. That's it.
30:25Happens all the time. To the downside,
30:27too. The point of this video is just to
30:30have you understand how I actually use
30:33premium and discount. I'm using it as a
30:36location filter to understand where it
30:38is that I should actually be looking to
30:39take trades. I do it every single day.
30:42And I don't draw them out on both sides.
30:44I'm not going to do this and this
30:47because if my bias on a higher time
30:51frame is that we just swept liquidity,
30:54let's say, and now we're heading higher,
30:55why am I going to be looking for shorts?
30:58You just you wouldn't do that. It
31:00wouldn't make sense. Just go with the
31:01higher time frame bias. Find your
31:03discount areas, find your premium areas,
31:06and then just understand where you
31:08should actually be taking the trade. If
31:10you do that, then you use Orderflow's
31:12confirmation to actually take entries on
31:15smaller time frames,
31:17you're going to find that it really
31:20helps that it really helps out. So, I do
31:24have a um PDF that I created that talks
31:28all about this and how I actually look
31:30at the market. Not just entries, it's
31:33not about entries. It's about
31:34understanding how I actually look at the
31:36market. I made a PDF. It's like 60 pages
31:38long. I spent a lot of time on it. I
31:41think it has great information on it. If
31:43you ever want to check it out, it's
31:45free. You can literally click the link
31:47in the description and download it or
31:49you can join the Discord and the Discord
31:51has it in the education section. Yeah,
31:53that's it. I literally do this every day
31:55and I just thought it would be a good
31:56idea to make a video on it. So hopefully
31:58it might help somebody. So I'll catch
32:00you guys next time I make a video and
32:02hopefully we'll talk about something
32:03else that is interesting or important in
32:06my trading. Peace.

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