Time-Based Premium & Discount — Mastering Time-Based Ranges

This is a concept a lot of people haven't heard of — time-based premium and discount. It's a very mechanical way to find your premium and discount while incorporating the time element. Instead of being confused about which range to use, which timeframe, where to mark the high or low — it's mechanical.

The mechanical rule

All you do is look at the previous higher-timeframe quarter, depending on the cycle you're trading.

Say you're trading the daily cycle on a Wednesday. You look back at the previous higher-timeframe quarter. The cycle above the daily is the weekly cycle. The previous quarter — if you're trading Wednesday (Q3) — is Tuesday (Q2). So your range is the weekly cycle Q2: Tuesday.

So: trade on the daily cycle on Wednesday, move up one cycle higher (15-minute → hourly), and mark out that previous quarter. Wednesday is Q3, so the previous quarter is Q2 (Tuesday). That's it.

Here are the ranges to use:

• Trading the micro cycle → mark the previous 90-minute cycle quarter
• Trading the 90-minute cycle → mark the previous daily cycle quarter
• Trading the daily cycle → mark the previous weekly cycle quarter (essentially the previous daily candle's range)
• Trading the weekly cycle → mark the previous monthly cycle quarter (essentially the previous week's range)

You can go lower (nano) or higher (yearly, quadrennial) — that's just the concept.

Having the cycle dividers automatically plotted on your chart makes this mechanical workflow much faster — the QT Cycles indicator at oracleindicators.com is what I use for the quarter markings.

A worked example

Say you take a short on the 5-minute using the 90-minute cycle — bearish 90-minute SSMT, a tCISD call, you want to short. How do you check if you can short in terms of time-based premium/discount?

Say this is during London session of the 90-minute cycle. What's the previous higher-timeframe quarter? Go from the 90-minute up to the daily cycle. Trading London, the previous quarter to London is Q1 (Asia session). So go to the 15-minute and mark Asia session's extreme high and extreme low. That's your premium and discount.

Premium and discount

Once your range is marked:

• Premium = anything above the 50% (middle) line. A time-based premium means price is more likely to offer sells as it moves from premium to discount. Price is expensive, likely to pull back.
• Discount = anything below the 50% line. The complete opposite — likely to offer longs.

Price goes from discount to premium, premium to discount. So if price was at a premium (caught the shorts), dropped back to a discount, it then offers longs and trades higher. You could've traded both directions off that one range.

Extreme premium and discount

Same concept — previous higher-timeframe quarter, marked low to high, standard deviation pulled — but:

• Extreme premium = price trades not just into the premium but above the range.
• Extreme discount = price trades not just into the discount but below the range.

Example on the 90-minute cycle: this is Q3 of the daily (AM session, 15m → 90-minute). Previous higher-timeframe quarter = London's range. Mark London low to high. Price comes above the premium → forms a 90-minute Sequential SMT → offers shorts back to a discount and below it.

Confirming the move

Once price hits the premium/discount levels, look for those cracks in correlation to confirm price is ready to trade away. From premium to discount, look for a cracking correlation to occur within a premium, then take the short. Ideally, if you're trading the 90-minute cycle and executing on the 5-minute, you want to see a 5-minute cracking correlation in correlation to the previous higher-timeframe quarter.

So if you execute on the 1-minute, always look at the previous 90-minute quarter to see where you are — looking for shorts or longs? Price won't always go into a discount before giving longs, or a premium before giving shorts. It can just be a confluence and part of your model's rules, because usually once price is at a premium, the shorts that occur are a lot higher probability — you're catching the highs and the lows.

On the charts

You want to look for Sequential SMTs that are marked out, then check if they occurred within that time-based premium/discount or extreme premium/discount. Examples: an Asia session 90-minute SMT forming above PM's high (extreme premium) → clean shorts. A daily cycle SMT on Monday → go up to the hourly (weekly cycle), mark Friday's range → far below at an extreme discount → daily SMT plus tea → move higher.

Key Takeaways

• Time-based premium/discount is mechanical: mark the previous higher-timeframe quarter as your range.
• The ladder: micro → previous 90-min quarter; 90-min → previous daily quarter; daily → previous weekly quarter; weekly → previous monthly quarter.
• Premium = above the 50% midline (look for sells); discount = below (look for longs). Price rotates premium ↔ discount.
• Extreme premium/discount = price trades beyond the range, not just into it — the highest-probability reversal zones.
• Confirm with a cracking correlation (SSMT, PSP, SMT Fill) at the level; ideally on the same timeframe you execute.
• It works best as a confluence inside your model — price won't always tag premium before a short or discount before a long.