In ICT (Inner Circle Trader) methodology, the Premium and Discount Arrangement Matrix is a foundational concept that helps traders determine optimal entry zones in alignment with Smart Money principles.
It’s based on market structure, price equilibrium, and Fibonacci retracement levels to identify where Smart Money is likely to buy or sell.
1. What is the Premium and Discount Arrangement Matrix in ICT?
This matrix divides a price range (usually defined by a significant swing high and swing low) into two zones:
- Premium Zone (Above the equilibrium or 50% level):
→ Favorable area to sell (Smart Money sells at high prices). - Discount Zone (Below the equilibrium or 50% level):
→ Favorable area to buy (Smart Money buys at low prices).
This division helps determine where Smart Money accumulates or distributes their positions.
2. Key Concepts in the ICT Array Matrix
| Concept | Description |
|---|---|
| Equilibrium | The 50% midpoint of a price swing. A dividing line between premium and discount. |
| Premium | The upper half of a price range — seen as expensive. Ideal for selling setups. |
| Discount | The lower half of a price range — seen as cheap. Ideal for buying setups. |
The matrix is often applied after a clear high and low have been established in price action.
3. How to Draw the PD Array Matrix in ICT
- Identify a significant swing low and swing high.
- Apply the Fibonacci retracement tool from swing low to swing high (for bullish setups) or high to low (for bearish setups).
- The 50% level is your equilibrium.
- Levels above 50% = Premium zone.
Levels below 50% = Discount zone.
4. Example: Bullish Setup (Using Discount Zone): ICT PD Array Matrix
- Swing Low: 1.0800
- Swing High: 1.1000
- Equilibrium (50%) = 1.0900
Now, price pulls back to 1.0850 → in the Discount Zone.
You look for:
You enter long at the discount zone with a target above the previous high (1.1000+).
Why?
Smart Money buys when price is discounted relative to its recent move.
5. Example: Bearish Setup (Using Premium Zone): ICT PD Array Matrix
- Swing High: 1.2000
- Swing Low: 1.1800
- Equilibrium (50%) = 1.1900
Now, price pulls back to 1.1950 → in the Premium Zone.
You look for:
- A Bearish Order Block
- A Liquidity Sweep
- BOS and FVG confirmation
You enter short from the premium zone expecting a move lower below 1.1800.
Why?
Smart Money sells when price is expensive relative to its recent move.
6. Real-World Application (Trade Example) of the ICT PD Array Matrix
Let’s say on EUR/USD:
- H1 swing low = 1.0650
- H1 swing high = 1.0750
- Price retraces to 1.0680 → Discount Zone
You find:
- A Bullish FVG
- A 61.8% OTE level
- SMT divergence with GBP/USD
This gives you a high-probability long setup.
7. Important Tips for trading ICT PD Array Matrix
- The Matrix works best on higher timeframes (1H, 4H, Daily).
- Combine with other ICT tools (Order Blocks, FVGs, Breakers).
- Always align trades with the daily or 4H bias.
8. Conclusion
The Premium and Discount Arrangement Matrix helps ICT traders avoid chasing price and instead focus on buying low (discount) and selling high (premium) — just like Smart Money.
It provides a simple yet powerful framework for making logical, low-risk entries with high reward potential.
Leave a Reply