Splitting a dealing range gives premium above and discount below. Why a simple 50 percent split awards a directional bias at a coin flip, and what to use instead.
Take a dealing range — a swing low to a swing high — and split it. The upper portion is premium, where price is expensive relative to the range. The lower portion is discount, where it is cheap. The principle is to buy in discount and sell in premium, which is really just buying low and selling high with a defined reference.
If premium is anything above the midpoint and discount is anything below, then a market sitting at 49 percent is labelled discount and one at 51 percent is labelled premium. You have awarded a directional bias at what is effectively a coin flip, and the label will flip back and forth on noise.
Leave a genuine middle. We classify above 70 percent as premium and below 30 percent as discount, and everything between as equilibrium — which explicitly asserts no directional edge and awards no confluence to either side. Roughly forty percent of the range produces no claim at all, which is the honest outcome.
Range position is one of the few inputs that changes continuously with price, so a threshold error here contaminates every downstream read. It is also the most common place for a display to disagree with an engine: if the backend uses 70/30 and the front end still uses 50, a member sees a directional label the engine never issued.
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