Hi Peter, the answer is in the screenshot attached:
And that is a good example to explain DM tolerance.
So no, these DM longies really were in the market, and yes, they even closed with a small profit or breakeven. But here is the thing; despite the longies “looking big”, they were within the DM tolerance. Because, we were in a squeeze against the DM shorties.
When the SM took the upper STS of the shorties, the longies, rather than being “sticky”, left pretty quickly and used that chance.
Now, note that this does not happen often, but it can now and then.
Look at the encircled area of the squeeze indicator; the longies were close to switch the market to the other side, but they just did not make the cutoff.
When most starting leaving while new DM shorties entered, the squeeze continued and expanded.
Yes, the “POWER OF THE SQUEEZE” as I call it. 😉
However, if the scenario would have been different, I may have placed a BIG trade when the market did the pullback up and offered a cheap entry. All I would have needed for example would have been the red squeeze line to DROP,
so some shorties getting out. In that case, I would have placed a bigger short at the pullback, also because of the “lasso principle” energy, so the willingness of the SM to quickly tie in the longies again.
But that did not happen, instead the opposite;
despite the squeeze lines “kissed”, the squeeze against the shorties continued in full swing and even expanded, sealing the deal for a stop-run up.
Very interesting case; it was VERY close to a nice switch in the overall market (which would have given a HIGH BIAS trade), however, instead, the longies were JUST within the DM tolerance and quickly left when the pullback appeared.