Reply To: Please explain


Hi AJ,

reg. 1. The Net DM indicator (as explained in the video course) shows you whether overall the DM shorties or longies are dominating. It also shows you what the current DM tolerance is and whether we have any squeezes are in the making. It is essential to understand these topics because that way you know how to evaluate the latest DM flow.
For example, if the red squeeze line is already upward sloping and then new DM shorties come in (red bars), there is a high likelihood of the price going up further. In particular if the green squeeze line is already downward sloping (showing that DM longies are leaving the market at the same time).
The overall numbers are not the most important factor here, rather, whether one of the two squeeze lines is above the middle line and what their slope is. That may sound a little more complicated than in actually is, also watch the new yt video where I explain the H4 reversal-scenario vs the failed-reversal scenario (squeeze).

These topics are very important because they literally show you whether the market is “trending” or “ranging”. That alone is a “holy grail” for many traders I guess. .-)

reg. 2. This indicator (also explained in the video course in detail) is valuable information when it comes to trading H4 reversals. A good H4 reversal setup comes when there is a proper DM switch, no squeeze line in the way, major stops have been cleared and one side of the DM even got a little into profit (so that yellow area appears). That is when you have a good H4 reversal setup in front of you. Now, if there is a strong squeeze, sometimes that means that one side of the DM traders was “lucky” to be on the “right” side, then the yellow area can extend for a while. However, the market is then very sensitive to a DM switch (so watch the DM flow).

Does that help?

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