Most heavy damages to short only biased traders are done all within 2-3 week period of very strong cycle (as current one) without doing any adjustment.
If this isn't good enough reason to start defining cycle conditions and get more adaptive... #smallcaps#trading
Many short sellers don't bother changing anything because they think this strange market won't last. And they are right. But it all depends, if trading very stubbornly or aggressive one such cycle can come rarely and still do so much damage that adjustment is a must.
If you think your drawdown is not acceptable then start forming plan on how to get better at recognizing cycles. Score tickers daily and be objective, get out of your "shorting trash" mindset, this is exactly what probably gets you I to trouble in first place. Objectivity.
Figure out how could your cycle defining system spot current strong cycle as early as possible (day2 of AERC) and reverse engineer to see how to create good scoring system. Then test it trough two more cycles and adjust as needed. Your initial version will need adjustments.
This is step one, or don't do so, stay static and stay afraid of when the next creepy market strength swallows you once again - unexpected.
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High float rotation volumes as high chance of short squeeze is often overused term, because it is all based on assumption that mechanics work only in one sided direction. Which is incorrect. Market makers can also float rotate somewhat ticker that they are distributing (trap).
Its often very difficult to tell just based from volume and float if ticker is under accumulation or distribution process. So the assumption of low float+high volume=squeeze can also turn very noisy in performance (very much 50-50 guessing).
If you are looking to collect some data for #smallcaps or #trading in general, or following someone elses advice and their research here are some tips and mistakes to avoid. The biggest problem is most data is noisy (unconclusive) and there are good reasons why, thread:
To collect useful data (not noisy) you need solid critical thinking+skepticism+hard work. This means breaking many ideas back down and rebuilding them from new approach, over and over. A lot of determination and testing before one good idea is shaped and passes test.
Shortcut mentality in fin markets of many will lead to the fact that much of hard work will end up being posted even if author realizes the data is weak, unconclusive (no edge).
Because people want to be given a nod for their time dedication.
Realize how important that might be.
Unlike many other markets not many track PA patterns in #smallcaps or specific behaviors. Mostly due to lack of intraday candles or classic chart patterns. But that doesn't mean there aren't any one just has to look outside of box from traditional chart patterns. #trading
For example, give #crypto guy a drawing board and chart and he'll draw you next Mona Lisa on chart. It's mostly due to abundance of data /candles which makes everyone see what they want to. In scarce environment of smallcaps you have to be more defined as behavior is constricted.
This means that due to time constraint also the MMs will be more forced to use patterns and techniques that also address this problem, not just chart drawers or pattern seekers themselves. It's why there is more liquidity traps in this market on avg due to limited exit opps.
An important research component should be to do your due diligence on how strong your countries #SupplyChain are in case if fuel, food, materials increase by large degree. There are many places (EMs) that require careful planning for next year's and I don't say this lightly.
The seriousness of this situation is it's not isolated pressure, supply chains are under attack from every angle. This will likely lead to weaker countries being excluded out at some point due to prioritization. But issue is, every country is weak at something.
But energy insecurity is probably the main issue because without this the rest of supply chain cannot be secured. But what as well matters is to look into place (s?) that are the most wholistic in having enough self sufficiency as those countries will out-wait the rest.
Fbo/clearout distance is the price that they swipe above HOD. Often same ticker will have similar pattern of distance and can be key guide for short entry accuracy, if it already swiped once with fbo and reject. Important micro behavior to track. #smallcaps
Rough guide is in strong cycle that distance can be large and very open-ended. In weaker cycles and flows it will be more limited. Previous past 10 tickers will also be key guide to tell you current avg cent distance of fbo move to help define that better so track it closely.
Typically before each new fbo HOD swipe, MMs will consolidate price minimum 15 minutes under it. The weaker the flows the longer, and vice versa if stronger. That helps to give you readiness on when it might happen very roughly plus minus 10 min usually.
"Shh, no cheering, trade either works or it doesn't."
My usual default (70%), neutralizing subjectivity and removing internal voice works great on improving discipline and sticking to plan.
"What?! No way!"
This internal voice is dangerous, it gets you bagged on position. Angry surprising reaction due to counter move is often cascaded into bigger than planned loss. Take control quickly when this voice starts to speak.