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Used to hold tools/material in a headstock. Often used in small drills as they result in a small compact chuck, the downside is you need a collet sized closely to the piece you want to hold.
Direct collets allow the tool/material to be held much closer to the headstock reducing the overhang. The image shows a selection of 3MT direct collets.
The collets are drawn into the head using a drawbar - there is a thread in the other end of the collet that the drawbar locates on.
Note: Do not over-tighten the drawbar as you will pull the morse taper too hard into the head and it may be difficult to release.
The advantage of the direct collet is obvious in the above pair of images as the distance from the end of the mill to the bearing in the head of the milling machine is much greater with the drill chuck.
The advantage with the milling machine is you get much less chatter as a result of this reduced overhang. In addition the chuck only holds the mill at three points whereas the collet holds the mill around it's circumference.