Welcome to The Discovery Trading Group

 Announcements  Comments Off on Welcome to The Discovery Trading Group
Nov 292011

We are a group of professional and amateur traders founded by principals of a quantitative research firm which develops strategy and periodicity diverse programs and risk modeling tools. Our own internal process involves using this webspace as a collective resource for sharing both discretionary thoughts during intraday sessions and as a sort of virtual think tank for our ongoing quant research. A big part of that research has consistently shown that the ‘Holy Grail’ of the purely mechanical, single market intraday trading strategy that produces near linear returns without significant ongoing adaptation DOES NOT exist. As such we have found that for most traders pursuing single market intraday strategies, an adaptive, risk management focused discretionary approach is likely to bear the most fruit. Ironic, given that rigid, purely mechanical systems are what the vast majority of retail traders (including us at one time) seem to be in relentless pursuit of. 

In the spring of 2010 we created a private, member only forum behind the blog devoted to our ongoing discussions related to discretionary analysis of market structure, price action and order flow to like minded retail traders as a sort of experiment. Since we have always found the format in which we use this space privately to flesh out ideas to be so beneficial, we wondered if it might be even more fruitful to increase the sheer numbers of those participating in this process and with that, DTG as it exists today was born. By any measure, the experiment has been almost unfathomably successful for us in terms of it’s role in keeping us sharp in whatever discretionary or quantitative work we happen to be engaged in at the time. Sharing our experiences and interacting with the greater numbers continues to spark new ideas for all of us, making our little experiment a huge win on all fronts in our book. For information about the type of trading that is the foundation for what most members are focused on here, follow this link:

Methodology Framework

 Posted by at 11:24 am

07/01/2022 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 07/01/2022 ES Trade Plan Worksheet
Jul 012022

Supply chain lead times are starting to come down.  According to Ed Yardeni of Yardeni Research, data from 5 of the 12 regional Fed banks “strongly suggest that supply-chain disruptions have eased significantly in recent months.”

There’s a strong relationship between supply chain lead times and inflation rates.  If supply chain lead times are coming down, then inflation is likely also coming down.  Yardeni says that if inflation was caused largely by supply chain issues, then prices should start falling sharply.

The S&P 500 ended the first half of the year down 20.58%.  The Dow did worse, down the most in percentage terms since 1962.

Atlanta Fed data suggests the US economy shrunk 1% over the second quarter after shrinking 1.6% the first quarter.

Micron Technology (MU) is down 3.6% premarket after the chip maker forecasted weaker than expected revenues for the third quarter.  The company said they would likely reduce the number of chips they produce.

Kohl’s Corp. (KSS) is down over 14% after a CNBC report that the retailer has ended takeover talks with the Franchise Group (FRG).

Bitcoin continues to tumble.  The cryptocurrency slumped below $19,000.  The unwinding of crypto hedge fund Three Arrows Capital, the freezing of withdraws at Celsius Network and the collapse of Luna stablecoin have sent bitcoin down 60% between April and June.

No corporate earnings of note.

The economic calendar focus is manufacturing PMIs: Market Manufacturing PMI @ 9:45am ET and ISM Manufacturing PMI @ 10:00am ET.  Other data includes Construction Spending @ 10:00am ET.

Volatility remains elevated although volume may drop off Friday as US markets head into a 3-day Fourth of July holiday weekend.

Size bias is short into the US session open.


 Posted by at 7:19 am

06/30/2022 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 06/30/2022 ES Trade Plan Worksheet
Jun 302022

Tech stocks as measured by the Nasdaq are down 29% so far this year.  In the 8 times the Nasdaq has dropped over 10%, the average return for the second half of the year is a loss of 5.8% with a median loss of 8.7%.  Not something for investors to look forward to…

In studying historical bear markets, it’s clear that the Fed was involved int helping markets turn bullish.  It’s also clear that the longer the preceding bull market, the longer the bear market lasts.  Given stocks have gone up for over a decade and the Fed is aggressively tightening their monetary policy, the historical outlook for stocks is not very good right now…

Earnings include Constellation Brands (STZ) premarket and Micron Technology (MU) and Walgreens Boots Alliance (WBA) after the bell.

The economic calendar focus is the Core PCE Price Index @ 8:30am ET.  Other data includes Claims and Personal Income/Spending @ 8:30am ET and Chicago PMI @ 9:45am ET.

Volatility continues to drop but remains elevated.

No Whale bias which is leaning bearish but large trader volume was too light overnight to be significant.


 Posted by at 6:52 am