Welcome to The Discovery Trading Group

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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

05/30/2023 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 05/30/2023 ES Trade Plan Worksheet
May 302023

President Biden feels good about the debt ceiling and budget deal negotiated House Speaker Keven McCarthy, spending his Memorial Day on the phone talking with individual members of Congress from both parties, trying so shore up the votes needed to pass the deal through the House.

Far-right conservatives are criticizing the deal as short on deep spending cuts while many liberals are upset with the Food Stamp work requirement age being raised from 50 to 54.  Biden asks that Congress members who have concerns about the deal to “Talk to me.”

The deal holds spending flat in 2024 while increasing military and veteran accounts.  It then caps growth at 1% for 2025.

The House Rules Committee will consider the debt deal Tuesday afternoon which determines if the package is passed to the full House for a vote Wednesday.  There are 3 Freedom Caucus members on the committee who will likely try to block the deal.  Biden and McCarthy are counting on majority support from the middle from both parties, a rarity in the recent years of a divided Washington.

Tuesday earnings include VMWare Inc (VMW), HP Inc (HPQ), Hewlett Packard Enterprise Co (HPE), and Amerco (UHAL).

The economic calendar includes HPI and S&P/CS Composite-20 HPI @ 9:00am ET and CB Consumer Confidence @ 10:00am ET.

Volatility rose on Friday on debt ceiling agreement hopes, but is a hard call for this week as Congress debates and votes on the debt ceiling package.

No Whale bias as large traders took little interest over the holiday weekend.


 Posted by at 6:42 am

05/29/2023 Memorial Day Holiday

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May 262023

US Stock markets are closed Monday, May 29, 2023 for Memorial Day.  Enjoy the long 3-day weekend!

 Posted by at 5:04 pm

05/26/2023 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 05/26/2023 ES Trade Plan Worksheet
May 262023

US stock futures are little changed overnight as traders continue to wait for additional news about the US debt ceiling negotiations.  Yesterday’s bullish bounce was a glimpse of recovery fueled by Nvidia’s blow out quarter in the AI space.  Marvell Technology Inc (MRVL) soared 17% premarket after projecting a big increase in revenue from artificial intelligence technologies.

Once the debt talks are over, they will soon be forgotten.  The White House and House Republicans are getting closer to a deal that would raise the debt limit and cap federal spending for two years.  The differences have narrowed but a final deal has not been struck.

A revision in jobless claims shows unemployment is not piling up as previously thought.  Nearly half of last week’s claims came from Massachusetts where fraudulent claims skewed the weekly data.  Additionally, a revision to first quarter economic data shows the US economy grew faster than initially thought despite higher than anticipated inflation data.

The current data isn’t supporting the recession pessimism some economists are warning about.  Best Buy (BBY) sees stronger consumer demand, clothing retailers Urban Outfitters (URBN) and Abercrombie & Fitch (ANF) reported strong sales, and investment spending in artificial intelligence as attested by Nvidia (NVDA), Marvell (MRVL), and Palo Ato Networks (PANW) is strong.

It’s all adding up to a second quarter of growth.  The Atlanta Fed currently projects Q2 GDP to grow 2.9% after slowing to 1.3% in Q1.

Friday corporate earnings include Booz Allen Hamilton Holding Corp (BAH) and Pinduoduo Inc (PDD).

As US markets head into a 3-day holiday weekend, the economic calendar is full with focus on PCE and Durable Goods @ 8:30am ET, and UoM Consumer Sentiment @ 10:00am ET.  Other data includes Goods Trade Balance, Personal Income, Personal Spending, and Wholesale Inventories @ 8:30am ET, and UoM Inflation Expectations @ 10:00am ET.

Volatility remains steady but could increase with risk off into the holiday weekend if a debt ceiling resolution is not in sight.

Whale bias is short into the 8:30am ET economic numbers on significant Globex large trader volume.


 Posted by at 6:45 am