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

12/13/2019 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 12/13/2019 ES Trade Plan Worksheet
Dec 132019
 

Trump tweets, market move.  US indexes saw new highs after Trump tweeted trade negotiations with China were going well.  Multiple reports said that Trump is prepared to suspend the scheduled Dec 15 tariffs and rollback some of the current tariffs in exchange for $50B in agricultural purchases from China.  Reports say terms have been reached for a phase-one US/China trade deal and only needs approval by Trump.

In the UK elections, Boris Johnson’s Conservative Party was won a large Parliamentary majority which provides the votes necessary to finish taking Britain out of the European Union.

FaceBook (FB) was down yesterday after a report that federal regulators were investigating how Facebook apps operate with each other and rival apps.  It appears regulators want to stop Facebook from further integrating of Istagram, Messenger, and WhatsApp as they consider a future breaking up of Facebook.

Both Oracle (ORCL) and Costco (COST) beat earnings but their stocks are down premarket.  No corporate earnings of note for today.

The economic calendar focus is Retail Sales @ 8:30am ET.  Also on the calendar are Import Prices @ 8:30am ET and Business Inventories @ 10:00am ET.  The Fed’s John Williams speaks @ 11:00am ET.

Volatility ticked up in yesterday’s big bullish run.  Expect volatility to be muted to the upside unless US/China trade news fuels another move up.

Size bias is long into the 8:30am ET Retail Sales numbers.

 

Note: today’s worksheet is based on the ES March 2020 contract.

 

 Posted by at 8:01 am

12/12/2019 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 12/12/2019 ES Trade Plan Worksheet
Dec 122019
 

Today is ES rollover.  Expect volume to shift to the ES Mar 2020 contract by mid-morning tomorrow.

The Fed voted unanimously yesterday to keep interest rates unchanged.  Fed Chair Powell said, “Our economic outlook remains a favorable one despite global developments and ongoing risks.”

Market focus has shifted squarely back on US/China trade negotiations.  President Trump is expected to meet with his senior trade officials and discuss strategies for the next Dec 15 round of tariffs on an additional $160B of Chinese goods.  A delay in tariffs would be bullish for stocks.  However reports say Trump is not happy with US/China negotiation progress and will most likely apply the new tariffs.

The UK is holding their third general election in four years in an effort to address their Brexit stalemate.  The goal for the election is to gain enough support for a Brexit plan or to offer another referendum on whether to leave the EU.

Luluemon Athletica (LULU) is down nearly 4% after beating earnings and revenue but lowering fourth quarter guidance.  General Electric (GE) is up premarket after UBS upgraded GE from hold to buy with a price target of $14.  Earnings include ORCL, AVGO, ADBE, CIEN, and COST.

The ECB announces their monetary policy @ 7:45am ET followed by a press conference @ 8:30am ET.

The economic calendar includes PPI and Claims @ 8:30am ET.

Volatility is shrinking as the ES is once again approaching its all-time high.  Expect volume to contract was we reach the end of the year which can cause liquidity gaps and price jumpiness.

Size bias is long into the 8:30am PPI numbers.

 

ES December 2019 Contract

 

ES March 2020 Contract

 Posted by at 6:59 am

12/11/2019 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 12/11/2019 ES Trade Plan Worksheet
Dec 112019
 

It’s a Fed day with an FOMC policy announcement @ 2:00pm ET and press conference @ 2:30pm ET

After 3 rate reductions in 2019, no changes in rates or policy wording are expected this round to end the year and the decade.

Markets continue to yawn at President Trump impeachment proceedings while keeping focus on US/China trade negotiations.  Congress goes on break after this week, so the impeachment process will be pushed until next year.

The next round of tariff increases on Chinese made goods is scheduled for this Sunday, Dec 15.  Market bulls are looking for a sign that US/China trade negotiations are improving and perhaps the new tariffs will be delayed.  Any US/China trade negotiation news can directionally move the markets.

Aramco, the Saudi Arabian Oil Company’s IPO started trading yesterday.  The tiny 1.5% float went limit up 10% sending the value of the government owned company to nearly $2 trillion, the largest listing ever.

The economic calendar focus is CPI @ 8:30am ET and Oil @ 10:30am ET.

Volatility is shrinking and volume is getting lighter as the markets move into the end of the year.  The lighter volume enables price whippiness.  Given the pending Fed announcement, markets should move into Fed wait mode and low volatility until the Fed show begins.

No Size bias this morning as Globex volume was too light for a reading.

 

 Posted by at 6:56 am