Welcome to The Discovery Trading Group

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Nov 292011
 

We are a group of professional 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

06/15/2018 ES Trade Plan Worksheet

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Jun 152018
 

The ES is down overnight after news that Trump is set to impose tariffs on about $50B in Chinese imports.  In response, a Chinese foreign ministry spokesman said a response would be immediate and China would “take necessary measures to defend our legitimate rights and interests.”  AT&T closes the $85.4B Time Warner purchase, acquiring HBO, Warner Bros. and Turner Networks.  The deal raises AT&T’s net debt to $180.4B.  China is the final of 9 countries to ok Qualcomm’s $44B acquisition of Dutch chipmaker NXP Semiconductors NV, a reminder of the impact smartphones have on the global economy.  After pressure from environmentalists, McDonalds decided to phase out plastic straws.  They’re switching to paper in the UK and testing plastic alternatives in the US.  The economic calendar focus is Empire State @ 8:30am EST, Industrial Production @ 9:15am EST, and Consumer Sentiment @ 10:00am EST.  The bears have an opportunity to increase volatility to the downside today, however if the bulls make a stand, expect upside volatility to be muted as we’ve seen over the last couple of weeks.  Volume has picked up overnight as the June ES contract finally stops trading today.  Size bias is short into the US session open.

 

 Posted by at 6:31 am

06/14/2018 ES Trade Plan Worksheet

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Jun 142018
 

Reaction to Fed Chairman Jerome Powell’s enthusiasm for the US economy was cautiously bearish yesterday.  He said, “the economy is doing very well” and “most people who want to find jobs are finding them.  Unemployment and inflation are low”, followed by “the overall outlook for growth remains favorable.”  The expectations now are for at least 2 more rate hikes in 2018.  As expected after the AT&T ruling, Comcast has launched an effort to purchase the assets of Twenty-First Century Fox.  They offered $65B or $35/share which is 19% higher than Disney’s thought to be closed deal.  The city of Chicago has contracted Elan Musk’s The Boring Company to create a 150mph express train from O’Hare International Airport to downtown Chicago.  Plenty of US data for traders to consume: Retail Sales, Claims, and Import prices @ 8:30am EST and Business Inventories @ 10:00am EST.  In addition, the ECB has a rate announcement followed by a press conference @ 8:30am EST.   Volatility is a touch call following yesterday’s rate announcement.  The bearish reaction was not severe, and the bulls have been struggling all week, so it could be another slow day.  Size bias is short on light overnight volume so don’t give it much weight.

 

 Posted by at 7:14 am

06/13/2018 ES Trade Plan Worksheet

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Jun 132018
 

After a legal battle with the US Department of Justice, AT&T got the green light to merge with Time Warner.  This was the first legal challenge over a corporate acquisition brought by the DOJ in over 40 years.  AT&T looks to close the deal next week.  Comcast has been waiting for the decision as they want to fight Disney over Twenty-First Century Fox assets.  DIS has already agreed to purchase FOXA’s assets.   Seattle repeals their headcount tax for the homeless after backlash from the business community, primarily Amazon.  This is a clear signal to other cities considering imitating the tax.  It’s a Fed day.  A 25 basis points rate hike is given a 90% plus chance of happening.  Markets will be more focused on when the Fed anticipates the next rate hike.  The announcement is at 2:00pm EST, followed by a 2:30pm EST press conference.  The economic calendar focus is PPI @ 8:30am EST and Oil @ 10:30am EST.  It’s highly probable volatility will be subdued as the markets wait on the Fed announcement.  Reaction to the announcement and press conference is anyone’s guess.  Size bias is short into the PPI numbers.  I expect we’ll see a gap close to yesterday’s 2788.25 settlement sometime this morning.

 

 Posted by at 6:49 am