Welcome to The Discovery Trading Group

 Announcements  Comments Off on Welcome to The Discovery Trading Group
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 Introduction

 Posted by at 11:24 am

11/16/2017 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 11/16/2017 ES Trade Plan Worksheet
Nov 162017

Tax reform remains in focus as the House is scheduled to vote on their version today.  The tax legislation is expected to pass.  Meanwhile Sen. Ron Johnson (R-WI) became the first Republican to openly oppose his party’s tax legislation which will make it more difficult for tax legislation to make it through the Senate.   Corporate earnings continue to beat expectations with CSCO the latest yesterday also projecting a rosy outlook in cloud computing growth.  Wal-Mart (WMT) reports this morning.  Also reporting today are VIAB, AMAT, BBY, and GPS.  The economic calendar includes Claims and Philly Fed @ 8:30am EST and Industrial Production @ 9:15am EST.  It was nice to see the pickup in volatility continue yesterday (from a day-trader perspective).  There’s still plenty of elbow room to the 2594.50 all-time high, but expect volatility to shrink as the bulls climb higher.  No Size bias this morning as overnight Size volume was mixed.


 Posted by at 7:05 am

11/15/2017 ES Orderflow Narration

 Educational Content  Comments Off on 11/15/2017 ES Orderflow Narration
Nov 152017

It doesn’t get much more textbook than this action for those implementing some version of the DTG ‘trifecta’ strategically. It also turned out this was discussed live in the room today as well so make sure to see the transcript as a companion. As always, its never about nor does it need to be about directional prediction. Members agreed in the room well ahead of time that given how “major” the 62’s structure as marked would be on the radar of participants across all relevant time horizons, if and when the 62’s were threatened, stops and other trade elections from both sides would be apparent and tell the story via the PA and flow.

And with that coming in to the retest of the Globex low and super major former support structure 62’s we saw the massive thinning of prints as market makers pulled bid liquidity in yellow, yanking price over the line and forcing stop elections/puking from trapped longs. Just what the doctor ordered for those wanting to hop short on the momo train. The next structure below should have been very obvious with the back side of the zone being the interim support from 10/26 55 half. With most intraday swinger members trading structure to structure that was what was on the radar ahead of time as the spot to stalk scaling or flattening. And once again the PA and flow told the story plain as day down there as the first push in light blue tested the case price to the tick with hard rejection via obviously thin prints off the low. Also note the largest size leading out long into that push in the stats. This was followed by more of the same this time with a low failure trapping some late shorts and ending with them puking off the low with long finish in dark blue. Obviously either of those pushes was a viable final trigger for those wanting to play a long bounce off that low as well.

Though the next true market structure above was the same 62’s line we just broke below then acting as potential former S turned R from below, the VWAP had of course moved down between the structures so that should have been on the radar for signs of action. And with that again right on the nose we saw a big stall on strong buyer absorption in pink which likely had most of you longs scaling some or all of your longs from below. Note the largest size leading the turn once again with short deltas into that push in the stats below as a confirmation scale trigger. For those holding for a second scale obviously we subsequently saw the rally continue back into a retest of the Globex low 62’s from below. Though the first push volume in light red was not really remarkable enough to jump out at you, given the magnitude of the structure and the size of the last push up I can’t imagine many of you not scaling there proactively. For those who waited for a second push though we did see solid buyer absorption and sellers initiating there in dark red with the majority of size showing short and neutral deltas. I’m sure that action had anyone still holding throwing in the towel with your second scale for a solid five handles or so of profit on a handle or so of risk to your stop point. Though its never a surprise for the structures to get respect, it’s always nice when they hold lines as tight as these from a risk to reward perspective…

About the Author

Discovery Trading Group is a unique dojo focused on mentoring aspiring futures traders since 2010. It’s emphasis is on guidance in building bespoke processes and risk overlays rooted in market structure, price action and orderflow, with sound adaptable risk management as a priority.


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