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

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

12/10/2019 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 12/10/2019 ES Trade Plan Worksheet
Dec 102019

The 6-week Federal Reserve policy meeting starts today with an announcement tomorrow.

Little new information about US/China trade negotiations into the looming December 15 US tariff increases has put US stocks into a bearish mood overnight.  US Agriculture Secretary Sonny Perdue said to reporters “I don’t think the president wants to implement these new tariffs, but there has got to be some movement on [China’s] part to encourage him not to do that.”

Luxury homebuilder Toll Brothers (TOL) beat expectations and the economic environment “looks positive” and buyer demand is improving.

NortonLifeLock is attractive to Premira, Advent International, and now McAfee for a buyout.  McAfee is owned by Intel and private equity firms TPG and Thoa Bravo LLC.

Pet online retailer Chewy (CHWY) beat expectations, narrowing their losses to $30.2M.  However, the stock is down more than 4%.  Chewy went public on June 14 and the stock lockup period ends tomorrow which will allow 83% of the stock to be freely traded and provide an opportunity for early investors to cash out.

The economic calendar is light with Productivity and Costs @ 8:30am ET.

Earnings include AZO, PLAY, GME, OLLI, and DBI.

Volatility has started to shrink again as markets await tomorrow’s Fed announcement and any new information about US/China trade negotiations.

Size bias is bearish into the US session open.


 Posted by at 7:28 am