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

09/16/2019 ES Trade Plan Worksheet

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Sep 162019
 

Oil prices soared to the highest levels since the 1991 Gulf War after drones strikes hit 2 key Saudi Arabian oil facilities cutting off almost 5% of global oil production.  Oil prices has since settled in $4 to $5 higher.  Iran is being blamed and Trump says he is “locked and loaded” for a response pending verification.  Iran denies any involvement.

Meanwhile new Chinese data shows their industrial output is at a 17.5 year low, weakening another 4.4%.  Chinese retail sales and asset investment also declined as the US/China trade war drags on.

General Motors (GM) stock is down about 3% after the United Auto Workers union rejected an agreement to replace the expired 2015 agreement.  According to GM, they proposed “best-in-class wages and benefits” which includes wage increases, improved profit-sharing, a ratification payment of $8K, enhanced health coverage, investments in 8 facilities, the first union represented battery cell manufacturing site and new vehicle and propulsion programs.  Tens of thousands of union workers went on strike yesterday.

Disney’s CEO Rober Iger resigned from Apple’s board of directors where he’s served since 2011.  Apple’s Apple TV+ service is set to launch Nov 1 and will compete against Disney+ which will launch Nov 12.  Earnings include ADBE, FDX, GIS, CHWY and DRI.

The economic calendar is light with Empire State @ 8:30am ET.  Despite the oil news, there’s been no significant increase in volatility.  Both the bulls and bears have plenty of room for price movement today.  Size bias is short into the US session open.

 

 Posted by at 6:52 am

09/13/2019 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 09/13/2019 ES Trade Plan Worksheet
Sep 132019
 

Note: today’s worksheet is based on the ES December 2019 contract.  Volume remains higher on the ES September 2019 contract, but the shift to the December contract should be made sometime this morning.

Trump raised hopes slightly for a partial US/China trade deal in talking with reporters yesterday, “it’s something we would consider, I guess.”  However, Trump qualified that no part of a trade deal is easier than other parts and that he would rather secure a full US/China trade agreement.

The ECB cut rates yesterday an aggressive 0.5% and said they will restart a quantitative easing program.  US stock market index all-time highs are within reach for a test today if the bullish sentiment continues after 7 consecutive bullish days.

Broadcom (AVGO) is down over 1.5% this morning after beating expectations but expressed caution over future earnings.  CEO Hock Tan told investors, “the US/China trade dispute is turning into an extended affair with lots of twists and turns in uncertainty… and we are assuming conditions (are) not going  to change from what we’re seeing now.  And if we make that assumption for next year, you probably see a very uncertain 2020.”

The economic calendar focus is Retail Sales @ 8:30am ET and UoM Consumer Sentiment @ 10:00am ET.  Also, on the calendar are Import Prices @ 8:30am ET and Business Inventories @ 10:00am ET.

Volatility is shrinking as the ES tries to move higher.  The ES 5-day ATR has dropped from the 30s down to 24.5.  Sans a change in trader expectations, expect price movement to the upside to be muted.  Size bias is long into the 8:30am ET Retail Trade numbers.

 

 Posted by at 6:23 am