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

06/10/2021 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 06/10/2021 ES Trade Plan Worksheet
Jun 102021
 

Market focus is the 8:30am ET May’s consumer price numbers.  Strong numbers could bring out the bears in anticipation the Fed in their meeting next week might start discussing a schedule to reduce their asset purchasing.

The Biden administration agreed to a phone call with Chinese commerce officials to discuss how to move forward with trade policies after years of battling President Trump and US import tariffs.

GameStop (GME) is down nearly 7% after beating expectations but announcing another 5 million stock share sale to raise more capital.  GameStop directors have brought on 2 former Amazon executives to lead the company.  The former head of Amazon’s Australia business Matt Furlong will take over as GameStop’s CEO on June 21.  Mike Recupero, former CFO of Amazon’s North American Consumer division will take over as GameStop’s CFO in July.  GameStop also revealed that the SEC has asked for documents pertaining to recent surges in stock trading activities from meme retail traders.

The latest stock to catch the meme-stock frenzy craze is steelmaker Cleveland-Cliffs (CLF).  The stock soared 15% in Wednesday’s trading and is up again premarket.

Earnings include CHWY, PLAY, and SIG.

In addition to CPI @ 8:30am ET, the economic colander includes Claims @ 8:30am ET and the Federal Budget Balance @ 2:00pm ET.  The ECB releases a monetary policy statement @ 7:45am ET, followed by a press conference starting @ 8:30am ET.

Volatility remains steady as the S&P 500 continues to grind under its all-time high.  Reaction to the CPI numbers could send the S&P 500 to new all-time highs or it could bring out the bears.  Either way, the reaction could set the tone for the day.

No Size bias once again as there continues to not be enough Globex interest to be significant.

Today is rollover day for the ES futures, the September contract becomes the first month.  Below are two worksheets, one for ES June and the second for ES September.  Volume usually shifts to the September contract by mid-morning on Friday, thus the June contract continues to be the more liquid for trading today.  The settlement difference is 9.50 points.

 

ES June 2021

 

ES September 2021

 

 

 Posted by at 7:29 am

06/09/2021 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 06/09/2021 ES Trade Plan Worksheet
Jun 092021
 

The S&P 500 is flirting with new a new all-time high which was last set on May 10.  The index failed to reach 4238.25 by 1.25 points which is a high failure and considered a double top if the bulls do not retest soon.  A high failure or double top is bearish.  However, given the S&P 500 bullish trend, it’s likely the index will at least probe 4238.25 if not today, then this week.

Markets are in a holding pattern, waiting for Thursday’s CPI data for another gauge on the US economy to anticipate when the Fed will reduce their economic support.  For Wednesday, the economic calendar is light with Wholesale Inventories @ 10:00am ET and Oil @ 10:30am ET.

A new report by ProPublica shows the 25 richest Americans paid little or no income tax over the last several years.  This includes Jeff Bezos, Elon Musk, Michael Bloomberg, and Carl Icahn.  Much of their wealth is in assets which instead of selling for income, the common tax strategy is to take out loans against the assets, allowing the assets to continue to grow while using part of the asset value.

Clover Health Investments (CLOV) has become a new meme stock investor darling.  The stock was up 85% on Tuesday and is up another 24% premarket.

Longtime favorite GameStop (GME) reports earnings on Wednesday.  Other earnings include CPB and VRA.

Volatility remains muted and should stay that way unless the bears find a reason to send prices down.

No Size bias once again as Size is just not interested in trading below all-time highs.

 

 Posted by at 6:14 am