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 its 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 types of trading which are the foundations for what most members pursue here, follow this link:

Methodology Framework

 Posted by at 11:24 am

06/12/2025 ES Trade Plan Worksheet

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Jun 122025
 

Treasury Secretary Scott Bessent told the House Ways and Means Committee on Wednesday that it’s highly likely that Trump will extend tariff pauses on countries that are negotiating “in good faith.”  Bessent also said the US is working towards deals with “18 important trading partners.”

President Trump later told reporters that he would send letters to trading partners in the next week or two, setting unilateral tariffs, “this is the deal, you can take it or leave it.”  China said they deal they struck with the US loosens restrictions on rare earth exports for a six-month period.  Trump agreed to allow Chinese students in US colleges.  He also said he would impose a total of 55% tariffs on Chinese goods.

The latest Trump tariff policy twists challenge Wall Street’s cautious confidence that trade tensions will ease soon.

Oil futures surged over 5% on Wednesday as tensions between the US and Iran over Iran’s nuclear program escalate.  President Trump says he is growing less confident that negotiations will produce a deal limiting Iran’s nuclear program.  Iran warned of retaliation against US bases in the Middle East if the talks collapse and Iran is attacked.   The US ordered some staff to depart the embassy in Baghdad.

There’s an $11 trillion chasm in estimates over Trump’s “Big, Beautiful Bill.”  The White House claims $8 trillion in black ink versus economists from the Congressional Budget Office, the Tax Foundation, and Penn-Wharton who claim $3 trillion in the red estimates.  The White House assumes zero costs for tax cuts, arguing they are free for a variety of reasons.

The White House also sees 3% growth each year and claims tariffs could add $2.8 trillion in revenues over the next decade, views that few economists share.  In fact, most economists trying to evaluate the bills impact are frustrated.  Erica York of the Tax Foundations said, “You can’t square it because it’s ridiculous…  The bill unambiguously will increase deficits; it will not contribute that much to economic growth.”

Oracle (ORCL) shares jumped 7% after the bell.  The company raised their annual growth forecast, saying demand is robust for their cloud offerings from companies deploying AI.  CEO Safra Catz said, “”We expect our total cloud growth rate — applications plus infrastructure — will increase from 24% in fiscal year 2025 to over 40% in fiscal year 2026.”

Corporate earnings include Adobe (ADBE) after the bell.

The economic calendar includes PPI and Unemployment Claims @ 8:30am ET.  No Fed speakers as the Fed is in quiet mode before next week’s June monetary policy announcement.

Volatility ticked up on Wednesday and remains moderate.  The ES 5-day average daily range is 69 points.

Whale bias is leaning bearish into the 8:30am ET economic numbers on light but significant overnight large trader volume.

 

 Posted by at 6:29 am

06/11/2025 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 06/11/2025 ES Trade Plan Worksheet
Jun 112025
 

Both the S&P 500 and Nasdaq are within striking distance of their all-time closing highs.  The S&P 500 closed at 6144.15 on Feb 19.2025 and the Nasdaq closed at 20173.89 back on Dec 16, 2024.

The US/China trade negotiations in London have produced a framework for implementing the previous Geneva consensus.  Commerce Secretary Howard Lutnick said, “First we had to get sort of the negativity out… Now we can go forward and to try and do positive trade, growing trade.”

In a 12-hour marathon session Tuesday, the Chinese pledged to speed up rare earth metals shipments to US auto and defense firms while the US would ease some export controls.  While the trade negotiations are positive, details are scarce and much more work needs to be done.  The proposals need to be blessed and approved by President Trump and President Xi.

Lutnick has also been privately negotiating with Mexico.  A deal with Mexico that would allow US buyers to import Mexican steel duty-free as long as total volume is below a level based on historical levels.  Current import duties on Mexican steel is 50%.

So far, economic data has not shown much inflationary pressure from the Trump administration’s tariffs.  That could change this morning @ 8:30am ET in the Consumer Price Index data.  Headline inflation is expected to rise to 2.4% in May from 2.3% in April.  Month-over-month prices are estimated to rise 0.2%, matching April’s increase.

Core CPI which excludes food and energy prices is expected to rise to 2.9% year-over-year for May which is up from 2.9% in April.  Reaction to the CPI numbers could set a direction for today and the fastest direction is down.  According to FedWatch, 25 basis-point rate cut is expected for the June meeting next week going into this morning’s CPI numbers.

Corporate earnings premarket include Chewy (CHWY).  Earnings after the bell include Oracle (ORCL).

The economic calendar includes inflation CPI data @ 8:30am ET, Crude Oil Inventories @ 10:30am ET, and the Federal Budget Balance @ 2:00pm ET.

Volatility ticked up on Tuesday and remains moderate.  The ES 5-day average daily range is 67 points.

Whale bias is short into the 8:30am ET CPI numbers on light but significant overnight large trader volume.

 

 Posted by at 4:27 am