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

09/05/2024 ES Trade Plan Worksheet

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Sep 052024
 

Technology stocks continue to weigh on stocks with the S&P 500 slipping 0.2% and the Nasdaq down 0.3% on Wednesday.  Six sectors outperformed the S&P 500 yesterday with Consumer Staples (XLP) and Utilities (XLU) performing the best.

The latest job openings data from the Bureau of Labor Statistics came in less than expected; another sign that demand for labor continues to cool.  Additionally, the Fed Beige Book reported that “Employers were more selective with their hires and less likely to expand their workforces, citing concerns about demand and an uncertain economic outlook.”

Fed Chair Powell said back in August, “We do not seek or welcome further cooling in labor market conditions.”  Fed San Francisco President Mary Daly said yesterday that the labor market health has to be “sustained and protected, and we have to be very mindful that if policy is overly tight, you might get additional slowing in the labor market, and to my mind, that would be unwelcome.”

Some economists think the latest data could push the Fed to be more aggressive in their rate cuts.  The Fed has held policy rates in the 5.25%-5.50% range for over a year.

After a Bloomberg report Tuesday, Nvidia (NVDA) says they contacted the DOJ and was told their company has not been subpoenaed.  The company released a statement, “Nvidia wins on merit, as reflected in our benchmark results and value to customers, and customers can choose whatever solution is best for them.”

Gasoline prices are coming down and are near a six-month low at a national average of $3.32 per gallon.  According to AAA, gas prices are down $0.15 since last month and $0.49 since last year.  US summer driving demand dropped from last year and it has been a quiet hurricane season so far which has oil prices collapsing.  Much of the US will be switching to winter-grade gasoline soon which will add more downward pressure to prices.  Some analysts expect gasoline prices to be below $3.00 by the end of 2024.

Corporate earnings after the bell include Broadcom (AVGO), DocuSign (DOCU), GWRE, and IOT.

The economic calendar includes ADP @ 8:15am ET, Claims, Nonfarm Productivity & Unit Labor Costs @ 8:30am ET, S&P Global Services PMI @ 9:45am ET, ISM Services PMI @ 10:00am ET, and Oil @ 11:0am ET.

Volatility remains relatively high with the ES 5-day average daily range near 92 points.

Whale bias is bullish into the 8:15am ET ADP report on decent overnight large trader volume.

 

 Posted by at 4:35 am

09/04/2024 ES Trade Plan Worksheet

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Sep 042024
 

Nvidia (NVDA) tumbled 9% on Tuesday, weighing on the Nasdaq which closed down over 3%.  Nvidia was the worst performing of the Magnificent Seven yesterday and less than a week after beating expectations that failed to move NVDA higher.  Chip stocks Broadcom (AVGO), Qualcomm (QCOM), and Taiwan Semiconductor Manufacturing Company (TSM) were all down over 6%.

An after-hours Bloomberg report is sending Nvidia stock down more.  The report says the US Justice Department sent subpoenas to Nvidia, seeking evidence the company has violated antitrust laws.  The DOJ had previously sent questionnaires to chip makers back in June and antitrust officials are now concerned that Nvidia is making it harder to switch to other suppliers and penalizing buyers that don’t exclusively use their AI chips.

A new Treasury report released Tuesday shows that business startups are surging.  So far in 2024, the US is averaging 430K new business applications per month, which is 50% higher than 2019, the last pre-COVID year.  Business applications most likely to hire employees have risen to 140K per month.  Small businesses are providing 70% of new US jobs.

Corporate earnings premarket include DICK’S Sporting Goods (DKS), Dollar Tree (DLTR), and Hormel Foods (HRL).  Earnings after the bell include Copart (CPRT) and Hewlett Packard Enterprise (HPE).

The economic calendar includes Trade Balance @ 8:30am ET, JOLTS Job Openings and Factory Orders @ 10:00am ET, and the Fed Beige Book @ 2:00pm ET.  The JOLTS reading is expected to show further cooling of the labor market as market focus shifts from inflation to economic growth concerns.

Volatility jumped higher on Tuesday’s selloff.  The 5-day average ES daily range jumped to about 88 points.

Whale bias is leaning bullish into the US session open on relatively light overnight large trader volume given yesterday’s volatility.

 

 Posted by at 5:54 am

09/02/2024 Labor Day Holiday

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Sep 022024
 

US Stock markets are closed today, Monday, September 2, 2024 for Labor Day.  Regular market hours resume tomorrow.  Enjoy the day off!

 Posted by at 7:06 am