Welcome to The Discovery Trading Group

 Announcements  Comments Off on Welcome to The Discovery Trading Group
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

12/04/2023 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 12/04/2023 ES Trade Plan Worksheet
Dec 042023

Market focus for this week is services PMIs on Tuesday and October’s job report and consumer sentiment on Friday.  Traders will be looking for signs the US economy is continuing a soft-landing path.  Economists are projecting an increase in job additions now that the big 3 UAW and Hollywood actors’ strikes are over.

The key is whether the market consensus thinks the numbers bolster the current market sentiment that the Fed is done raising rates.  Fed speakers last week attempted to temper those expectations, but market bulls ignored them.  The Federal Reserve will be entering a quiet period before their next meeting which starts on December 12.

A short squeeze on gold sent the GC futures to 2152.30 overnight, an all-time high.  Gold prices have since dropped back down around Friday’s closing price.  The metal is up around 15% since early the Hamas attack of early October and speculation that the Fed is down raising rates started percolating.

Bitcoin is back in the news after surging past 41,000 over the weekend.

Spotify (SPOT) announced another round of layoffs.  Despite being on pace to add more than 100 million users this year and posting a rare profit last quarter, the company announced they would cut 1,500 people which is about 17% of their workforce.  CEO Daniel Ek said the company is spending too much and needs to cut costs.  The company had previously cut 6% in January and 2% in June.

No corporate earnings of note for Monday.

The economic calendar is light with Factory Orders @ 10:00am ET.

Volatility ticked up on Friday and remains moderate.

No Whale bias as large trader volume was too light overnight to be significant.


 Posted by at 5:00 am

12/01/2023 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 12/01/2023 ES Trade Plan Worksheet
Dec 012023

Stock made a strong closing move up to make November the largest monthly S&P 500 gain since July 2022.  The S&P 500 closed up 8.9% while the Nasdaq soared 10.7% and the Dow & Russell 2000 both gained 8.8% as Treasury yields tumbled.

Reads on slowing inflation and softening labor market support the case that the Fed is done raising rates.  PCE came in @ 3% y/y, down from 3.4%.  Six Fed members said this week they are comfortable keeping rates steady in December.  FedWatch now shows a 92% chance of a June 2024 rate cut.

Fed Chair will most likely reiterate that it’s too soon to declare victory on inflation and to start the rate cut discussion today in his two Spelman College talks in Atlanta.  Powell is to make opening remarks @ 11:00am ET and then have a fireside chat with the Spelman president starting at 2;00pm ET.

Tesla (TSLA) shares are down premarket after CEO Elon Musk delivered the first Cybertrucks to a few customers in a presentation event in Austin, Texas.  Tesla announced 3 variants ranging from $60,990 to $99,990, about 50% greater than the prices Musk touted in 2019.

The truck had generated over one million $100 deposits, but the new price tags will likely turn off many of those prospective buyers in this high interest rate environment.  The Cybertruck is over two years behind schedule.  Raw material and production costs have grown substantially over the last 4 years.

No corporate earnings of note for Friday.

The economic calendar focus is ISM Manufacturing PMI and Prices @ 10:00am ET.  The calendar also includes S&P Global Mfg PMI @ 9:45am ET and Construction Spending @ 10:00am ET.  In addition to Powells talks, Fed speakers include Goolsbee @ 10:00am ET.

Volatility remained steady on Thursday, but this morning’s PMIs or Powell’s talks could certainly move markets today.

Whale bias is leaning bullish into the US session open.


 Posted by at 5:18 am