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

10/03/2023 ES Trade Plan Worksheet

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Oct 032023

The S&P 500 flatlined on Monday while the Nasdaq closed up 0.7% after Goldman Sachs strategists said Nasdaq valuations are historically cheap.  Treasury yields continue to rise, adding pressure on stocks.  The 10-year sits just below 4.7% as of Monday.  The September ISM Manufacturing Index beat expectations @ 49, but below 50 suggests a contraction.

World Bank slashed their outlook for China’s 2024 growth, fueling worries about demand from the world’s second biggest economy.  China’s real estate investing Evergrande Group defied the gloom and jumped 42% as it restarted trading in Hong Kong after a halt last week.  China is on a week-long holiday.

Fed members reiterated hawkish tones on Monday, souring the bullish mode from the government deal announcement.  Fed Vice Chair for Supervision Michael Barr said the biggest question was how long to leave rates elevated.  Fed hawk Michelle Bowman reiterated her call for multiple rate hikes and Cleveland Fed President Loretta Mester said another rate hike is likely needed this year.

Oil is down for the fourth day in a row with West Texas Intermediate dropping below $90 a barrel as the peak summer driving season comes to an end.

Tuesday earnings include McCormick & Company Inc (MKC) before the market open.

The economic calendar focus is JOLTS Job Openings @ 10:00am ET.

Volatility ticked up on Monday and remains elevated.

Whale bias is leaning bearish into the US session open.


 Posted by at 5:53 am

10/02/2023 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 10/02/2023 ES Trade Plan Worksheet
Oct 022023

In a surprise Saturday turnabout, Congress acted swiftly to avert a government shutdown, pushing the spending fights out about 6 weeks to November 17, right before the Thanksgiving holiday.  House Speaker Kevin McCarthy changed course on Saturday morning and offered a bill with bipartisan appeal.  Thus, Democrats provided McCarthy with the votes he needed to avert a shutdown.

After a brief haggle over funding for Ukraine, the Senate also passed the bill.  President Biden signed the bill @ 11:15pm ET, 45 minutes before the pending government shutdown.  Now McCarthy will face the wrath of the far-right MAGA Republicans who will request he be removed from his speakership, according to Florida Republican Matt Gaetz.

True to form, September finished as the worst month of the year for stock indices.  The S&P 500 fell 3.6% while the Nasdaq closed down 4.1%.

Markets will focus on the labor market this week to see if the labor market continues to soften as Fed Chair Powell noted in his September press conference.  Wednesday’s ADP, Thursday’s Claims, and Friday’s September employment report will be the key jobs data for the week.

The auto workers’ strikes remain center stage as the UAW threatens to add more workers to the strikes.

A heath care worker strike could unfold this week.  A coalition of 8 unions representing 75,000 Kaiser Permanente employees said Saturday that they have not reached an agreement with Kaiser.  The medical workers are at hundreds of hospitals and medical offices in CA, OR, CO, VA, WA, and Washington DC.  They are seeking pay raises, pension plan improvements and outsourcing protections.

Higer oil prices and Treasury yields remain in focus for this week.  The 10-year is near 16-year highs.  Treasury volatility is weighing on stocks and likely will continue to do so until the volatility comes down.

No corporate earnings of note for Monday.

The economic calendar focus is ISM Manufacturing PMI & Prices @ 10:00am ET.  Other data includes S&P Global Manufacturing PMI @ 9:45am ET and Construction Spending @ 10:00am ET.  Fed speakers include Chair Jerome Powell and Philly Fed Patrick Harker in a roundtable discussion @ 11:00am and Fed Governor Michel Barr @ 1:00pm ET.

Volatility ticked up on Friday and remains elevated.

Whale bias is leaning bearish into the US session open.


 Posted by at 6:00 am