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

04/11/2024 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 04/11/2024 ES Trade Plan Worksheet
Apr 112024

Inflation remains problematic as March Consumer Prices were up 0.4% higher than expected yesterday morning.  The S&P 500 sold off nearly 1% and the 10-year Treasury surged 20 basis points, nearly reaching 4.57%, which is its highest level since last November.

This morning’s focus shifts to the 8:15am ET ECB policy announcement and 8:30am ET Producer Prices and Unemployment Claims.  There were expectations the ECB might begin interest rate cuts today; however, the hot US CPI report yesterday has dissipated those expectations.

US markets are now expecting less Fed cuts this year.  FedWatch shows an 81% chance of no rate cut in June and about a 56% chance of no rate cut in July.  Fed minutes showed that nearly all officials thought it would be appropriate to lower interest rates “at some point.”

The largest sector for inflation is auto insurance, costing on average 22.2% higher than last year.  The increase is the largest since 1976.  The auto insurance industry claims the higher premiums are due the rising number and severity of accidents of American drivers.  Additionally, the cost of auto repairs has gone up.

During the pandemic, road fatalities increased by 10.5% to levels not seen since 2005.  Despite laws against cellphone usage and in-car features being disabled while moving, driver distraction seems to be at an all-time high.  Analysts think the upward trend of auto insurance will continue.

Google announced they will invest $1 billion in laying 2 cables across the Pacific Ocean to connect with Japan and multiple Pacific islands including Guam, Fiji, French Polynesia, and Hawaii.  Subsea cables are the backbone of the internet, carrying 99% of global data traffic.

Corporate earnings include CarMax (KMX), Constellation Brands (STZ), and Fastenal (FAST) before the opening bell.

The economic calendar includes PPI and Unemployment Claims @ 8:30am ET.  NY Fed President John Williams speaks @ 8:45am ET.

Volatility jumped higher on Wednesday and should remain elevated for today.  The 5-day average ES range is now around 80 points.

No whale bias as overnight large trader volume was both light and little bias.


 Posted by at 5:53 am

04/10/2024 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 04/10/2024 ES Trade Plan Worksheet
Apr 102024

After 2 days of stocks going nowhere, markets will finally get some new inflation data this morning @ 8:30am ET in the CPI numbers that could set a direction.  The numbers will either validate or disapprove that the previous 2 months of hot CPI numbers were just bumps in the inflation road or inflation remains stronger than expected.

Fed Minutes released this afternoon @ 2:00pm could provide additional volatility and direction.

Atlanta Fed President Raphael Bostic said that CPI numbers in line with consensus estimates would be a “welcome development.”  However, Bostic expects some inflation bumpiness and thinks inflation will decelerate “at a very slow pace.”

Bostic only expects one rate cut in Q4 and said the Fed may need to delay cuts “even further out.”  He thinks the economy “will slow but not nearly as much as I had anticipated in January.”

Fitch Ratings changed China’s outlook from stable to negative.  Fitch thinks the Chinese government is likely to explode debt to pull their economy out of a real-estate driven slowdown.

The Chinese government pushed back saying Fitch failed to reflect the role of fiscal policy in economic growth which helps stabilize debt burdens.  Financial markets were unfazed as analysts say China’s debt and property crisis are well known and Fitch’s rating change matches a similar move by Moody’s back in December.

Corporate earnings include Delta Air Lines (DAL) before the market open.

The economic calendar includes CPI @ 8:30am ET, Wholesale Inventories @ 10:00am ET, and the main event of the day: the Fed Meeting Minutes @ 2:00pm ET.  Fed Governor Michelle Bowman speaks at a European Bank virtual conference starting @ 8:45am ET.

Volatility ticked up on Tuesday and today’s CPI and Fed Meeting Minutes should keep markets volatility today.

Whale bias is bearish into the 8:30am ET CPI prints on significant overnight large trader volume.



 Posted by at 4:31 am