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

04/17/2024 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 04/17/2024 ES Trade Plan Worksheet
Apr 172024

The Down Jones Industrial Average broke a six-day losing streak, however the S&P 500 closed down 0.2%.  Treasury bond yields remain at multi-month highs and the 2-year touched 5%, its highest yield since November 2023.

Fed Chair Powell said Tuesday that it will take longer than previously expected for inflation to come down towards the bank’s 2% target.  “Given the strength of the labor market and progress on inflation so far, it’s appropriate to allow restrictive policy further time to work and let the data and the evolving outlook guide us,” Powell said.  This is the first Fed acknowledgement that the sticky 2024 inflation data is not coming down quick enough for the Fed to begin lowering interest rates from their 23-yrst high.

Congressional leaders are pushing a bill that places sanctions on Iranian oil as a statement against Iran’s direct attack on Israel.  Iran produces roughly 1.5 million barrels a day of which 80% is sent to China.  According to ClearView Energy Partners, the sanctions would add about $8.40 to a barrel of oil which translates to about a 20 cent rise in the price of gasoline.

United Health (UNH) closed 5% Tuesday after beating profit estimates despite stating the company would take a $1.6 billion hit from a cyberattack in February.

Bank of America (BAC) reported Q1 profits down 18% from last year while both Morgan Stanley (MS) and BNY Mellon (BK) both beat profit expectations.

United Airlines UA) reported a $124 million Q1 loss which they blame on the 3-week grounding of all Boeing 737 Max 9s after the Alaska Airlines’ panel blew off.  The company also said they would receive fewer new aircraft from Boeing this year than originally forecasted.  Demand for air travel continues to climb.  UA stock was up 5% after hours.

Premarket earnings for Wednesday include Abbott Laboratories (ABT), ASML, Citizens Financial Group (CFG), Prologis (PLD), Travelers Companies (TRV), and US Bancorp (USB).  Earnings after the bell include Crown Castle (CCI), CSX, Discover Financial Services (DFS), Equifax (EFX), Kinder Morgan (KMI), and United Airlines (UAL).

The economic calendar is light with Crude Oil Inventories @ 10:30am ET and the Fed Beige Book @ 2:00pm ET.

Volatility ticked down on Tuesday but remains high.

No Whale bias as overnight large trader volume was near mixed.


 Posted by at 5:26 am

04/16/2024 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 04/16/2024 ES Trade Plan Worksheet
Apr 162024

The S&P 500 closed down 2.6% over the last two trading days, the largest drop in over a year.  Meanwhile the 10-year Treasury yield touched 4.63%, their 2024 high.  Markets are scaling back on the depth of Fed rate cuts this year.

China’s GDP surprised with 5.3% Q1 growth versus 4.6% growth expected on robust high-tech manufacturing growth.  Production of 3D printing equipment, EV charging stations, and industrial components surged 40% over last year.  On the downside, Chinese property investments slumped 9.5% with new property sales down 27.6% from last year.

After Samsung was awarded a $6.4 billion for US semiconductor manufacturing, the Biden administration has allocated about $23 billion of the $39 billion from the Chips and Sciences Act passed about 20 months ago.  Samsung will build two chip manufacturing plants, a research center, and a packaging facility.

Taiwan Semiconductor Manufacturing Company (TSM) had previously received $6.6 billion in grants and Intel (INTC) received $8.5 billion.  Micron (MU), the only US based manufacturer of memory is still awaiting a grant to expand operations.

Goldman Sachs (GS) shares jumped 3% Monday against a the broader market selloff after their Q1 profits beat estimates.

Tesla (TSLA) shares tumbled 5% after the company reduced staff as EV market growth slowed.

Apple (APPL) global iPhone shipments fell 10% in Q1 despite a growing smartphone market.  The company is facing rising Chinese competitors such as Xiaomi.  Apple’s global market share has slipped from 20.7% to 17.3%.

Tensions between the US and China has Apple trying to wean itself from Chinese manufacturing, moving operations to Vietnam and India.  The world’s largest smartphone maker Samsung saw their shipments decline 0.7% for the quarter.

Premarket corporate earnings include Bank of America (BAC), Johnson & Johnson (JNJ), Morgan Stanley (MS), Northern Trust (NTRS), Telefonaktiebolaget LM Ericsson (ERIC), Bank of New York Mellon (BK), The PNC Financial Services Group (PNC), and UnitedHealth Group (UNH).

Earnings after the bell include Interactive Brokers Group (IBKR), Omnicom Group (OMC), and United Airlines (UAL).

The economic calendar includes Building Permits and Housing Starts @ 8:30am ET, and Industrial Production and Capacity Utilization Rate @ 9:15am ET.  Fed speakers include Jefferson @ 9:00am ET, Williams @ 12:30pm ET, Barkin @ 1:00pm ET, and Fed Chair Powell @ 1:15pm ET.

Volatility continues to rise with the ES 5-day average range greater than 95 points.

Large traders bought into Monday’s selloff.  Whale bias is bullish into the US session open.


 Posted by at 5:26 am