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

11/28/2024 Thanksgiving Holiday

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Nov 272024
 

US stock markets are closed Thursday, November 28th for the Thanksgiving holiday.  Stocks will open for a shortened trading day (1pm ET close) on [Black] Friday.  Historically, Black Friday trading has been a low volume, low volatility affair as most institutions and traders are not working.  Enjoy the long weekend.  Next Monday will be the first week of December.

 Posted by at 7:30 pm

11/26/2024 ES Trade Plan Worksheet

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Nov 262024
 

It’s a Fed Day.  November Fed meeting minutes will be released today, a day early due to the pending Thanksgiving holiday.

The day of market impacting Trump tweets (or Truth Social “truths”) is back upon us.  The last 4 years of relatively calm overnight markets is about to get rocky again as usually out-of-the-blue Trump “truths” get digested.  It was a common occurrence during the Trump presidential years to wake up and think WTF happened overnight?  Then to find out Trump went on a posting rant.

Trump posted after the bell Monday that on day one in office, he would impose 25% tariffs on all Mexican and Canadian imports and an additional 10% tariff on Chinese goods.  The announcement sent stock futures and gold down, and the US dollar up.

The USMCA agreement with Mexico and Canada is not up for negotiation until 2026, but Trump is likely setting the expectations early.  The Mexico/Canada tariffs seem conditional.  Trump said the tariffs would remain in place until the two countries clamp down on drugs and migrants crossing the US borders.  Over 83% of Mexican exports and 75% of Canadian exports go to the US.

As for the 10% additional China tariff, Trump is likely testing Xi’s appetite to play ball.

On Monday, the Dow closed at a new record high while the S&P 500 and Nasdaq 100 both rose 0.3%, despite Nvidia (NVDA) tumbling 4%.

Bitcoin failed to reach $100,000 and has dropped over 6% to below $94,000 over the last 3 days.  Since the election, the total cryptocurrency market cap has risen over $1 trillion.

Corporate earnings premarket include Best Buy (BBY), Burlington Stores (BURL), DICK’s Sporting Goods (DKS), ADI, HTHT, and SJM.  Earnings after the bell include Dell Technologies (DELL), HPQ (HP), ADSK, CRWD, NTNX, and WDAY.

The economic calendar includes S&P/CS Compoite-20 HPI and HPI @ 9:00am ET, CB Consumer Confidence, New Home Sales, and Richmond Manufacturing Fed @ 10:00am ET.

Volatility ticked up on Monday and remains moderately high.  The ES 5-day average daily range has grown to 72 points.

Whale bias is bearish into the US session open on significant overnight large trader volume.

 

 Posted by at 4:19 am

11/25/2024 ES Trade Plan Worksheet

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Nov 252024
 

It’s Thanksgiving holiday week with only 3 full trading days.  US stock markets are closed on Thursday and closed early at 1pm ET on Black Friday.

Stock futures gapped higher overnight, an apparent thumbs up to Trump’s Treasury Secretary nomination.  Trump chose Key Square Group manager Scott Bessent.  Bessent indicated that he would support Trump’s tariffs and tax cuts but that investors expect him to prioritize economic and market stability over Trump political points.

Despite the shortened week, there’s plenty of economic data for markets to digest: Fed Minutes, Core PCE Price Index, GDP, CB Consumer Confidence, HPIs, New & Pending Home Sales, Richmond Mfg. Index, Weekly Claims, Durable Goods, Personal Income & Spending, and Weekly Crude Oil. However, for today, the economic calendar is bare.

Now that corporate earnings are winding down, focus becomes the Fed’s perception of this week’s economic data.  Last week, Fed governor Michelle Bowman expressed concern that the Fed’s progress towards 2% inflation had stalled after both Core CPI and Core PPI showed price increases.  Expectations are that core PCE to also rise in this month’s release on Wednesday.  FedWatch probability for a December rate cut has dropped to 50.9%.

Corporate earnings this week are highlighted by Dell Technologies (DELL), CrowdStrike Holdings (CRWD), Macy’s (M), and DICK’s Sporting Goods (DKS) which all are released tomorrow.  Corporate earnings today after the bell include Agilent Technologies (A), Woodward (WWD), and Zoom Video Communications (ZM).

Volatility fell Friday and volatility this week will likely be dictated by economic data reactions and fizzle in the afternoons.

Whale bias is leaning bullish into the US session open on much lighter than recent overnight volume.

 

 Posted by at 3:12 am