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

04/16/2024 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

04/15/2024 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 04/15/2024 ES Trade Plan Worksheet
Apr 152024

Markets were risk off on Friday, on edge about a Iranian retaliation for an April 1 attack on their Damascus embassy.  On Saturday, Iran launched over 300 explosive drones and ballistic missles at Israel around 2am local time.  Israel shot rockets at the drones, aiming to intercept.  The US shot down over 70 of the Iranian drones.  Most of the drones were shot down, but a few missiles got through causing minor damage to a military base.

The big question mark now is whether the situation will escalate with either an additional attack by Iran or a retaliation from Israel.  Israel has vowed to extract a price for the attack after President Biden warned Israeli Prime Minister Benjamin Netanyahu in a phone call Saturday night that Israel should avoid attacking Iran and the US will not support or participate in such a retaliatory attack.

Markets are calmed this morning over speculation that diplomatic efforts will help the Israel/Iran conflict from escalating after the UN Iranian mission said the issue “can be deemed concluded.”

JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup ( C ) reported earnings on Friday.  All 3 reported declining interest income in this high interest rate environment.  The banks all gave muted guidance as it looks like the Fed will keep rates higher for longer.  The lowered guidance will likely be replayed by all the big banks reporting this week.

FedWatch shows market consensus is currently two rate cuts this year.

Premarket corporate earnings include The Goldman Sachs Group (GS), Charles Schwab (SCHW), JB Hunt Transport Services (JBHT), and M&T Bank (MTB).

The economic calendar includes Retail Sales and Empire State @ 8:30am ET, and Business Inventories and NAHB Housing Market Index @ 10:00am ET.

Volatility ticked up again from Friday’s selloff.  The 5-day average ES range is now 78 points.

Whale bias is leaning bearish into the 8:30am Retail Sales and Empire State numbers.


 Posted by at 5:20 am