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

11/28/2022 ES Trade Plan Worksheet

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Nov 282022

Civil unrest in China has added another layer of uncertainty to inflation and recession risks.  Angry Chinese demonstrators in Shanghai and Beijing clashed with police over three years of China’s zero tolerance Covid policies.  Tension boiled over after an apartment in the city of Urumqi that killed 10 people.  Fire emergency response was crippled and slow to respond because of the Covid policies.  Protestors are demanding an end to the policies and “freedom.”

Markets fear the protests will increase disruptions in manufacturing and supply chains.  Apple (APPL) is down premarket after reports they could see a 6 million iPhone shortfall because of Chinese factory disruptions.  Chinese workers staged violent protests last week over working conditions and pay at the Zhengzhou-based complex, a 200,000-person plant run by Taiwan’s Foxconn.

Jobs, inflation, and Fed Chair Jerome Powell are in focus this week.  The November jobs report will be reported on Friday, JOLTS on Wednesday, PCE Price Index on Thursday, and Powell will speak on the job market to the Brookings Institution on Wednesday.

According to data from Sensormatic Solutions, foot traffic to US brick and mortar stores was up 3% over last year for Black Friday through the weekend.  A record 48% of Black Friday sales were made through smartphones.  Today is Cyber Monday and sales are expected to top $11 billion.

No corporate earnings or US economic data of significance today.  The Fed’s Bullard and Williams speak @ 12:00pm ET.

Volatility continues to shrink but could tick up today given the long holiday weekend and the China unrest.

Whale bias is a divergent bullish into the US session open on decent Globex volume.


 Posted by at 6:46 am

11/24/2022 Thanksgiving Holiday

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Nov 232022

US markets are closed Thursday, November 24, 2022 for Thanksgiving and opened for a shortened trading session on Black Friday, November 25, 2022.  Black Friday trading is historically light as most US traders take a 4-day holiday weekend.  DTG will resume posting on Monday, November 28.  Enjoy the long holiday weekend!

 Posted by at 9:46 pm

11/23/2022 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 11/23/2022 ES Trade Plan Worksheet
Nov 232022

It is a Fed Day with FOMC minutes released @ 2:00pm ET.  The economic calendar is also full before the long Thanksgiving holiday weekend.  Focus is on Durable Goods and Unemployment Claims @ 8:30am ET, Flash PMIs @ 9:45am ET, New Home Sales and UoM Consumer Sentiment @ 10:00am ET.  Other data includes Crude Oil Inventories @ 10:30am ET.

It’s interesting to note the US did not grind to a halt, running out of diesel before Thanksgiving.  Conservative news outlets made headlines last month, bashing the Biden administration over a 25-day supply of diesel.  Apparently, they didn’t understand that 25 days is normal and ongoing production keeps reserves buoyant.  Diesel reserves are now over 26 days and the diesel prices have drifted down.

China saw an overnight surge in Covid infections, spreading in major cities.  More lockdowns are expected.  Investor sentiment is not reacting, but rather selling the US dollar for riskier investments into the year’s end.  Of course, today’s Fed minutes can reverse sentiment.

Inversions continue in Treasury yields.  The 2-year hit 4.533% overnight while the 10-year held around 3.759%.  The inversion warns of a near-term recession.

HP Inc. (HPQ) is up premarket after announcing they would eliminate about 6,000 jobs or near 12% of their workforce by 2025.  The company beat expectations, but revenues fell 12% to $14.8 billion and EPS fell 9.5% to 85 cents per share.

Nordstrom (JWN) is down nearly 10% premarket after beating estimates but trimming their profit outlook.  The retailer had to make deep markdowns to move inventory.  Nordstrom’s chief accounting officer Michael Maher said, “We believe that unseasonably warm temperatures in certain geographies contributed to the decelerating trends, along with delayed holiday shopping.”

Corporate earnings include Deere (DE) and SentinelOne (S).

Volatility continues to shrink as we enter the last full day of trading this holiday week.  Reaction to this morning’s economic data or this afternoon’s Fed minutes could increase volatility today.

Whale bias is bullish into the 8:30am ET numbers on decent large trader overnight volume.


 Posted by at 7:03 am