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 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

06/29/2022 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 06/29/2022 ES Trade Plan Worksheet
Jun 292022

Consumer Confidence dropped to 98.7 in June as concerns about high gas and food prices, (i.e. inflation) increase.  The level is the lowest in over a decade.  The reading conveys a larger risk of recession, kind of a self-fulling prophesy; if consumers slow buying, the economy hurts and a recession is possible.

Tesla (TSLA) is down premarket after announcing they laid off about 200 hourly workers of their auto pilot system.  It’s likely Tesla will need to make many more cost cuts as China’s Covid shutdown and Tesla’s losing “investment” in bitcoin impact the company’s finances.

Disney (DIS) shares are up premarket after the Disney board decided to renew CEO Bob Chapek’s contract by 3 years.  Chapek has steered the company through tough times; the pandemic and fights with the Florida governor.

Pinterest (PINS) shares are up over 5% premarket after news CEO and co-founder Ben Silbermann will leave the company to make way for former Google executive Bill Ready.

Premarket earnings include BNED, BBBY, GIS, MKC, and PAYX.

The economic calendar includes GDP @ 8:30am ET and Oil @ 10:30am ET.

Fed speakers include Powell @ 9:00am ET and Bullard @ 1:05pm ET.

Volatility remains elevated and ticked up from Tuesday’s selloff.

Whale bias is bullish into the US session open.


 Posted by at 7:34 am

06/28/2022 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 06/28/2022 ES Trade Plan Worksheet
Jun 282022

The ”bullwhip effect” is starting to show up in corporate earnings which should lead to a turn down in inflation.  The “bullwhip effect” is when companies over-react to customer demand, over-order inventory which trickles down to wholesalers and manufacturing supplying or creating more products, using more resources which drive resource prices up.

The companies then build too much inventory which will need to be discounted to sell since it costs more to store the inventory than to sell at a discount.  We’re seeing drops in metal, commodities, and energy prices as a result.

Oil and Cotton have fallen sharply since their peaks.  Lower oil prices should trickle into lower gasoline prices over the next several weeks, but current prices will impact June CPI numbers.

China cut their quarantine time down for inbound travelers from 14 days to 7 days.  China had no new Covid infections on Tuesday.  Markets are viewing this as good for business in the world’s second largest economy.

Morgan Stanley (MS) is up premarket after they became to first big bank to raise dividends after passing the Fed’s stress test.  Goldman Sacs (GS), Wells Fargo (WFC), and Bank of America (BAC) are all expected to raise their dividends.

Nike (NKE) is down premarket after warning higher transportation costs and the stronger US dollar will hurt profit margins.  No corporate earnings of note for Tuesday.

The economic calendar is full with Trade Balance and Wholesale Inventories @ 8:30am ET, HPI and S&P/Case-Shiller 20-City Composite @ 9:00am ET, and Consumer Confidence and Richmond Fed Mfg Index @ 10:00am ET.

Volatility continues to drop as we enter the summer doldrums where volatility and volume drop as traders take vacations.

Whale bias is bullish but on light overnight volume.


 Posted by at 7:21 am