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

08/10/2022 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 08/10/2022 ES Trade Plan Worksheet
Aug 102022
 

As the discussion of whether a recession exists makes headlines; one measure, corporate bankruptcy is surprisingly low given the Fed’s aggressive rate hikes which impacts companies with high debt.  S&P counts only 212 US bankruptcy filings so far in 2022.  That’s the fewest number since 2010.  Credit investors don’t seem concerned.

A Bank of America survey shows credit investors expect a corporate default rate of 3.1% which is lower than expectations during the pandemic.  During the Fed’s multi-year, low interest rate accommodating monetary policy, companies with high debt were able to have strong fundraising.  Perhaps the Fed’s rate hiking has not been enough to undo the easy money policies of the pandemic, yet…

Market focus this morning is CPI @ 8:30am ET.  Last month’s CPI was a 41-year high 9.1%.  Gas prices which are down for 50 straight days will be key for this month’s CPI.

Other economic data includes Wholesale Inventories @ 10:00am ET and the Monthly Federal Budget Statement @ 2:00pm ET.

As earnings season winds down, premarket earnings include Fox Corp. (FOXA), Jack in the Box (JACK), Sonos (SONO), Wendy’s (WEN), and Wolverine World Wide (WWW).

After the bell earnings include AppLovin (APP), Coherent (COHR), Dutch Bros(BROS), Red Robin Gourmet (RRGB), and Traeger (COOK).

Volatility remains moderate but today’s CPI reaction could send stocks in a directional move.

Whale bias leans bearish but overnight volume is too light to be meaningful.

 

 Posted by at 6:47 am

08/09/2022 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 08/09/2022 ES Trade Plan Worksheet
Aug 092022
 

Given last week’s strong jobs data and the continuing inverted Treasury curve, indications of a recession remain mixed.  China announced a fresh round of Covid lockdowns for the tourist island of Hainan on Tuesday adding a threat of recession for the world’s second largest economy.

After a rally on Monday, oil is down once again with WTI now below $90/barrel.  AAA national gas price average is now $4.03 with average prices in the SE states around $3.60.

Nvidia’s (NVDA) earnings and warnings were hit hard by the crypto market down turn.  Sales of video gaming chips likely used by crypto miners were way under Wall Street expectations.  NVDA shares dropped more than 6% and market value is down $30 billion.  The company expects a 44% drop in revenue from their gaming segment.  Ethereum’s pending change from proof-of-work to proof-of-stake called “the Merge” will reduce processor usage and thus chip demand.

Earnings season is winding down.  Premarket earnings include Bausch Health (BHC), Carlyle Group (CG), Dine Brands (DIN), Emerson (EMR), Hilton Grand Vacations (HGV), Hyatt Hotels (H), Norwegian Cruise Line (NCLH), Planet Fitness (PLNT), Ralph Lauren (RL), Spirit Airlines (SAVE), Sysco (SYY), and Warner Music Group (WMG).

Earnings after the bell include Akamai Technologies (AKAM), Bloom Energy (BE), Coinbase (COIN), Grocery Outlet (GO), H&R Block (HRB), IAC (IAC), Roblox (RBLX), The Trade Desk (TTD), Unity Software (U), World Wrestling Entertainment (WWE), and Wynn Resorts (WYNN).

The economic calendar is light with Nonfarm Productivity and Unit Labor Costs @ 8:30am ET.

Volatility remains moderate.

Whale bias leans bullish but overnight volume is too light to be meaningful.

 

 Posted by at 7:09 am