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

05/16/2024 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 05/16/2024 ES Trade Plan Worksheet
May 162024

The US Bureau of Labor Statistics (BLS) accidently published subsets of the Consumer Price Index to their website 30 minutes early yesterday.  BLS is subject to strict protocols to prevent early dissemination of potential market moving data.  What’s interesting is futures didn’t react to the CPI data until the official release time of 8:30am ET.  In other words, most traders tuned into the data at the scheduled time.

The CPI data showed inflation eased in April, raising hopes of Fed rate cuts.  However, the lower inflation numbers are probably not enough to change the Fed’s “higher for longer” stance.

FedWatch shows a September rate cut has a 53% chance versus a 45% chance before the CPI data.  Powell had said on Tuesday that his confidence that inflation will keep cooling is not as high as it was at the beginning of the year.

The CPI is now up over 19.4% over the three-plus years since Biden took office.  Inflation is a global issue over which the Biden administration has little control.  The Fed and other global central banks have pumped currencies into the global economies for decades and the Covid pandemic government spending has thrown fuel on the inflation fire.

The currency devaluations have come home to roost, making inflation difficult to control.  US consumers are feeling the inflationary pressures but are resistant to change their spending habits as confirmed by record credit card spending.  Inflation will be one of the central issues for the next Presidential election.

Bitcoin may be moving to trading on a regulated exchange.  The CME Group has been holding discussions with traders who want to buy and sell cryptocurrencies on a regulated marketplace.  The CME already hosts bitcoin futures, but the CME is looking into introducing spot bitcoin trading.  The interest is there, bitcoin ETFs are the fastest growing ETFs of all time.

Premarket earnings include BIDU, DE, JD, NICE, WMS, and Walmart (WMT).  Earnings after the bell include Applied Materials (AMAT), CPRT, and TTWO.

The economic calendar is full: Claims, Building Permits, Housing Starts, Philly Fed, and Import Prices @ 8:30am ET and Industrial Production and Capacity Utilization @ 9:15am ET.  Fed speakers include Barr @ 10:00am ET, Mester @ 12:00pm ET, and Bostic @ 3:50pm ET.

Volatility increased for the second day in a row on the bullish reaction to the CPI numbers.

No whale bias as overnight large trader volume was mixed and too light to be significant.


 Posted by at 6:36 am

05/15/2024 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 05/15/2024 ES Trade Plan Worksheet
May 152024

Meme stocks continue to soar, and US equities closed higher on Biden’s China tariffs as markets wait on this morning’s CPI prints which are one of the most important data points the Fed will consider at their next meeting.

Headline inflation is expected to decrease 0.1% from March’s 3.5% to 3.4%.  Analysts also expect the large March increases in auto insurance and maintenance costs to reverse the trend in April.  Given weakening labor market data, rent inflation will also be in focus from the CPI numbers.

The Nasdaq closed at a new record high of 16,511, the first record high close since April 11.

The Producer Price Index released Tuesday morning showed wholesale prices increased 0.5% m/m in April versus 0.3% expected.  However, March’s PPI increase was revised lower to a decrease of 0.1% from a positive 0.2%.  Markets shrugged off the mixed PPI numbers.

AMC surged 120% before plunging back to a 30% gain.  GME was up over 100% before finishing up around 60%.

Premarket earnings include Dynatrace (DT) and Sportradar Group (SRAD).  Earnings after the bell include Cisco Systems (CSCO) and Grab (GRAB).

The economic calendar is full with focus on the 8:30am ET numbers: CPI, Retail Sales, and Empire State Manufacturing Index.  Other data includes Business Inventories and NAHB @ 10:00am ET, and Crude Oil Inventories @ 10:30am ET.  Fed Governor Michelle Bowman speaks in a fireside chat @ a Blockchain Summit in DC.

Volatility ticked higher on Tuesday’s bullish push higher.

No whale bias as overnight large trader volume was too light to be significant.


 Posted by at 4:43 am