Gap Trader Scott Andrews explains the process he goes through in preparation before he even begins his day of trading.

ROB:  I'm here with a trader that has a reputation for doing an immense amount of preparation for the day's trading.  Hi, Scott, it's nice to be with you. 

SCOTT:  Hey, Rob, good to be here. 

ROB:  Tell me about the preparation that you to do get ready for the daily events in the market. 

SCOTT:  So, I do a little more than probably most but I've found that the more I trade, the less I make, and that's maybe not the same with everyone but for me it works better to be more selective, so I'm using a lot of historical data and update it overnight.  I have a database now, but I used to just dump it into Excel every night and would update the Excel spreadsheet, and in the morning I review the analysis.  I simply want to see what's in play and what's not, and then I average it up.  It's all pretty mechanized now I guess, so really doesn't take me a whole lot of time.  I do reserve a little bit of the morning for me, maybe 30 minutes where I'll evaluate the pre-market action and any unique patterns that may be in play, do a little additional testing, a little additional confirmation on my decision, but generally by 9 o'clock in the morning I know if I'm going to take trade or not. 

ROB:  So how much earlier before the market opens are you starting your day's preparation? 

SCOTT:  8:30, not much at all because I've done the work.  It's taken me years to get to this point.  I used to spend more than that, but pretty much I'm done in about 50 minutes, from 8:30 to 9:20. 

ROB:  And then after that for the rest of the day are you watching the market throughout the day constantly or do you have to back off and walk away? 

SCOTT:  No, I'm primarily a gap trader in term.  That's been my bread and butter over the years, so the gap is very binary for me.  I'm either taking the trade or not.  I may delay it a few minutes but generally right at the open.  I will watch and have historically watched the market for the first hour and a half.  I will do a 15-minute range trade, like a breakout of a 15-minute range high or low, and I'll do the first hour range trade as well, but by 11 o'clock I will at least have my set-ups done with a pre-determined target, pre-determined stop, and I go about my day and try to spend a little time with family or kids, try to stay away from the honey-do list if I can. 

ROB:  You say you like to do more preparation and less trading.  Is that something that everybody could follow or is that something that you've had to work up to over the years? 

SCOTT:  Well, I'm biased, obviously.  I can tell you what has worked for me.  I like to trade, I don't have a problem pulling the trigger, right, it's easy to sit there and push the button, but I did notice, I actually did an interesting analysis, and it was not hard math.  I looked at the number of trades I took in a given day versus how much money I made, and I averaged out the more frequently I traded, the less I made in aggregate for the day as well, so I was overtrading, so now I've realized that there's really not that many great set-ups in a given market on a given day, so for me if I trade once or twice a day, that's a typical day. 

ROB:  Well, I know it's true of me, the fewer trades I take the better I do.  I appreciate the advice, Scott, thank you so much. 

SCOTT:  Thank you. 

ROB:  You're watching the Money Show video network.