Scott Andrews is the CEO and Co-Founder of InvestiQuant, an innovative financial services company providing quantitative research, tools, and services to active investors and traders around the globe.
Scott has been trading full time since 2004, finding great success trading the opening gap and launching MasterTheGap.com in 2008. Scott has published over 1,500 daily gap analysis videos and his exact gap trading plan prior to the market open each morning for his subscribers. Scott is highly respected for his comprehensive analysis and is affectionately known by professional and retails traders around the world as “The Gap Guy.”
Scott’s quantitative research and analysis has been published in most industry leading journals and sites including Futures Magazine, Active Trader, SFO, Trader Magazine, Trader Planet, Traders Library, INO, and many more. Scott has also been a popular speaker at many World Money Shows and Traders Expos and numerous traders’ meet-up and investing groups.
In this weeks episode Scott shares his expertise in gaps, explaining what factors to take into account when trading gaps and what to avoid. We also discuss gap zones, when to fade and when to follow and calculating stops and targets.
PLUS, for those that aren’t into Gap trading, we cover some important concepts that can impact all styles of trading, include one concept called ‘Ensemble Systems’ which may just change the way you look at trading strategies.
- Why it’s important to trade a style that matches your own strengths rather than follow someone else
- Why gap trading works
- Markets where gaps work best and those that don’t
- The best type of stocks to trades gaps and the stocks to avoid
- The benefits of trading gaps in indices vs stocks
- The 3 market conditions to look at when analysing a gap
- How seasonality impacts gap trading
- Signs of gaps to avoid
- Using ATR to determine the probability of gap size closing
- Gap zones and how the location of the gap can provide useful information
- The worst performing gap zone
- The psychology of certain gap zones and why some work better than others
- When to fade the gap and when to follow it
- Calculating stop and profit levels based on gap characteristics and market conditions
- How to determine if a target should be a full gap close, partial gap close or an extended target past gap close
- The impact of QE on gaps
- How to combine systems into Ensemble Systems for an interesting view on trading strategies
Resources & Links mentioned in this episode
- Scott can be contacted through his website InvestiQuant.com, by email or follow @investiquant on Twitter
Video: Scott Andrews of Master the Gap
Top tips from this episode
Here are some of my favourite tips from Scott this episode:
- There are many different ways to trade gaps successfully – from the size of the gap to the location of the gap, which Scott calls ‘gap zones’. You also need to take into account market conditions, recent price action, seasonality, stops and targets and other factors. There really is a lot to it, so if you’re going to trade gaps you better study up on them or follow someone who already has. Also, if you trade a system that enters on the open you may want to consider the effect of opening gaps on your entries.
- Ensemble systems – the idea of ensemble systems is really interesting. It’s not a new idea, it’s used in weather prediction but the applications to trading could be very interesting. I think we might need to hear more about it in the future!
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3 August 2015