Who is Dan Zanger?
Dan Zanger is an equities and technical stock trader, who hit the media spotlight after turning a mere $10,775 to $18,000000 in just under two years. His 29000% stock market portfolio appreciation in a single year earned him a world record for his trading.
Dan Zanger spent his childhood in Los Angeles’ San Fernando Valley. After enrolling in college, Zanger dropped out to pursue snow skiing for a few years in Idaho and Colorado. He also worked numerous odd jobs during this time, such as being a cab driver, a bellhop, and even a prep cook to support himself.
With no professional trade under his belt and just a high school degree, Zanger moved back to LA and started working for a landscape, eventually receiving his California Contractor’s license. As the internet bubble began to form in 1997, internet and technology stocks took the center stage. Zanger sold his Porsche to raise capital for his entry into the market. He sold it for a measly $11000 which he ultimately turned into $18 million over the next year. This success allowed him to leave his contracting job behind and become a full-time trader.
Beginning in 1996, Dan Zanger created a faxed newsletter reaching hundreds of beginner traders. Eventually, this evolved into his own educational website in 1998. There, traders can study and trade patterns in interesting daily stock charts. The website currently provides services to hedge funds, private traders, and industry market makers, serving thousands of traders worldwide. Dan includes the analysis of major indices along with short-term sentiment through NYMO. The newsletter covers story stocks, major trends, as well as personal picks and setups which Dan selects and watches.
Each of Dan’s newsletters on average includes around sixteen charts. Dan Zanger also personally interacts with subscribers during each trading day from Monday to Friday via a chat room/ he answers questions and provides feedback on stocks among other things.
Dan Zanger Top Trade
Dan Zanger’s top trade was between an 18-month period from June 1998 to December 1999. Zanger, who was known as a former swimming pool contractor then registered a world record in trading for parlaying $10775 into an astounding $18 million. The CMGI stock at the time was going for $118. Dan Zanger bought the stock in early January 1999 and rode it to $305. Anticipating that the stock will drop soon, Dan sold it at $130 subsequently, after which the stock dropped dangerously low at $87.
This single trade made Dan Zanger a famous trader, netting him more than 210 percent in a mere four days. Dan’s nest egg increased to $42 million. Other successful trades he’s been a part of include National Discount Brokers, UBID, and Qualcomm.
Dan Zanger Trading Principles
Dan’s trading principles can be summed up into 10 Golden rules he follows, applicable to all traders striving for success.
- Traders have to ensure that the stock possesses a well-formed pattern or base before considering to buy it. Dan provides a detailed list of stock with such patterns in the newsletter he sends out.
- As the stock moves over the trend line of that particular pattern or base, a trader should buy it. He/she has to ensure that the volume is above the recent trend before the breakout occurs. The maximum a trader should be willing to pay is up to 5% above the trend line. They should find out the stock’s 30 days moving average volume. This is available in a majority of stock quote pages like eSignal’s quote page.
- Traders should quickly sell their stock if it returns under the breakout point or trend line. They can set stops $1 below the break out point. Traders can increase this to a maximum of $2 for more expensive stock. Traders can also employ the 5% stop loss rule in this case. The 5% stop loss rule refers to selling a stock trying to break out, which fails within 20 minutes to 3 hours from the time it broke out above the trader’s purchase price.
- If the stock moves up between 15% to 20% from its breakout point, Traders should sell 20% to 30% of their stock.
- The stronger the stocks are, the longer a trader should hold them. They should sell any stock that act sluggishly or which have ceased moving up, as fast they can.
- Traders should actively try to keep their selections in strong groups of stocks.
- Stocks become vulnerable to sell-offs after the market moves for a substantial period of time, which can happen very quickly. Traders should thus, learn to set higher trend lines, as well as gather knowledge about reversal patterns for existing out of stocks. Dan Zanger mentions the Encyclopedia of Chart Patterns written by Bulkowski, as recommended reading material to traders.
- Traders should be aware of their stock’s volume behavior and how the stock reacts to spikes in volume which can be found out from charts.
- Dan Zanger mentions many stocks with buy points in his newsletter. However, a stock is not outright but when the buy point is touched, just because its mentioned with a buy point. Traders should first see the action in the stock, combining it with its volume. The volume should be for the day at the time the buy point is hit. Traders should consider this as well as the overall market environment before they consider purchasing anything.
- Until they’ve mastered their own emotions, charts, and the markets, traders should never go on margin as they can wipe a trader out.