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Dan Zanger, A Pure Wyckoff Mark Up Trader
Dan Zanger bio is incredible. He turned $10,775 into $18 million between June 1998 and December 1999, he is the world record holder for the largest percent change for a personal portfolio for a 12-month period of time.
Dan Zanger a working man turned professional trader. Transforming himself from a 'pool builder' to very successful high roller trader and hedge fund manager.
Let's review how he does it.
Note: readtheticker.com has no association with Dan Zanger or any of his services. We are only passing comment to his trading method as it resembles the Wyckoff logic approach.
- Follow the market leaders (best relative strength).
- Stocks with Explosive earnings (50%, 100% etc) with explosive price action to match.
- It is the 'new story' or 'change' that creates the stronger market advance.
- Watch for when institution establishing positions in stocks that are yet to be fully owned by institutions.
- Stay away from established stocks as they are fully owned by institutions
- Understand market seasonality and cycles.
- Does not short stocks as much, bigger money made in going long.
- Combination of fundamental and technical analysis is used.
- Stocks that have good patterns generally have good fundamentals. If chart has a good pattern and fundamentals are not explosive it is not traded.
- Best lesson: Do not be in the market all the time. Trade less stocks (2 to 4). Quality not quantity,
- It takes 4 to 5 months for a stock to create a base that results in price breaking.
- Focus on leading stocks with explosive earnings. The leaders lead, the general market plays catch up.
- Watch list is about 60 stocks with global revenue and earnings exposure.
- Watches for massive surges in volume (50%, 100% plus), with a break out from base pattern, on explosive earnings.
- When the institutions wants the stock badly then he wants it also. Volume activity tells you if institutions have the intention to own the stock
- Continuation patterns are important: flags, channels
- Not a fan of standard indicators.
- Uses only: Price action, volume, chart pattern and spectacular earnings.
- Book1: William J O'Neal 'How to make money in stocks'.
- Book2: Jesse Livermore book called 'Reminiscences of a Stock Operator'.
- The market is design to take your cash therefore you must learn the game.
- When you have a winner the market tries to shake you out of your position.
- Expensive stocks (more than $50) better to make money with than cheap stocks (under $30).
- Find market leaders that are dominate in their space with quarter over quarter earnings increases that produce: new services, new products, new management just something new.
- This is the way of the CANSLIM method developed by William J O'Neal.
To take nothing away from Dan Zanger, the above video is from a interview that is designed to promote his services. Some points to understand.
The years which Dan Ranger made fantastic returns are 1998 to 1999 when the Nasdaq stock bubble was in full throttle. You could by 50,000 shares in Amazon as a day trade with margin at ease. It was a special time, and returns were abundant for all. There has not been a time since equal to these years.
Company earnings can be gamed. The business can sell some plant, a business or a building to generate short term improved earnings. It is best to consider revenue, positive cash growth and retained earnings growth to confirm the quality of the earnings reported.
A bull market is required to trade the Dan Zanger way. A bull market is associated with positive economy and increased standard of living and general way of life. A bear market is associated with slow economic growth, recession and or depression. It would be very difficult to find spectacular earnings growth in a bear market. In the great depression of 1930's 70% of all stocks went down, that means 30% went up. Thus you never now were the institution capital may go.
Earnings are not the only motivation. A closer look at Dan Zanger trades suggest commodity markets that show strong bullish trends are fair game as well.
Market leaders show themselves by having strong relative strength (Alpha) than the wider market and/or sector.
Dan Zanger is a great fan of William J O'Neal book 'How to make money in stocks' which is why we like Dan. William J O'Neal book is modern day extension of Richard Wyckoff logic. The CANSLIM is an approved approach by this site, however the chapter on M for Market timing is lacking and this is why we promote our RTT Market Timer to help overcome this problem.
Dan likes to buy stocks that move from say $50 to $100. This means Dan is a Wyckoff Mark Up phase trader. He finds stocks that offer PURE mark up of the best quality.
Dan Zanger states that he follows the market leaders that dominate in their field or space. This means he follows sectors and the best stocks in the sectors. This is also a standard Wyckoff stock selection method. Wyckoff logic suggests the buying well known widely followed and much loved companies are better than those that are not or a obscure. In the end stocks that a fueled by increase institutional ownership are attractive to both Wyckoff and Dan Zanger.
Dan Zanger states that he likes to see a base pattern for the stock to break out of. This is a Wyckoff logic theory of price breaking out of an accumulation phase into the mark up phase that will result in higher prices. The Wyckoff accumulation phase is critical as is the phase that allows the market whales to accumulate stock float to eventually sell at higher prices.
- Trade only the most powerful Wyckoff mark up phases
- Powerful Wyckoff mark up phases require spectacular news to motivate price
- Need not be in the market all the time, trade quality mark ups not quantity of mark ups.
- A powerful mark up is born out of a base or otherwise known as Wyckoff accumulation phase.
Even though Dan Zanger has stated he is not a fan of indicators, and we dont blame him, he has not seen our Wyckoff logic approach. Tools like RTT Market Timer, RTTTrendStatus, RTTTrendPower and RTTTrendPowerOBV. Readers should be aware that continuation patterns are not the only way to trade a powerful mark up price trend, for example here is RTTTrendPowerOBV working on Apple Inc.
Please note that Apple Inc (AAPL) is an extraordinary example of price mark up. Apple Inc went from $70 to $700+ (700%) on the news of multiple unique new product announcements. Apple Inc in effect had multiple impulse waves of price advancement. It may not be the next year market leader, never fear the stock market always seems to find another darling to chase to higher prices.
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