Dan Zanger's Trading Strategy

Jul 30, 2025

Summary

  • The meeting focused on Dan Zanger’s trading strategy and how he turned $10,000 into $46 million over 23 months.
  • Key topics included the specific stock characteristics and chart patterns he targeted, his mindset and methodology, and practical instructions for screening stocks with Marketsmith.
  • The discussion provided actionable steps for identifying market leaders using specific screening criteria and emphasized the discipline and persistence required for Zanger-style trading.

Action Items

  • None assigned: The session was an educational presentation, so no specific owners or due dates were given for follow-up tasks.

Dan Zanger’s Trading Philosophy and Methods

  • Zanger achieved spectacular returns by trading with extreme concentration, often holding just one or a few high-conviction stocks at a time, especially in the early stages of his run.
  • His approach relied on technical analysis, focusing on price action, volume surges, and well-formed breakout patterns (flags, cups and handles, VCPS).
  • He never entered positions more than 5% above technical buy points and exited quickly if stocks fell under those points, employing strict risk management and partial profit-taking as stocks appreciated.
  • The core of his method is trading only the strongest stocks from leading groups, prioritizing those with explosive earnings, high sales growth, and strong relative strength, particularly near 52-week highs.
  • Zanger’s mindset emphasized resilience and commitment, persisting through a steep learning curve and losses, and focusing on continuous, deliberate practice and study.

Criteria for Stock Selection

  • Zanger looked for stocks with:
    • Earnings increases of 50% or more (often much higher)
    • Strong sales growth and positive guidance
    • Dominance in their industry, global reach, and new or expanding products
    • Clear chart patterns with volume confirmation at breakouts
    • High relative strength (RS), especially RS line making 52-week highs
  • The presence of large institutional ownership and buying was a key confirming indicator.
  • He did not chase “cheap” stocks; he focused on high-priced, quality leaders with large run potential and manageable risk.

Chart Patterns and Technical Aspects

  • Breakouts from well-formed bases, particularly with volume surges, were Zanger’s primary entry points.
  • He utilized exponential and simple moving averages (10, 21, 50 EMA/SMA) for identifying tight price action and entry/exit points.
  • Signs of institutional activity were monitored through unusual increases in volume and price movement.
  • Zanger was not a frequent short seller, noting that the biggest gains were made on the long side in leading stocks and that shorting was generally tougher.

Screening Process (Marketsmith Example)

  • Screening steps included filtering for stocks with:
    • 50-day average volume > 500,000 (liquidity)
    • Relative strength (3-month) > 90
    • 50-day MA > 150-day MA > 200-day MA (uptrend confirmation)
    • Last quarter’s earnings and sales growth each > 50%
  • The process typically reduced a universe of over 9,000 stocks to under two dozen high-quality candidates, which would then be further analyzed for technical setup and fundamentals.

Decisions

  • No formal business decisions were made — This was an educational/informational session.

Open Questions / Follow-Ups

  • No open questions or follow-ups were raised.