The meeting focused on Dan Zangerâs 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 Zangerâs 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.
Zangerâs 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 âcheapâ 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 Zangerâs 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 quarterâs 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 â This was an educational/informational session.