3/28/25, 12:09 PM Dan Zanger Interview - Traders Log

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Dan Zanger Interview

By Larry Jacobs
Larry: How have you been?
Dan: I have been very good and busy. Last year was probably my
most profitable year and my biggest dollars gain ever since I started
trading. I had some big winners such as Google, Apple and housing
and oil stocks. The majority of my money was made on Google first
then Apple second. I made some on Sandisk and then the housing
stocks. I really can’t complain, it’s been going exceptionally well.
Larry: What was your actual performance last year?
Dan: My personal gain was up 180.6%. The dollar amount was $22
million.
Larry: Has your trading method changed since we last talked?
Dan: No, my method has stayed the same. It’s finding fast growing
companies and leading groups and companies that dominate their
space in the global environment. You will find some incredible
winners in the marketplace by following that method. Certainly,
Apple dominates its place in the IPOD market. They not only
dominate it, they created it. Google created the pay-per-click
advertising and they dominate it. These are global companies with
leading niches. They dominate and control their space. These are
they types of companies that I look for.

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Larry: What software do you use to find these companies and

actually how do you do it?

Dan: I use AIQ software. It leads me into finding the charts.

Certainly when we have real positive charts you have very positive
fundamentals as a general rule. This is what I use to find the big
moving stocks. I download all day long and look every hour for
stocks on the move. I also download at the end of the day to find
them. The AIQ software is my priority. That’s all I use really.
Larry: Using AIQ you say you are downloading during the day at
certain times of the day. How do you scan all the charts that you
download determining what to buy?

Dan: In the evening, of course, I do my newsletter at my website,

chartpattern.com. I will scan some 1,300 to 1,400 charts. I have a
defined list in the AIQ software. It’s called the TAG list. With this you
can tag your favorite charts. I manually flip through those every
night finding the big movers in the market. I highlight them on my
website. Then I put them on my eSignal quote screen in the
daytime. I may have 50 or 60 of the leading moving stocks. I’ll also
have the strongest groups in the market. In my sixty stocks I may
have 10 of the biggest movers in the market. I may have two or
three groups and then I may have six to 10 stocks in each group in
my little group sectors. I am constantly watching for stocks on the
move. Then, during the day when I see things moving, I’ll download
my charts with AIQ and I’ll make reference to the charts and see
how they look. I want to see how the charts are setting up, whether
it is a bearish formation, bullish formation, how big is the daily bar
in reference to other bars, how small is the bar. Whatever is taking
place, I want to see what it looks like during the day. Then, I may
add or subtract my positions. I may sell my entire position. I am 
constantly referring to the AIQ charts during the day and in the
evening time. I am certainly making a list all day long and into the
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night when I do my Chartpattern.com newsletter in regard to what

is looking good and what needs to be sold or bought.
Larry: How do you actually determine during the night and during
the day what to buy and what to sell? Is this based on patterns?

Dan: I certainly use patterns and the look of a daily trading bar. A lot
of stocks have good patterns, but then they don’t move. Many
people have sent me pattern recognition soft ware that they have
setup on various soft ware platforms such as TradeStation, or some
other software. They run all these scans and here are all these
patterns. They come up with all these patterns, but nothing moves.
So you really have to find what moves and then find the patterns
that they create. I have initially missed the first move of a stock, but
I will track it for a month or two waiting for something to set up as
opportunistic to buy either a breakout to the upside or a potential
sell to the downside. I would say that 95% of my trades are long
positions. 99% of my gains are in long positions and the 1% from
shorts are for fun and games!
Larry: How do you determine what moves a stock?
Dan: I go with the big funds. When the institutions are buying the
stock en masse on volume I will buy the stock too. When I see a
stock beginning to move on heavy volume, I will be a buyer with the
other institutions. Volume is extremely important. It fact it’s
everything.
Larry: Do you have any kind of a volume alert?
Dan: No, I don’t have any pre-set alerts. I may have a couple of buy
alerts set on my eSignal. I have all the stocks memorized because I

have done my homework the night before. When the market opens,
I know what is moving, what looks good, what is sluggish, what is
not moving, what is trying to move, what is faking you out. You
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really have to spend a lot of time in the market every day. I spend 12
– hours at it every day studying my charts and watching volume
behavior and price movement when the market is open. Every day
when the market is open that is everything to me. I want to see the
behavior, behavior is everything.
Larry: When you see the volume coming in, what patterns do you
like to buy on?

Dan: It depends. I certainly like bull flag patterns. They are my

favorites. High level channels and horizontal channels work very
well too. Occasionally, you will see a good cup and handle. A cup
and handle is best when the stock breaks out of the handle on the
day of earning. Many times people will say here is the cup and
handle and the stock is trying to break out between earnings. That
is typically a sell signal to me. I find that those fail quite a bit. So I
try to avoid those types of cup and handles. Certainly, you see a lot
of oil stocks trying to break out of descending channels here in
March. After the market corrects a certain amount of time you see a
lot of leading stocks breaking out of descending channels. I’ll go
ahead and buy some of these stocks with this type of pattern.
Sometimes these patterns yield weak moving stocks and
sometimes they yield very strong moving stocks. Like any pattern
where a stock breaks out, the pattern alone does not guarantee a
winner. This is a big fallacy for people who are tying to trade off of
chart patterns. They think that patterns are the new thing (deleted)
and that is a no fail system. Patterns just give you a leading
indication of which stocks are ready to move. Be prepared for the
failures. Be quick to cut your losses. When they really start to move
big with big volume you need to really step into the stock heavy.

Larry: How do you actually do that?

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Dan: A big stock that trades 2-3 million shares per day can make
moves of 3, 4 or 5 points per day without breaking a sweat. These
are the stocks I really like to key in on. As the stock breaks out I
might test the water on it and buy 30 – 50% of the position that I
really want to buy. So if I want to buy 200,000 shares of a stock like
a Google, I would buy 70,000 to 100,000 shares of the stock and
see how the stock reacts then I may wait an hour or two and see
how the stock is moving. Then, as the stock continues to move up
with heavy volume and is not timid making new highs, I might add
another 30,000 to 40,000 shares up to 75% of the position that I
want. I may wait 4-5 days to see how the stock acts and then add
the fi nal 25% of the position I want.
Larry: How long are you in a position?
Dan: It depends on the market and the stock. If it’s breaking out of
a high level pattern I would be in the stock for a shorter period of
time. Usually 3 – 5 days up to 2 weeks. If the stock has had a long
base for example 6 – 8 to 10 weeks and the market is coming off a
nice correction, I might be in the stock for 10 – 15 weeks. Th ese are
things that take experience and time before you really get the hang
of it.
Larry: What about stops, how do you use those?
Dan: If a stock really does not act right and get up an go when it
breaks out, for example, I would just sell the stock right there. I
would not even wait for it to come back down to the breakout point.
If you want to make money in stocks, you have to be in stocks that
are moving up. Th e longer it continues to move up, the more
money you make. If the stock breaks up and then goes to sleep, I
am out of the stock. I want to keep my money in those fast moving
stocks that are always moving up. So that is how I employ stops.
Certainly it the stock comes back under where I bought it, I will just
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checkout. Then, if the stock then turns and breaks out again I would
re-buy the stock, for example if the market had a shakeout on a
terrorist attack or a news story, the stock can easily breakout again.
I would wait for it to clear the bar that it failed on. If the stock broke
out at 60 and ran up the next day to 63 and say it had bad news,
then the stock comes back down to $58, I would sell out of the
stock. When the stock clears 63 again, I would buy the stock again
as $63.10 is a new high.
Larry: Why do you think a lot of people are not good traders as you
are? (Awkward question. How about: How do you think traders can
improve their skill-set?

Dan: Persistence, homework, more homework and more homework

is the reason for success. I feel many traders don’t put the time in.
They don’t have the desire to learn. They don’t have the laser beam
focus to really zoom in with what is working, why it works, what
does not work, why it did not work and to put the years in that it
really takes to learn all the stuff . People think that trading is going
to be easy. They come in and they get crushed after a little while.
Then they say they’ll never do it again. Guess what, you’ll never do it
again and you’ll never succeed.
Larry: How long does it take to make a good trader?
Dan: It depends, but with most people that are really successfully
they have been at it for 4-6 years at a minimum.
Larry: Have you changed anything in your trading since I talked to
you in the last two years?

Dan: In stocks like Google, I have added deep in-the-money stock

options, because Google is trading at $300, I did not want to buy it
at such a high stock price. I would rather buy the cheaper options.
When Google was at $300 I would buy a 2 month out contract, like a
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Google 260 or a 240 call option. Th e 240 contract would cost me

65 dollars. That means I would have to pay up $5, but I would not
have to pay $300 for the stock. I would save $240 for an extra $5
and this way I could even buy more stock. So I ended up buying an
incredible amount of Google and the stock took off and I obviously
made a great deal of money. Th at was the only thing that I changed
in my trading, adding deep in the money call contracts out one to
two months on very expensive stocks.
Larry: Have you found the volume to be OK to trade those options?
Dan: For the most part yes because I like to trade stocks with high
volumes. But I still fi nd it fairly easy to get out of options on low
volume stocks for example, the Chicago Mercantile Exchange
stock, tick symbol CME, the stock would trade 500,000 – 800,000
shares per day with the stock at $260. I bought the CMD 200
contracts with the stock at $250 or $260. If you bought 10,000
shares and wanted to get out on a fl ash, it would take you 2-3
hours to get out. If you tried to sell 10,000 shares at a shot you
could drive the stock down 4-5 dollars. I could buy 400-500 or
even 1,000 contracts of that stock with a phone call I could
completely sell it all instantly, with no waiting. I found that the
options market is more liquid than many of the stocks, which is
especially nice when the stock is not moving . However, when the
stock is collapsing that is another story? Because I had Google call
contracts when the stock was going up to 440 – 445 and it got a
downgrade and the stock got slammed $20, by the time I got out of
my contracts. You could watch money evaporate as the contracts
were getting filled. What I learned was when Google was moving
down like it was is that I had too many contract prices and that was
diffi cult. I had to sit down and go through the diff erent strikes and
wait for one strike to be liquidated and then go to the next strike
and wait for it to be liquidated. You are spending all this time as you
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are moving through the strikes and diff erent time frames to sell
them all. It took a long time to get out of these options with my
traders. Th e one thing I learned is that you should get options with
just one strike and one month. Then you can just click the button
once and you’re out, you don’t have to wait and go through various
strikes and expirations to get out of them. It was a learning
experience. It cost me a couple of million dollars on that trade but I
still made millions on the trade. I only employed options on a couple
of stocks. I don’t really want to trade options. I only want to trade
options aft er the market has come down aft er a correction and
then comes up out of it, then I’ll buy the deep in the money call
contracts and that’s it. Otherwise, options will kill you, because you
are so leveraged. If the market goes against you, you think being on
margin is tough! Being on options is tougher because of the greed
factor for one, but its the leverage factor that will eat you alive. You
might say that you can buy so many more options and you can
make so much more money and then if you get caught in a down
move due to an earning downgrade or something, you’ll be out of
cash completely, maybe even wiped out. You need to be careful on
margin and even more so on options.
Larry: What is your outlook for the market?
Dan: For me, trading is one day at a time. I never say the market is
going to go up or down. It if you trade on a forecast like that, and
you load up, the market can turn on you and you can really get
hammered. I have a few market timers who send me stuff and it is
interesting and that’s fine. But, I don’t really rely on it for trading.
For example, you can be loaded up on chip stocks and say all of a
sudden the leader in the group says that they don’t see earnings
continuing and then the whole group takes a 15% discount and you 
are on 2 x 1 margin. This may cause you to take a 20 to 25% loss on

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your positions. You can really get hurt on this. I don’t believe in
anything but my charts and my price action with stocks.
Larry: What is your protection with something like a terrorist
attack?

Dan: I don’t have any protection. I don’t think anyone does who is a
trader. The main thing is not to get too loaded up on margin. If you
have to take a brutal discount on your positions and you are loaded
on margin or on options and you do get into a wicked terrorist
attack you can get really hurt. On something like this the market
might gap down a substantial amount, you can get wiped out. You
really don’t want to be in a position like that at any time. You need
to be reasonable in your positions.
Larry: Are there any final recommendations for traders?
Dan: Go to chartpattern.com

©2006, Reprinted with permission of Traders World

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