The Nuances Behind Dan Zanger

How the story shapes the strategy

Dan Zanger’s strategy is simple:

“I own what the big institutions want to own and go when they go. I’m always scanning to buy leading high-beta stocks coming out of well-defined patterns.”

Or to put it another way, he wants to buy the strongest stocks, with the potential to make the biggest moves, just as they’re about to make those huge runs.

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This is where my younger self would have built a checklist:

• Shows initial momentum (volatile behaviour)

• Global leader, preferably young company

• Powerful earnings growth (50%+)

• High-priced stock

• Leading in a strong group

• Explosive volume (300%+ on breakout)

…and that’s before you start thinking about chart patterns, specific buy and sell rules, position sizing, overall market conditions, routines, and more.

(No wonder Dan says that it takes years of hard work before you put all the pieces together!)

ABOUT THIS STACK

I’m a full-time trading writer. I specialise in ghostwriting in-depth, original content for traders while trading my own money and continuing my own studies — with Dan Zanger being the subject of my latest deep dive.

To me, that doesn’t mean trying to uncover every last detail of his strategy. Not anymore.

I want to understand how he thinks. I want to dig into the unsexy aspects of his approach — like how come Dan appears to contradict himself frequently, yet maintains clarity on his own simple strategy. Or how his approach has, and hasn’t, changed over the decades. Or how he made a necessarily imperfect strategy work for him, which may reveal ideas someone else could adapt for their own needs.

Because when you just focus on the tangible stuff like the above ‘checklist’, you’re limiting yourself to the surface layer. And that makes you inclined to believe — even if only subconsciously — that you might just achieve superperformance if you copy Dan’s techniques.

But without clarity or conviction, techniques that may be potent for Dan are ineffective for you.

This stack is my attempt to go deeper. The friction of writing increases my clarity on my recent research — and hopefully, it can spark ideas for you.

NUANCED SIMPLICITY

(Successful *discretionary* traders focus on simple ideas, adapted to the context at hand)

Dan himself doesn’t work with checklists.

He can’t even give you a formula if you ask him how much he uses technicals vs fundamentals. Nor does Dan answer questions like “what’s your favourite chart pattern?” consistently.

Yet he considers himself a systematic trader:

“I buy the same types of stocks with the same types of price action, out of the same types of bases on a continuous basis.”

Plus, he perceives his approach as simple: “I simply rely on chart patterns, price, and volume.” The same goes for his overall strategy: “I find out who the winners are and stick with them, moving in and out until they begin to fizzle.”

To find those winners, Dan asks himself a simple question during market hours:

Which stocks are acting best?

But how does Dan find an answer to that simple question?

This is where things get interesting for me — because the more I mature, the more I focus on how top performers think.

Blindly copying another trader’s strategy is pointless. They don’t have your unique combination of experiences, environment and DNA, so why should the exact blueprint that worked for them also work for you? Your success depends on your ability to handle the unavoidable discomfort of the market — a key point from Matt Petrallia in this article I helped him write — which makes personalisation essential.

…but you can’t personalise without depth or clarity.

That requires understanding Dan’s processes.

Why does he do things the way he does? How do his rules reflect his personality? What hard-earned lessons do they implement? What weaknesses do they mitigate? What are their drawbacks? And to what extent are they applicable to you?

Asking questions as you study doesn’t just allow you to adapt his ideas to your own needs. It also gives you insight into how his mind works — and that of other top performers. How can they process tons of nuance and complexity, yet cognitively experience this as simple?

Because they consciously focus on just a few key ideas — from which all the other information flows. (I call this Nuanced Simplicity.)

This makes it possible to apply discretion.

That discretion is the reason Dan gives, on the face of it, contradictory answers between interviews: because the context isn’t the same.

Different tactics work best under different conditions. Knowing when to use which requires a deep understanding of a handful of simple ideas — like looking for explosiveness (price action, volume, earnings growth, etc.) and staying out of the market when that explosiveness is lacking.

That search for explosiveness is, by the way, what connects the items on the earlier stock selection ‘checklist’. And once you understand that, you become less inclined to rigidly check off each item when scouring the markets. (This rigid approach is, ironically, when you’re more likely to miss critical nuances.)

Not only that, you can also build on such a list with your own criteria, thereby maintaining the spirit of Dan’s strategy while adapting it to your own style and personal circumstances.

Develop your own Nuanced Simplicity.

Successful traders make their system sound simple — because to them, it is.

For example, notice how in each of these next three quotes from Dan, he perceives his own tactics as simple. And you can find many more examples like this, from both Dan and other top traders.

However, executing these simple ideas well, with good judgement (discretion), requires a network of deeply internalised, interconnected knowledge that, objectively speaking, is complex.

“If stocks start to fail on their breakouts, I’ll pass on buying those stocks at that time. The market is sending a clear signal that a correction is upon us and it’s time to go to cash and/or look for shorts. Also, if the price action isn’t what I like, I’ll pass on that stock, even if it’s coming out of an attractive pattern.” [source]

“Nothing works better than watching the charts set up on the leading stocks. This is by far the most important timing mechanics out there today. That is because no market can rally unless stocks are set to move up from solid basing patterns.” [source]

“I look at daily bars intensely and dissect them and then add in the volume bars to come up with sort of a pressure factor that tells me what the stock wants to do next and when it wants to do it. Is it ready now or does it need more time? That’s the job at hand every day.” [source]

Dan perceives his own mental network as simple because he knows how the ‘nodes’ connect. And he can navigate that entire network through one simple idea: the core premise behind his strategy. (“I find out who the winners are and stick with them, moving in and out until they begin to fizzle.”)

That’s the discretion at work.

…and you can’t reduce that judgement to a formula.

CHART PATTERN NUANCES

(Patterns aren’t infallible — but they hold far more information than most people recognise)

If you can’t reduce discretion to a formula, why is Dan so fixated on chart patterns?

This was one of the biggest questions I had while digging through every public interview with Dan I could find (spanning 2000–2020).

The name of his website aside, in interviews, he said things like:

“Chart patterns are all that I find necessary. I plot price and volume and browse through charts, looking for patterns.”

That’s a quote from a 2000 interview, but even in 2020, Dan still used the phrase “chart patterns could foretell the future movement of stocks” (6:38, when referring to Gene Morgan’s Charting the Market show from the ’70s). The idea fascinated him — which may resonate if you came across technical analysis early in your journey — and perhaps that’s why Dan continued repeating it decades later.

Plus, when he says “chart patterns”, Dan doesn’t just mean longer basing patterns, but also individual and groups of bars. This was inspired by his studies of candlesticks, giving him “a sense that [he] should be following closely the daily bars and where they close and putting groups of bars together to get a sense of timing. […]

“Combinations of a series of certain types of closes and certain types of lengths of bars will foretell what the stock is going to do in the next few days.”

Yet patterns are far from everything.

In Dan’s own words:

“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.”

A pattern just indicates which stocks might be “ready” to move. NOT that the stock will move. And certainly not that it’ll make a big move.

Remember the earlier ‘checklist’: if you want to catch the strongest liquid movers just as they’re about to start their big runs, you’re looking for signs of explosiveness, then use patterns to time when you buy and sell:

“It’s more than just price patterns; it is the combination of patterns and price action of the stock during the day, plus the strength of the groups that these stocks are in that makes my stock selections so powerful.” [source]

“A lot of stocks have good patterns, but then they don’t move. […] So you really have to find what moves and then find the patterns that they create.” [source]

Because those patterns offer you asymmetric opportunity…

…but only if the stock can explode higher.

Otherwise, you have limited upside (and therefore no asymmetry). Like Dan said:

“Sometimes a stock has the right pattern but then can’t get going, or when it does, it’s a slow mover. And the problem generally lies in volume and/or heavy overhead supply.

“The stock that decides to go somewhere is the stock that has the highest percent change in volume. I key in on volume and the percent change in volume. Really, volume is my main focus during the day.”

That’s why, during market hours, Dan watches how price responds to volume surges.

He gets a feel for each stock’s personality, and when its behaviour might be changing from good to bad, or vice versa. He wants to let the market dictate to him which stocks are acting best and are ready to move.

“Yes[, I look for price and volume breakouts and chart patterns.] But I want to see how the institutions are treating the stock as well by watching the ebb and flow during the day. I watch bid, ask, and volume as well as price change throughout the day and I watch how they run through it on volume spikes. I watch to get a feel of the stock on the quote screen.

“On various chart patterns, stocks should be doing certain things at certain times. When the stock is acting right, volume should come in and do certain things. If it doesn’t do what it’s supposed to do, when it’s supposed to do it, then something isn’t right and I’ll pass on that stock until the time is right.” [source]

Notice how explicitly Dan ties stock personality to price and volume action.

Most traders use terms like ‘linear’ and ‘choppy’ action to describe a stock’s personality.

But Dan makes stock personality explicitly about price and especially volume:

“I look at daily bars intensely and dissect them and then add in the volume bars to come up with sort of a pressure factor that tells me what the stock wants to do next and when it wants to do it. Is it ready now or does it need more time? That’s the job at hand every day.”

Also:

“You have to know the meaning of each daily bar combined with its volume to get in or out of a position at what can often turn out to be critical times.”

In other interviews, Dan explained that he breaks the trading day into 13 periods (i.e. half-hour periods), then monitors the volume for each period and how price responds to it. (From his quote screen and the daily chart; he rarely uses other timeframes.)

Based on that information, Dan describes stocks as “frisky”, “sluggish”, and so on. The more “frisky” (volatile) the stock, the higher it moves on his quote screen (what he calls a “top-down” approach).

Names make it onto that screen to begin with if they make a big one-day move ($1–$3+) on volume. Dan then checks the chart and fundamentals. If the stock remains of interest, he starts stalking it to become familiar with how it moves. As he said: “It takes a long time to track stocks and wait for them to set up for the proper time.”

Dan doesn’t blindly look for patterns.

He looks for chart patterns on stocks the market appears to want to move higher.

Then, he combines that pattern analysis when going through charts with watching his quote screen during market hours, observing price and volume:

When you listen to this one-minute clip, you’ll hear hammer and coconut sounds:

• Hammer: the stock is being bought at the ask.

• Coconut: the stock is being sold at the bid.

This informs him of the health of ‘his’ basket of stocks — are they being aggressively bought or sold? Combine that with price, and you can deduce institutional buying and selling:

“When […] the market is moving up, you’ll hear hammers being hit across the entire basket of stocks. If the market drifts sideways and stocks start to sell off, you will start to hear coconuts. If stocks are up but you can hear a lot of coconuts, you know there is selling into strength. After the market falls for two to three weeks, you’ll start to hear hammer sounds as they buy the dips.”

The hardest-to-buy stocks are the ones institutions want.

…and a stock coming out of a base aggressively is a sign of institutional accumulation — which is why Dan is quick to sell when the stock isn’t showing that explosiveness post-breakout.

At this point, you might wonder why he’d even buy a stock that doesn’t explode, considering all his experience and selectiveness. Well, that goes to show that neither certainty nor the perfect strategy exist — something we’ll come back to later.

But while chart patterns aren’t perfect, they tell Dan considerably more than a trader who depends on pattern recognition software.

The ‘best’ pattern depends on the overall market.

(Emphasis is mine in the following quotes. For quotes throughout this stack, where appropriate, I also lightly copy-edited for clarity.)

“I think the descending channel for buying is one of my favorite patterns as the market has become more choppy and volatile.

“You are seeing more descending channels and island reversals for buying. There was an island reversal in January [2010] which started stocks on their way down. The market consolidated […] for 3 to 5 weeks and then got up on the right side. The market then gapped back up. That created the island.” [source]

“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 earnings. 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 these fail quite a bit.” [source]

(Notice how context dependent his ‘favourite’ pattern is?)

“One of my favorite patterns is the bull flag pattern. This is a continuation pattern and for the most part a stock has already broken out and has succeeded since the breakout.

“A bull flag occurs after a rapid and fairly extensive advance. After a nearly vertical move, the stock fluctuates sideways in a narrow range. The completion of the pattern occurs on a break above the consolidation, ideally on heavy volume.” [source]

“You just cannot beat the flat channel as it is one of the best chart patterns. Next up for me is the bull flag and once every so often a cup and handle pattern. […]

“The flat channel pattern is a terrific setup chart that shows a stock trading horizontally for an extended period of time. What this consolidated chart pattern shows us is where the institutions are buying on the dips, and thereby putting a supporting floor or bottom at specific levels.” [source]

When I wrote about Dan in 2024, I included a few of these quotes, but hadn’t put together all the pieces yet.

Maybe you love trading cup and handles. Maybe you love a high tight flag. Maybe you have another favourite pattern.

But all these patterns just reflect different stages in the lifecycle of a strong stock.

Once that clicks, you can come into the markets with more realistic expectations about what scenarios are more likely to play out, whether it makes more sense to sell into strength or try to hold for a bigger move, and other nuances that inform your tactical decisions.

Holding periods, for example, depend on the stock and overall market:

“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 6–10 weeks, and the market is coming off a nice correction, I might be in the stock for 10–15 weeks.

“These are things that take experience and time before you really get the hang of it.”

Plus, keep in mind the earlier quote from Dan about chart patterns and the overall market:

“Nothing works better than watching the charts set up on the leading stocks. This is by far the most important timing mechanics out there today. That is because no market can rally unless stocks are set to move up from solid basing patterns.”

Chart patterns aren’t perfect. Using them out of context will lead to disappointing results.

But when you start digging into the nuances, they can tell you more than appears at first glance. Like Dan said:

“Everything is just in the chart. You just have to look at the charts. There’s more information in every daily bar that you look at than you can imagine.”

That applies to everything from gauging overall market health, to timing buy and sell decisions (like on the break of a trendline after a rally, on a reversal bar or pattern, or when the stock doesn’t make progress on high volume), to reading the stock’s personality.

Charts are also Dan’s main tool to stay unemotional about the markets: “Never lose focus on the market or the job of watching stocks.” And in a different interview:

“My strategy [with psychology] is to be completely focused on what I am doing. Stay completely on the technicals and behavior of the stock. […]

“I watch price action combined with the technicals and try to eliminate the emotions. It says clearly what the institutions are doing with that stock.”

…but objectivity doesn’t equal certainty.

PERSONALISATION: PROBING & QUICK SELLS

(How Dan made other people’s ideas work for *him*)

“If you do your homework, you’ll have more money than you’ll know what to do with.”

This William O’Neil quote was Dan’s key takeaway when he attended an O’Neil seminar in 1989.

…and so, for ten years, while working full time, Dan studied charts as essentially a second full-time job. He was utterly determined to ‘make it’ in trading because he didn’t enjoy running his pool-building business and wanted the ‘big money’, but also had a genuine fascination with the markets — particularly chart patterns (obviously).

Even in 2016, he still talked about having spent 8–10 hours of that weekend “just scrolling through charts” on different timeframes and programs. Plus, he was glued to the charts throughout market sessions, so worked 8–9 hours a day during the week (or 14–15 hours on his newsletter days).

In spite of all that screentime and his selectiveness, Dan still buys many stocks that end up going nowhere.

If that doesn’t tell you that the market offers no certainties, I don’t know what will.

However, one thing is certain: “if you don’t step in and buy the stock on the breakout, you won’t have a chance to know what you’ve got.”

That’s why Dan does a lot of “fishing”:

“I test the waters on a lot of stocks that break out, and I probably sell at least 50 percent of them either a minor gain or loss because they aren’t acting the way I want them to.

“It’s just like fishing — you never know when you’ll get a big fish on the line.” [source]

“I do buy a lot of stocks coming out of bases, as you never know which one will rocket up and which ones won’t. If the stock rockets up, then I know I have a winner. At that point, I’ll add to my positions on that stock in a big way.

“This is where the big returns come in: concentration of money in the big movers and selling stocks that fail to rocket out of their bases on the first day.” [source]

“If you buy a stock that exits a pattern and it goes nowhere, just check out and find something else. This is really just a numbers game and you need to be in the right stock(s) that move.

“For example, pick out five or six stocks when they break out. The ones that don’t move up strongly, sell, and double up on the powerful movers.” [source]

Dan also ‘probes’ in a Livermore-inspired way.

While you must ultimately make each idea your own to maximise its potency, you don’t need to reinvent the wheel. Many great traders stood on the shoulders of those who came before them, often picking up different ideas from different people to ultimately develop a style unique to them, yet traceable to their mentors or influences.

Dan is no exception. From O’Neil, for example, he learnt stock selection, except Dan further tightened up the CAN SLIM criteria, looking for even more explosive earnings growth.

His actual trading style, however, more closely resembles Jesse Livermore’s approach. Dan likes to put out ‘feelers’, buying a portion of his position first to see how it fills:

• A poor fill is a bullish sign: it suggests people aren’t letting go of their shares, which creates the huge imbalance in supply and demand that can rocket prices higher. That’s when Dan wants to buy the rest of his position: “When they really start to move big with big volume, you need to really step into the stock heavy.” (In the linked interview, he follows this up with a concrete example.)

• An easy (good) fill, however, suggests someone is selling into your liquidity, which means you probably aren’t looking at an explosive mover.

More broadly speaking, if you generally have difficulty buying stocks, that’s a bullish sign — the recent market being an excellent example. But if you “can’t give [your] stocks away at their current market prices”, that’s a bearish sign. Dan describes this as “the easiest way to know what kind of market you are in.” (We’ll come back to market environment later.)

Dan also talked about the Livermore inspiration in this 2020 interview (38:22).

Probing goes hand in hand with quick selling.

If Dan has any ‘magic sauce’, it’s his determination to never own a stock that isn’t going up.

It doesn’t matter if he only bought the stock 20 minutes ago, or that the stock hasn’t (yet) taken out his stop loss or even come back to his breakeven point. If the stock isn’t acting like it wants to explode higher, he’s out.

Like anything market related, this approach isn’t perfect — but it suits Dan’s personality. He understands and accepts the drawbacks:

“With my Type-A personality I have no patience for slow-moving stocks, so if the stock does not move rapidly, I pretty much move to the sidelines and wait for one that does.

“I must admit, I miss many big movers that are slow movers for this reason, but there is nothing I can do about that in retrospect.”

Going through the school of hard knocks helps Dan be at peace with imperfect outcomes — because he’s experienced the painful consequences of not following those rules.

The more you study Dan’s story, the more you recognise those hard lessons shaped his trading.

From the obsessive focus on charts both during and after hours, to the almost skittish selling, you can trace the most striking elements of his style to his hard-earned lessons and personality.

For example, when he became too enamoured with certain stocks and blew up in the mid-’90s, that was when he became determined that “they’ll never get [him] again”. He’d never believe in his stocks again, only in his stops. Or to be more exact, in just his charts and price action, which meant he:

• Let the market tell him which stocks to own — and when to buy (and sell) them — rather than push his stock selections on the market.

• Became extremely quick to sell. Whether it’s a trendline break, bearish reversal bar, price not making progress in spite of huge volume coming in, or another sign of stalling action, Dan exits (or reduces, after a decent move higher) and keeps rotating his money into the fastest-moving names.

In this interview, Dan expressed his philosophy well: “As soon as the stock stalls, just trade out of it. If it moves up again, buy back in. […] Stocks are vehicles to make money or lose money.”

He also shared a story about being asked by SEC attorneys why he’d sold Lida at $13 the day before the stock gapped down to $4. His response: “I sold because it wasn’t going up. This is news to a lot of people.”

Fast rotation also fits Dan’s thrill-seeking personality:

“I’m a Type-A personality kind of guy. I enjoy the adrenaline rush.

“To get that thrill, I have to be on 2-to-1 margin and that keeps my interest in the market. I’m the race car driver doing 180 MPH around the course inches from the wall. And that’s what I like. If you aren’t like that, then you have to adjust yourself and your risk factors accordingly.

“That’s how I turned $10,775 into $18 million in 18 months and ultimately went to $42 million in 23 months. I would own the one or two fastest stocks of the week during the bubble, and I would know exactly when to buy it on 2-to-1 margin and be out within a few points of the top and compound my money weekly, swing trading these lightning-fast moving stocks leaping $10 to $25 a day or more.

“I would be so glued to the computer screen you would almost have to peel my eyes off the monitor with a spatula.”

As an extension to that final point, for many years, Dan would flip through 1,400–1,500 charts once or twice a day. That’s on top of watching his quote window throughout the day.

This is why he doesn’t use scanners:

“Scans are not going to get all the movers the way I will on a manual scan. The charts tell you everything you need to know about the stock. If a stock is lying dormant, no scan will tell you it’s time to go before it goes, but viewing the chart manually will.”

Dan’s only protégé, Randy Opper, also offered insight:

PERSISTENCE & HOMEWORK

(Two ‘secrets’ to Dan’s success)

Dan’s mantra is to “never stop watching the market”.

…because he never wants to repeat his mistakes:

“I remember getting hammered on a market correction more than once and saying I’ll never do stocks again and walking away. After a few months of my not paying attention to the market, it was taking off again, and I was asleep at the wheel instead of watching the market during the correction like I should’ve been. […]

“I realized I’d been wiped out in a market correction, but if I decided not to go back, I would have never gotten my money back. At that point I realized you could never, ever turn your back on the market. You have to be there every single day. Then you’re ready to go when stocks make their move out of a correction.”

For context, Dan started trading in 1989 when he inherited $100,000 from his mother, ran up his account to $450,000 in six months, then gave all his winnings back and more in the 1990 bear market — just as he was dreaming about what he’d do with all that money.

He then went through the boom-and-bust rollercoaster during 1991–1997, until losing it all in the market break of 1997 — which he considers his turning point. He foresaw the break in the oil index (with oil stocks leading at the time), but didn’t act fast enough. He ended up owing his broker $225; a debt he settled by selling his car for $11,000, leaving him with the $10,775 he’d eventually turn into millions.

Those experiences didn’t just teach him the crucial “never hold a stock that’s going down” lesson, but also changed his attitude towards money: he’d just focus on his charts and price, and hardly took out any money from the account he ran to $42 million. (Even though his pool-building business was $200,000 in debt!)

The more you piece together Dan’s story from the various interviews, the more you see his ‘all-in’ personality.

More than once, he swung from one extreme to another. He’s also incredibly persistent, never giving up, endlessly reviewing his mistakes, rereading O’Neil’s book, hammering the lessons into his head — until he eventually put all the pieces together in time for the ‘perfect storm’ that was the dot-com bubble.

Not counting his early exposure to the markets in the ’70s and ’80s, it took him ten years of extraordinarily hard work and sacrifice to achieve his ‘overnight success’.

…hardly a surprise he often said things like:

“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. […]

“Most people that are really successful have been at it for 4–6 years at a minimum.”

And:

“Pretty much everything is right there [in the charts]. There’s really nothing else you need. You just have to do the homework.

“You write your own book.”

For me, writing my own ‘book’ (well, Substack) hugely improved my trading. The friction of writing and pressure of publication forced clarity into market structure, my strategy and myself.

Highly recommended.

THE LEARNING NEVER STOPS

(Even *after* his record run, Dan learnt big lessons — about liquidity, position sizing and market environment)

After making his initial $42 million, Dan lost 75% of it.

Since he made his record run in the dot-com bubble, he must have given his gains back when the bubble popped… right?

In fact, Dan had consistently been good at getting out near tops as he rotated his money so quickly to aggressively compound his account during the bubble. And because he knew the market would break viciously, his weakest performance (within the 23-month record run) was actually during the blow-off period, which he played more conservatively — and got out before the internet stocks collapsed.

But in October 2000, he was heavily long fibre optic stocks, which then all gapped down when Nortel Networks announced it was going to miss earnings.

He lost 32% of his portfolio that day.

(He openly discussed this in several interviews, both written and spoken.)

Because he had such large size, it took him two days to fully get out of his positions, pushing the price lower in the process.

After that event, you notice Dan prioritising liquidity, particularly as he started trading with a $40 million account again as he later achieved triple-digit years trading liquid leaders (different to how he traded the dot-com bubble). He always wants to know he can get out of a name if it tanks. He also started accumulating shares earlier and selling more on the way up.

He also learnt to never have his entire account in one stock or group. (Which he did — in internet stocks — during his record run.)

The most interesting lesson was the 2000–2003 bear market.

Taxes aside, trying to trade through that bear market led to the final chunk of his drawdown.

That was his first prolonged, vicious bear market, and clearly hit him deep from the tangible pain in interviews afterwards. The experience made him, in his words, a “wiser” trader: “Next time a major bear market comes around, I’m heading to Maui and I’ll stay there until the next bull market arrives.”

What makes a major bear market so much more dangerous compared to a smaller correction is that it contains fierce rallies, tricking you into taking on risk, only to have the market pull the rug from under your feet. Going through this experience multiple times doesn’t just cost you money — it’s also mentally draining.

But Dan offers more insights into the importance of environment:

“You can be in a bear-like market when stocks break out and fail en masse or stocks run up into new highs with an abbreviated base and then quickly fail.

“All these scenarios are a bear-like market to me and can eat you alive even without the leading averages being down 20 percent or more. This type of market behavior I just described can often be the precursor to a much bigger downturn for the leading averages.”

“The lesson is to not trade bear markets and you will not lose money.”

“Over the past two years, I can look back on my portfolio and see that my gains have come in about three to four months of the year with slight down months all the other months in between.”

That final comment reflects Dan’s own journey, going:

• From trading the major bear market in 2000–2003…

• To ‘trading less’ — only during the big swing cycles — being his main focus (shared in his best spoken interview, from 2005)…

• To clearly having become comfortable about staying in cash (this 2015 broadcast illustrates it well).

Another recent article with Matt Petrallia covers environment in more detail — what it is, why it’s so important, how to assess it, and how to adapt to different environments.

“The key to surviving is not getting hurt in a choppy market or sucked in on false breakouts or rallies.”

“Once you’re in [a bear market], you start getting chopped up and losing cash. And typically it’s the drawdown in your portfolio that tells you not to trade.

“Getting to the point where you can say, ‘this is a bad market; stay out of it’ and avoid taking the drawdown takes a long time. I think I’ve almost gotten to that point. [Interview from 2006.] I think I’m there in certain areas, but I have some things to tweak in others.

“But you know, if the market wasn’t a new learning experience every day, I think I might be bored with it. I don’t need to work any more — it’s the challenge that keeps me going.” [source]

Dan continued highlighting how the market never runs out of things to teach. By 2010, he’d been trading for over 30 years, but still described the list of new things to learn as “endless”.

The fact that he’s so passionate about the markets, loving how they intellectually stimulate him, is a huge part of what makes Dan Zanger, well, Dan Zanger.

“If the markets are open, I have to be here. There is nothing more exciting and enjoyable. It is the passion and love of my life. I’m so blessed to be doing what I want to do and get paid to do it. It doesn’t get any better. There is nothing I’d rather do.

“Every day is different and your brain is being taxed and you have to figure out the puzzle. Do you hold ’em or fold ’em? What’s going to happen next?

“It doesn’t get more exciting than this.” [source]

MY FINAL THOUGHTS

Dan Zanger is one heck of a trader.

…but ‘plugging and playing’ his tactics — especially from old interviews — is a recipe for disappointment.

Markets change. His strategy is tailored to his personality, not yours. And his explanations are deceptively simple — reflecting the way he perceives things, but hiding the sheer amount of experience that went into building his depth of understanding.

You can’t just ‘download’ that knowledge into your brain.

But you can study him to get to the essence of his strategy.

That essence reflects the foundational truths of the market — the ones that never change.

If you want to find the biggest movers, look for explosiveness. Don’t hold a stock not going up. Listen to the environment. Understand that certainty doesn’t exist in the market and find a way for you to make peace with that fact.

Your story — and personality — shapes your strategy.

- Kyna

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