Dan Zanger's Trading Advice

A casual interview of the legendary Dan Zanger with I-TV's Matt Blackman at the end of 2005 or early 2006. Dan talks about his trading performance in 2005 and touches on a number of keys to success. Lots of good material for a 6 minute video. Of course, he makes it sound so easy. For mortals like me trading isn't always easy, and actually Dan addresses this on his website:

"If trading were easy everyone would be making millions. It's not; it takes years and years of hard work and long hours."

Here are my take-home points from the interview:

• Follow the leaders in the market.
• Have a lot of money in the leaders.
• Follow stocks with explosive earnings accompanied by explosive price movement.
• Look for high earnings growth and revenue growth (above 50%).
• Buy stocks that are not well known -- "New Stories" in relatively new companies.
• Find stocks that are both new ideas and dominant companies. Ideally everyone uses the product or service, but not everyone owns the stock.
• Focus on game-changing companies -- "Revolutionizing Companies".
• Buy breakouts on 2:1 margin, then take off margin during the run.
• Institutional buying pressure is critical.
• The big money is made on the long-side.
• Shorting is tough.
• Ignore the media saying a stock is 'too expensive'.
• Stay unemotional in the market most of the time (he's only gotten excited a few times).

Obviously Dan Zanger is quite comfortable buying stocks that "seem too expensive" in spite of the fact that it is psychologically difficult for traders to buy new highs. Both stocks that he mentions owning, GOOG and TASR, made numerous all-time highs in 2003-2005. It was a short interview so Dan doesn't give much detail about his entries and exits, but it is important to know that he has a detailed methodology for buying and selling, and when to let a breakout go without chasing it.

Stocks are only good when they are moving up -- Dan Zanger

Related Posts

• All-Time High Stock Screen for March 4 2011
• Why many Investors Lose Money
• Why all-time highs outperform
• PZG, PZG.TO Paramount Gold and Silver
• Trend-trading Potash Corp 2006-2008
• On Setting Stops