Don't kid yourself. Yeah, I know all the trading books and gurus tell you to focus on the trade, not the money. Treat it as an art they say. And all that is just some psych ramble to help beginners get over the hump of making bad trades. They tell you to focus on the trade as a way of making sure you max your profit, instead of exiting when you've made a few hundred bucks. But that doesn't mean money isn't your final objective. I used to believe it too, since I was having alot of fun trading when I started. Then I realized the only reason I was having fun, was because I was MAKING MONEY. Take that away and all you have is staring at computer screens all day along. If you really loved the GAME, while don't you just get a regular job and paper trade in your spare time. I mean, you're still playing the game right? Dont get me wrong, I love trading, but only because of what it provides me. After you've been making serious money in and out for several years, you realize that trading isn't some noble cause or some grand contest for "consistency." Its about the bucks. End of story. BTW, I've in the business long enough to realize any edge in the market is temporary. I've seen them come and go. So I press my size to the max with my current strategies. Because consistency can only last so long.
I had never heard of Dan Zanger until this thread. According to this article www.investopedia.com/articles/trading/04/082504.asp he has continued to do well. 2003 +150% 2004 over +100% Oh, by the way, he says he's still highly leveraged and prefers bull and range markets. Why get offended by another person's financial success? You see it in every industry.
DANâS 10 RULES 1 - Make sure the stock has a well formed base or pattern such as one described on this web site and can be found on the tab âUnderstanding Chart Patternsâ on the home page, before considering purchase. Dan highlights stocks with these patterns in his newsletter. 2 - Buy the stock as it moves over the trend line of that base or pattern and make sure that volume is above recent trend shortly after this âbreakoutâ occurs. Never pay up by more than 5% above the trend line. You should also get to know your stocks thirty day moving average volume, which you can find on most stock quote pages such as eSignalâs quote page. 3 - Be very quick to sell your stock should it return back under the trend line or breakout point. Usually stops should be set about $1 below the breakout point. The more expensive the stock, the more leeway you can give it, but never have more than a $2 stop loss. Some people employ a 5% stop loss rule. This may mean selling a stock that just tried to breakout and fails in 20 minutes or 3 hours from the time it just broke out above your purchase price. 4 - Sell 20 to 30% of your position as the stock moves up 15 to 20% from its breakout point. 5 - Hold your strongest stocks the longest and sell stocks that stop moving up or are acting sluggish quickly. Remember stocks are only good when they are moving up. 6 - Identify and follow strong groups of stocks and try to keep your selections in the these groups 7 - After the market has moved for a substantial period of time, your stocks will become vulnerable to a sell off, which can happen so fast and hard you wonât believe it. Learn to set new higher trend lines and learn reversal patterns to help your exit of stocks. Some of you may benefit from reading a book on Candlesticks or reading Encyclopedia of Chart Patterns, by Bulkowski. 8 - Remember it takes volume to move stocks, so start getting to know your stockâs volume behavior and the how it reacts to spikes in volume. You can see these spikes on any chart. Volume is the key to your stockâs movement and success or failure. 9 - Many stocks are mentioned in the newsletter with buy points. However just because itâs mentioned with a buy point does not mean itâs an outright buy when a buy point is touched. One must first see the action in the stock and combine it with its volume for the day at the time that buy point is hit and take keen notice of the overall market environment before considering purchase. Are stocks moving briskly or are they acting sluggish or even worse, are we in a hefty sell off. 10 - Never go on margin until you have mastered the market, charts and your emotions. Margin can wipe you out. Note: If you are new to trading or investing, I suggest reading these rules many times over until they become ingrained so you can act without emotions. Stocks that breakout and move up with tremendous volume and close near the highs of the day seem to work out best. However many stocks that move up 15% or more on breakout day often fail. Youâll just have to watch your stocks action like a hawk and get to see and understand these things over a long period of time. If trading were easy everyone would be making millions. Itâs not; it takes years and years of hard work and long hours. Many traders employ a half hour rule, meaning that for the first half hour of the day many traders do not buy any stock that gaps up in price. If the price holds after the first half hour then often many traders will step in a buy the stock. I find this rule works good after the market has moved up for few strong weeks and is not very effective at the start of a new strong move. If itâs earnings season then itâs an absolute must that you know the date that your company reports its earnings. Many traders prefer to be out 100% before a company reports its earnings in case the company misses its earnings or guides lower. Others I know reduce positions substantially before earnings are released to lower risk. The choice is up to you.
I agree on the points here about alpha. But this quote reminded me of an old floor trader saying .... "I'd rather be lucky, than good"
You guys really need to quit bitching about him. He is actually featured again in this month's Trader Monthly. He was reported to have made 15 to 20 million in 2004. That's right, while ET was starting 30 threads a week about how you can't make any money in this market, he made 20 million. Doesn't look like a one trick pony after all does he?
Nah - just saw this thread and checked him out. But with those kinds of results maybe I should subscribe!
Abso-freakin-lutely. People call what Zanger did "luck", and he himself admits he in the right place at the right time, but so what? A million other traders were in the same place at the same time but couldn't hold a candle to him. Imo, it wasn't "just luck". I think it takes great "skill" (or the right mindset) to realize when conditions are extremely favorable to your trading approach, and then just put the pedal to the metal and try and cash in, 'cos, hey, this might be a once in a lifetime opportunity. Sure, you might crash and burn a few times with this approach, but, imo, it's how the truly big money is made in trading. Then, once you hit the jackpot, you need one more extremely important "skill": knowing when to quit. I wouldn't dream of comparing myself to Zanger, but in the only year I made any money trading, '02, I was an extreme bear in a bear market. But I didn't push hard enough. I was trying to be "consistent". Consequently, I didn't make anywhere near as much as I coulda-shoulda-woulda.