Dan Zanger uses no indicators. That is the unusual thing about him, and it is not a stylistic preference: his published method is chart patterns, price, and volume, and nothing else. He came to attention in December 2000 when Fortune ran a piece on his trading, and he has run chartpattern.com since, along with a long Stocks & Commodities interview (V.21:8, 2003) that remains the best published account of how he works.
This guide covers the patterns, the one measurement he did put his name to, and what of it survives translation into a backtest.
A note on integrity before we go further: InvestingPaths is an independent research site and is not affiliated with, endorsed by, or connected to Dan Zanger or Chartpattern.com. Everything below is our summary of publicly documented material, attributed as such. Trading involves substantial risk of loss, and nothing here is financial advice or a promise of any result.
About the record, first
Zanger's reported result is turning roughly $10,775 into more than $18 million during the late 1990s. It is the reason anybody reads him, and it needs the same scrutiny as any other headline number.
It was earned in 1998 to 1999, in the most extreme momentum market in modern American history, trading the stocks at the centre of it, with heavy concentration and margin. The Fortune coverage brought the figure into the mainstream. What does not exist is an audited, independently verified track record covering the period before, during and after, which is the thing that would tell you whether the method or the market produced the result. Treat it as testimony from an extraordinary window, not as an expected outcome.
The patterns
Zanger's vocabulary is classical technical analysis, the same shapes described decades earlier, traded with an emphasis on the breakout and the volume behind it.
| Pattern | The trade |
|---|---|
| Cup and handle | Buy the break above the handle's high |
| Flags and pennants | A brief tight pause after a sharp advance, bought on the break of the pause |
| Channels and trend lines | Buy the break of the upper boundary |
| Ascending triangles | A flat top with rising lows, bought on the break of the flat top |
| Head and shoulders | Read as a reversal, and used defensively |
The consistent element is not the shape. It is that every entry is a break of a level after a period of contraction, confirmed by volume. The shapes are a way of describing where the contraction is; the breakout and the volume are the trade.
The Zanger Volume Ratio
This is the one measurement carrying his name, and it exists to solve a specific problem: you cannot compare a partial day's volume against a full day's average.
Two hours into a session, a stock might have traded 30% of its average daily volume. Is that heavy or light? Against the daily average it looks light. Against what this stock normally has done by 11:30am, it might be double.
The Zanger Volume Ratio compares current volume against the volume this stock typically has accumulated by this point in the day, so it reads correctly from the opening bell onward. A reading of 165 means the stock is running at 1.65 times its normal pace.
That makes it an intraday instrument by construction. On a completed daily bar it collapses into an ordinary relative volume measure, which is the honest thing to know before you go looking for it in a daily-bar tool.
The sell rules, which matter more than the entries
Zanger is consistently more specific about exits than entries, and his stated discipline is where most of the method's risk control lives:
- Sell into climactic strength. A near vertical move on enormous volume is where he reduces, rather than where he adds.
- Respect the moving averages. A break below the short term average that has guided the advance ends the trade.
- Cut failed breakouts immediately. A breakout that reverses back inside the pattern is not a pullback, it is a failure, and the loss is taken at once.
- Size is the risk. Concentrated positions and margin produced the record, and they are also the reason the same method in the same market ruined a great many other people.
Anyone taking the entries without the exits has taken the part that loses money.
Building the scan in TC2000
Chart patterns are recognised by eye, but the conditions around a Zanger style breakout scan cleanly. In TC2000:
| What you want | Formula |
|---|---|
| Tight consolidation | (MAXH10 - MINL10) / C < .08, a range under 8% over ten bars |
| Breaking out today | C >= MAXH20.1, clearing the prior twenty day high |
| Volume confirmation | V > 2 * AVGV50 |
| In an uptrend already | AVGC50 > AVGC200 |
| Prior advance to pause from | C / AVGC50 > 1.10 |
That combination finds the flag and pennant family reasonably well, because a tight range after an advance is what those patterns are. Cup and handle needs the eye. Custom formula conditions need the Premium tier; our pricing breakdown covers the tiers and the EasyScan guide covers saving the scan.
Testing it
The pattern names do not translate, but the mechanism underneath them does, and our free backtester expresses it directly:
| Zanger element | Our rule |
|---|---|
| Tight pause after an advance | Volatility contraction |
| Volume drying up in the pause | Volume drying up |
| Breakout of the pause | Pivot break or Donchian channel break |
| Volume confirmation | Volume vs its own average |
| Established uptrend first | Moving average stack |
| Clean overhead | Trendline clearance |
That stack is a fair mechanical rendering of "tight base in an uptrend, breaks out on volume", and it is the testable core of the whole approach. The Donchian breakout template is the nearest ready made starting point, free and with no account.
Two things it will not tell you. The Zanger Volume Ratio is not reproducible on daily bars, because its entire purpose is time-of-day normalisation and a daily bar has no time of day; the closest daily equivalent is Volume vs its own average, which is a genuinely different measurement. And the exits are the method, so a backtest with a mechanical exit is testing the entries of a strategy whose author says the selling is what mattered.
Frequently asked questions
What is the Zanger Volume Ratio? A measure of how heavily a stock is trading compared with its normal volume at the same point in the trading day, so that a partial session can be judged. 165 means 1.65 times the usual pace.
What patterns does Dan Zanger trade? Cup and handle, flags and pennants, channels, ascending triangles, and head and shoulders as a reversal. Classical patterns, traded on the breakout with volume confirmation.
What indicators does Dan Zanger use? By his own account, none. Price, volume and chart patterns, plus moving averages used as trailing reference levels rather than as signals.
Is the Zanger Volume Ratio available on daily charts? Not meaningfully. It is an intraday tool by construction. On a completed daily bar it reduces to ordinary relative volume, which most platforms already provide.
Can I backtest Dan Zanger's method? The mechanism, a tight base inside an uptrend breaking out on expanded volume, is fully expressible in our backtester. The pattern recognition and the discretionary exits are not.
Test the mechanism, not the shapes
Strip away the pattern names and what is left is a testable claim: tight consolidation inside an uptrend, resolved upward on heavy volume. Stack Volatility contraction, Volume drying up and Donchian channel break in the backtester and see what it did on real daily bars, free and with no account.