Chart Patterns Analysis

This book Chart Patterns Analysis: How a super trader made $42 million with $11,000 within 23 monthstrading stocks is a must-read by all traders. Fred Tam is one of the industry’s foremost technical analysts. I have known Fred for 20 years and have taught classes on technical analysis together. Although my brand of technical analysis is different, the same patterns show up time and time again. Like anything worthwhile it takes time to learn but this would be time well spent.

Mr. Lim Tat Seng and Mr. KH Tan are also friends of mine. They are Senior Lecturers at Fred Tam’s technical analysis school. The three experts combined make a very compelling reason to learn this method of analysis.

When it comes down to price change, after all the fundamental analysis has been read, digested and evaluated, it is the irrefutable law of supply and demand that causes all price change. If there are more buyers than sellers willing to sell then price must rise. If there are more sellers than buyers willing to buy then price must decline and if buying and selling are equal, price must remain the same. There is nothing else other than supply and demand and demand and supply. This is exactly what technical analysis endeavors to do – take you directly to the answer.

Tom Dorsey
Founder of Dorsey Wright & Associates,
Richmond, VA, USA

Successful trading stands on three pillars: (1) psychology, (2) market
analysis and trading systems, and (3) money management. Dan Zanger had a unique strategy to all three subjects that helped him get the phenomenal returns of thousands of percent.

It is difficult, however, in one book to fully explain Dan’s strategy on all
three pillars. Firstly, some things just cannot be taught from a book. The
fluid nature of the financial markets, for example, would be difficult to be
comprehensively explained in a book.

Furthermore, to explain the strategies in full, a fair amount of advanced
knowledge would be required on multiple areas such as sector rotation,
technical analysis and money management.

Accordingly, to ensure that the most important part of Dan Zanger’s
strategy is shared to all who are interested, this book focuses on the key
market and trading analysis aspect of Dan Zanger’s strategy: chart pattern analysis. It will focus to identify, illustrate and explain the chart pattern analysis tools that made Dan $42,000,000 in 23 months.

There are many books in the market, both for beginners and advanced
practitioners, that cover the other pillars of trading, be it in terms of
psychology or money management principles. However, there is not
so much material available for the relatively less known art of technical
analysis, in particular chart pattern analysis, which forms the heart of the
Dan Zanger’s strategy.

It is interesting to note that the essential technique of Dan Zanger’s
successful strategy, chart pattern analysis, is not given respectable coverage and under-emphasised in many books on trading. Few contributions in this area have been made since the seminal works by Richard W. Schabacker who wrote three great books on chart patterns in the early 1930s.

Schabacker is widely considered to be the father of technical analysis. Fourteen years after his last book, written in 1934 entitled “Stock Market Profits”, his nephew Robert Edwards and John Magee continued Schabacker’s work with their own classic “Technical Analysis of Stock Trends” which was first published in 1948. No student of chart pattern analysis would consider himself or herself complete without reading Schabacker’s and Edward and Magee’s classics on chart pattern analysis.

But chart patterns analysis was not given the prominence it deserves until Dan Zanger came into the picture. It was Dan Zanger who popularise Schabacker’s and Edwards and Magee’s works when this super trader proved to the world how powerful this technique can be when he astounded the world in 1998-2000 (it should be “2000) by amassing $42 million with just $11,000 in 23 months trading Nasdaq stocks during the NASDAQ super bull run. His incredible performance has proven to us that this technique is effective and still remains very relevant in today’s market environment just as when it was first discovered by Schabacker in the early 1930s. For those who are interested in the stock markets of Malaysia and Singapore, we would draw your attention to Schabacker’s chart patterns found in our very own markets.

It is hoped that this book will provide a logical, organized and sensible
method of learning the chart pattern methodology. We feel that if you
are interested in and enjoy following the financial markets, you will be
fascinated reading the pages before you. Most importantly, through this
reading, you will gain some insights into how one of the most spectacular
investment phenomenon in recent years – super stock trader Dan Zanger
– grew his initial investment of $11,000 to $42 million within 23 months
trading stocks!

CHAPTER 1  INTRODUCTION: WHO IS DAN ZANGER

• Who Is Dan Zanger?
• Dan Zanger General Background
• Dan Zanger Trading Background
• How Did Dan Develop His Stock Selection System From Losing All His Momey To Making World Record Profits?
• You Too Can Emulate Dan Zanger’s Success Formula
• What Is Dan’s Trading Strategy?
• Conclusion

CHAPTER 2  THE ART OF CHART PATTERN ANALYSIS

• Introduction
• Highly Rated Chart Patterns
• Conclusion

CHAPTER 3  CHART CONSTRUCTION

• Introduction
• Bar Chart
• Japanese Candlestick Chart

CHAPTER 4  BASIC CONCEPTS OF TREND

• Introduction
• Importance Of Identifying A Trend
• Advantages Of Identifying A Trend
• Definition Of Trend
• Trend Has Three Directions
• Uses Of A Trendline
• How To Draw Trendlines
• Break Of A Trendline
• Summary: Advantages Of Identifying A Trend

CHAPTER 5  SUPPORT AND RESISTANCE  

• Introduction: Importance of Support and Resistance
• Definition Of Support
• Defintion Of Resistance
• How Support And Resistance Levels Reverse Their Roles
• Bulland Bear Traps
• Importance Of Support And Resistance And Their Trading Rules
• Conclusion

CHAPTER 6  CHART PATTERNS 

• Introduction
• Two Categories Of Chart Patterns – Reversal & Continuation
• Requirements Of Chart Patterns
• Key Factors In Chart Paterns
• Conclusion

CHAPTER 7  MAJOR REVERSAL PATTERNS

• Introduction
• Head-And-Shoulders Pattern
• Double Tops And Bottoms Pattern
• Triple Top And Triple Bottom Pattern
• Spike (OR V) Top And Bottom Pattern
• Rounding Tops & Bottoms
• The Wedge Formation
• The Broadening Formation
• The Diamond Formation
• Conclusion

CHAPTER 8  MAJOR CONTINUATION PATTERNS

• Introduction
• Triangles
• Flags And Pennants
• The Wedge
• The Rectangle (Channel) Formation
• Price Gaps
• Flatbase Pattern
• Parabolic Curve
• Conclusion

CHAPTER 9  THE GOLDEN RULES