Dan Zanger on Volume: The Ultimate Confirmation Signal

Volume as a Lie Detector

For Dan Zanger, volume is the ultimate truth-teller. A breakout on low volume is a lie. It is a trap set by market makers to lure in unsuspecting traders. A breakout on high volume, on the other hand, is a sincere expression of institutional demand. Zanger will not even consider a trade unless the volume on the breakout day is at least 300% of the 20-day moving average. This is his way of ensuring that he is trading with the big money, not against it.

Real-World Examples

Consider the case of Qualcomm (QCOM) in late 1999. Zanger noticed the stock forming a base, and when it broke out, it did so on a massive surge in volume. This was his signal to go all-in. The stock went on to make a historic run, and Zanger's account balance exploded. This is just one of many examples of how Zanger has used volume to identify and profit from explosive breakouts.