I subscribed to Dan Zanger’s Chart Pattern with hopes of finding some great stock picks, and in the process gaining a deeper understanding of the technical analysis behind picking stocks. If you’re like me you have probably seen the thousands of online “investing geniuses” claiming to outsmart the market by merely looking at the charts. Dan Zanger is one of the more infamous stock traders of the dot com era, claiming to have turned $10,775 into $18,000,000 in just 18 months. Dan certainly has the accolades to support his investing expertise, appearing in countless magazine articles from the late 1990’s to early 2000’s. I was enticed to try out his system with hopes of turning a profit and covering the cost of the pricey subscription; not necessarily $10k to $18m, but at the very least discovering a few winners.
First things first, for $125 a month I expected the service to include access to some sort of charting software. After signing up for Chart Pattern you are directed to purchase one of a few charting software products from AIQ to Esignal, etc. It is recommended to get the real-time charting software, and the cost for these additional charting services range from $115-$300 a month. So with Dan’s hefty $125 a month price tag, and with the lowest level of real-time service of $115 you are spending at least $240 a month for the service. The only price break you will receive is if you decided to purchase Chart Patterns with a check on a quarterly basis, in which you will spend $360 ($15 savings). So the cost for a yearly subscription to Chart Patterns if you pay by check is $1,440, and with the lowest level real-time charting service you are looking to spend an additional $1,380 per year; for a grand total of about $2,820 a year. It is also mentioned that “Dan includes 4 weeks of vacation time during the year in these rates. There is no adjustment in your time when Dan takes a week off”, so if you pay for a full year at least one month of that yearly payment is dedicated to Dan’s vacation time.
With Chart Pattern, you can expect a newsletter every Sunday, Monday, and Wednesday evening intended to help you trade the following day. These newsletters are not very detailed but do consist of multiple basic charts showing the performance of indexes such as the Russell 2000, S&P, and the Dow Jones transport avg. These newsletters also show charts of a few of Dan’s recent recommendations with some mild guidance as well. I say mild guidance because these graphs are accompanied with a sentence or two explaining the resistance points or formation setups, etc. For example, showing a stock and saying: “hitting $40 and then selling down where it might need to rest for a few weeks”. Or saying: “$34 might work as a technical buy are for this stock or dips at $32”. Or saying: “45 ish is the technical buy area”. You are essentially supposed to look at his charts, along with his mild advice, and make decisions for yourself. For $125 a month, I was personally hoping for more of a definitive direction from such a seasoned trader.
As far as the actual recommendations, you can expect a “morning market update” every day that the market is open. With the morning market update, there are typically somewhere between 9 stocks listed which then have a link to “finviz.com” where Dan has created a graph of each pick, showing potential formations, resistance points, etc. There is no significant value added with these graphs as anyone could go and create these graphs showing the exact same formations and resistance points, I guess the value lies in the picks that Dan presents. IBD has a charting feature included in their subscription, for which a yearly subscription costs about as much as one month of Dan’s service. Additionally, if you pay for a service like AIQ for example; you could set your own technical parameters and find the exact same stocks Dan does, without paying the additional monthly fee. If you are one of the Chart Pattern’s active subscribers, you probably have enough time on your hands to do so. These picks are again accompanied with some mild advice, such as: “Use 5 and 15 minute charts to find entry and exit areas for these stocks listed here for potential long or short positions that could last from 20 minutes to 4-5 hours or even a few days. Or: “These are not outright buys or stocks to sell short, but stocks with good price action that you would follow using your 5 and 15 minute charts to find entry and exit points during the day”. The majority of the picks seem to stay the same all day or for a few days, while some do cycle in and out. Dan admits to recommending the same stock again and again if it appears to have more potential. This page is also accompanied with an “oscillator reading”, a “cash slider reading”, and a “market light”. These readings are supposed to be used as overall market indicators, but are not explained in great detail on the site. If Dan’s recommended picks are not sufficient you can purchase a disk to see Dan’s top rated picks using the AIQ system, for an additional fee. If you have trouble using Chart Patterns succesfully, you can always attend one of Dan’s seminars for “only” $1,995 per person.
One of the added bonuses of the subscription was the fact that you would have access to the exclusive chat room with “as many as 500 active and seasoned traders discussing strategies and market color”. I can say for 100% certainty that during the time period in which I was a member of Chart Pattern, I did not ever see anywhere close to “500 active and seasoned traders discussing strategies and market color”. Truthfully, I don’t think there was one single day where I saw more than 25 active traders commenting on this chatroom. While there were times when there would be some 20 or so traders commenting back and forth asking questions about potential trades, they were using chatroom terms and acronyms to communicate and I found absolutely no value in any of this chatter back and forth. Not to mention the days when they were all chatting back and forth about golfing, or some other irrelevant topic. While Dan does have a listing of all of the common terms listed; why would anyone take the time to learn all of these terms and acronyms just to chat with a couple of traders? There is another section titled “Chart Pattern Community” which again doesn’t have much action, and the majority of the comments are actually from “ChatModerator” or “ChatWatch” which I assume (as their names imply) are the chat room moderators. There is also a specific section within this chatroom called “Dan’s Posts” which I assume (again, as the name implies) is a section where Dan Zanger himself would leave comments. Unfortunately, I also did not see many days where Dan actually posted any sort of comments in this section. Overall, as most chatrooms are in 2015; this chatroom appears to be dead. If the chatroom aspect sold you on a Chart Pattern Subscription, I advise you to check out Stocktwits.com; it’s 100% free and you can communicate with thousands of traders in real-time.
Lastly, if you look at Chart Patterns testimonials, you will see countless claims of making $200K, $1M, and so on. While I could not find many recent legitimate reviews of the system, I did find some very old reviews of the system boasting the site’s winners. It is tough to be able to dispute Chart Patterns’ performance as the site only displays their “Top Performers”. Chart Patterns claims to “keep the losses small at around $1”, but with no complete track record available how can you verify performance? I know of many systems that would have stellar performance, if they only touted their winners. I absolutely do not expect every single pick to be a winner every time, as every investor knows that losses will occur. But when I am looking for a stock picking system to invest my hard earned money, I would like to be able to verify performance to see how the system held up during a booming market, a choppy market, and a down market.
Overall, there is no disputing Dan Zanger’s personal trading expertise in the late 1990’s-early 2000’s, as he has the track record to prove it. The Chart Patterns website is archaic and looks like the last time it was updated was in the early 2000’s. I was personally looking for more than conditional advice such as “buy stock xyz in this range, if this chart makes this pattern”. I was looking more for “buy stock xyz at this price” or “sell stock xyz if it goes below this price”. The Chart Patterns system may work for some subscribers, but at $125 a month there are definitely better services available at a lower price point. If you are a day trader or have the time to sit around a computer all day refreshing stock charts on a charting system, then Chart Pattern may be for you.