Both of these trading strategies were inspired by Dan Zanger, the trader who was featured in Fortune Magazine because he took $11,000 and turned it into $42 million within two years.

One of the secrets to Dan’s success was his use of price and volume. This got me to thinking about how price and volume signals can be used to create wealth in the stock market. After reading about Dan in 2000 I set out to see if I could crack the code to stock market wealth with price and volume signals like Dan did.

I didn’t want to do it with stocks since they are at the mercy of whatever sector is in fashion at the time (and I didn’t want to have to keep track of sectors also).

The logical decision is to track the price and volume of Indices since they are an overall picture of all sectors and offers diversification. Unfortunately, back in the early 2000’s you couldn’t trade the indices with any success.

It wasn’t until a few years ago that ETF’s emerged and gave us a vehicle to play the markets up or down. Perfect for what I was attempting to do.

So in 2009, with the advent of ETF’s (especially inverse ETF’s) I was able to implement my dream and create two trading strategies using price and volume signals to signal the proper time to use TNA or the proper time for TZA.

It’s been three years in use and while neither strategy gained every year, they did show a profit if used two years or more. I recommend the use of both. Half your funds on one and the other half on the other (rebalance every year). Using both strategies at the same time has produced a 50%+ GAIN EVERY YEAR! Below are the full stats.

If you use both together, half your funds on one and half your funds on the other, you can get a more diversified return of:

Average Returns:
2009: +94% (the S&P did: +25%)
2010: +45% (the S&P did: +13%)
2011: +85% (the S&P did: 0%)

The average return of these two strategies is 75% per year compared to 12% per year on the S&P. That’s 6x better. Do you see how powerful these two strategies are?

I’m giving these two strategies away for free to members of my “Go With The Flow” Index Trading System. You do the math. See how fast your money will multiply and then YOU decide if you want to join me and my fellow traders on the inside.

Click this link for more information about my
“Go With The Flow” Index Trading System.

In the post I said the market is about to make a big move to the upside or downside starting on Wednesday of last week. As we see in the below chart the S&P fell for three days straight, broke through it’s support line, and now lies at it’s lowest point in over a month.

I take it you all followed my advice and moved to cash and protected yourselves from losses, good job.

Now we are ready to profit off the markets next big move. I see it happening around Tuesday, maybe Wednesday, of this week. I see a potential gain of 10% in a matter of days.

Basically, you buy and sell an Index instead of stock in a company. You can trade the DOW, the Russell 2000, the S&P 500, or whatever index you wish.

The advantages to trading an Index instead of a stock are many.

1) When markets rise, only 75% of stocks will rise with it. There is no guarantee that the stock you picked will rise with the market. However, with Index Trading, if the markets rise you are guaranteed to have a winner as 100% of the Indices will rise with it.

2) Another great advantage is LEVERAGE. With stocks you have to use margin to get leverage. With Index Trading you never borrow money and you can leverage your portfolio up to 3 times return. Fir example, if the markets rise 1%, you get 3%. Best leverage there is.

3) You can make money when the markets drop so much easier with Index Trading. With stocks you have to short-sell and are at the mercy of your broker if things go wrong. With Index Trading you never need to borrow shares to short-sell and therfore are always in complete control of your investment.

Now that I’ve laid out the advantages, let’s see how it all works.

Step 1: Pick an index to trade.
Step 2: Decide how much risk you are willing to take. 1 = minimal. 2 = moderate and 3 = maximum.
Step 3: Now that you know the index and how much risk you are willing to take, now you must find an Exchange Traded Fund (ETF) to trade. Do a Google and find the ETF that suits your needs.

Example: I want to trade the Russell 200 and I’m willing to take moderate risk (2). I can Google “Russell 2000 2x ETF”. To search for others simply change name of the Index and change the number based on your risk.

Searching Google for the above we find that UWM and TWM come up. Both are 2x leveraged ETF’s based on the Russell 2000 index. UWM will profit when the Russell 2000 goes up. TWM will profit when the Russell 2000 goes down. So you see, you can make money no matter which way the market goes.

Step 4: Determine market direction. Now comes the tricky part. This is where most traders get it wrong. You need to be certain of market direction. If you are sure the markets will rise, buy UWM. If you are certain the markets will fall, buy TWM.

With Index Trading you don’t need to worry about if a company will be profitable, if the management will fall apart, or even if the company you are buying stock in is going bankrupt. All you need do is be correct about the market direction. If you don’t know how to determine that I suggest you spend a few years learning technical analysis.

OR

You could take the easy way out. I currently run an Index Trading portfolio (I call it Go With The Flow) that as of September 7, 2011 is up over 51% (while the DOW is only up 1%). The easy way is to just partner with me and let me monitor the markets for you. I’ll tell you when the markets are going up and when they are going down. No need to waste years studying charts, etc..

If you want the quick route to gains, please visit my Index Trading Strategy page for more details on how you can partner with me.

During this same time period, my portfolio has risen over 50%. How was I able to do this?

First, if you take a look at a chart of the S&P 500 you will see the market didn’t move sideways for five months, but rather had a series of ups and down and has now ended back in the same spot it was five months ago.

Those investors following a “Buy & Hold” strategy have just wasted five months of their life for no gain. The secret to big gains is to play the ups and downs of the market! Here is how it works:

First we need a vehicle to invest in. Now since most stock investors think of “stock” as an investment vehicle, the sad fact is.. about 25% of stocks will move in the opposite direction of the markets. If you are investing in stocks while the market is rising, there is no guarantee your stock will rise also. But what if there was a guarantee?

Enter the ETF. Exchange-traded funds (ETFs) are innovative investment vehicles. They are built like mutual funds and trade like stocks. For example, you can buy an ETF that mimics the S&P 500. So when the S&P gains 5%, that ETF will also gain 5% (or close to it). It’s what we call a sure thing. Everytime the market goes up, your ETF will also go up. You can’t say the same about stocks.

But wait. It gets even better. You can also make money when the markets drop. In the old days that meant “shorting” stocks which left you at the mercy of your broker if the trade goes wrong. You could lose it all. Extremely risky.

Today, there is what’s called an “inverse” ETF. This ETF goes up when the markets drop. You trade these just like a stock so it’s easy to profit when the markets fall.

Now that you know how to profit in up and down markets, now it’s time to supercharge your returns. To do this you invest in a “leveraged” ETF. These currently come as 2x and 3x. For example, if the S&P rose 5%, your 3x ETF would rise 15%. How sweet is that. The same goes true for Inverse ETF’s.

To sum it all up. Simply buy an ETF (TNA, UPRO, BGU are some) when you feel the markets are rising. When you feel the markets will fall, invest in an Inverse ETF (BGZ, SPXU, DOG, plus many more).

The only thing you’ll need to master with this trading strategy is timing. How good are you are telling when the markets will fall or rise? There are big returns to be made if you are good at market timing.

If you are like most investors you are always getting in and out at the wrong time.
All is not lost. For less than $11 a month you can subscribe to my stock alert service amd I’ll email you when the markets are about to rise or fall (in 2011 it’s been about once a month). I’ll even tell you which ETF to be in at any given time.

If you would like to consistently out gain the markets (I’m currently up 63% in 2011 vs the S&P’s 6%) than I urge you to join me today by clicking the link below:

Click to learn more about my profitable ETF investing strategy.

So how did he do it? Zanger uses volume and chart patterns as the main criteria in stock selection. He mostly avoids technical indicators, but instead looks for high momentum stocks with 2-3 times the average daily volume exhibiting pattern breakouts. Some of the patterns he uses most are head and shoulders, cups and handles, rising and falling wedges, triangles, and flag and pennants.

In addition, Zanger looks beyond technicals to the fundamentals. Zanger looks for companies with rapidly increasing earnings, a new product or service, strong management and dominance in their market.

A typical day for Zanger is sitting in front of his six flat screen monitors watching the price and volume movements of the selected stocks that have passed his trading criteria. Zanger also spends a large amount of time on the phone with any one of his three brokers when any of the stocks on his watchlist are on the move.

Every night Zanger scans 1,400 stocks looking for the next days trading prospects. Using his strategy, Zanger has shown a knack for locating high-alpha stocks that lead the market, particularly during a major market move to the upside.

Zanger’s final advice is “Trading for me is all about volume and price action. I buy on pattern breakouts when volume is rising, and as long as price is responding well to increasing volume, I stay on board. But when either price or volume stops rising, it’s time to get out.”