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In this interview, John Kurisko, a seasoned trader with over 25 years of experience, shares his journey and insights into the world of trading. Known for his passion for both technical analysis and trading psychology, Kurisko has spent years refining a methodology centered around stochastics, a momentum indicator. He discusses how he transitioned from early success in the tech bubble to creating a business plan for his trades, one that focuses on a disciplined, systematic approach. Kurisko is also the founder of Day Trading Radio, where he teaches traders how to apply these principles in their daily trades.
Through this piece, you’ll learn about John’s core trading strategy, which revolves around stochastic oscillators and their power to predict price shifts. He breaks down his approach to identifying high-probability trades, emphasizing the importance of patience and discipline. Kurisko also highlights his key setups, such as the “quad rotation” and “channel breakouts,” which form the foundation of his trading plan. Whether you’re new to trading or looking to refine your skills, this interview offers actionable insights that can help you stay disciplined and increase your chances of success in the markets.
John Kurisko Playbook & Strategy: How He Actually Trades
The Core of John Kurisko’s Strategy
John’s trading strategy is deeply rooted in his experience with the stochastic oscillator. He uses it as his primary tool for assessing momentum shifts in price action. This method is simple but highly effective when combined with patience and strict discipline.
Key Points to Understand:
- Stochastic Oscillator: John uses the stochastic indicator to measure momentum and price changes over time. It’s particularly useful for spotting divergences between price and momentum, a signal that the trend may be reversing.
- Focus on Divergences: Divergences between the price chart and the stochastic oscillator are the foundation of his strategy. When the price is going in one direction and the oscillator moves in the opposite direction, it indicates a potential reversal.
- Business Plan Approach: Kurisko treats his trades like a business, with strict guidelines for entry, exit, and risk management. This approach keeps him disciplined and prevents him from chasing every opportunity that arises.
John Kurisko’s Trading Setup: The Importance of Stochastic Divergences
One of the most important setups in Kurisko’s strategy is based on identifying stochastic divergences. This is when the price is moving in one direction while the stochastic is going in the opposite direction. He believes that these divergences are among the best signals for a potential market reversal.
Trading Rules for Stochastic Divergences:
- Look for Divergences: When the price makes a new high or low but the stochastic does not, that’s a divergence. This often indicates that the momentum behind the move is weakening.
- Use Multiple Time Frames: John tracks divergences across multiple time frames. For example, if the 1-minute and 5-minute charts both show divergence, the trade setup becomes stronger.
- Patience is Key: Wait for the divergence to fully form before entering a trade. This prevents you from entering too early and getting caught in false moves.
- Combine with Trendlines: A divergence near a key trendline (support or resistance) significantly increases the probability of a successful trade. Trendlines act as critical zones where price action is likely to reverse.
Quad Rotation Setup: The High-Probability Trade
John’s “quad rotation” setup is one of his signature strategies. It involves using four different stochastic oscillators across various time frames. When all four time frames align and indicate the same momentum shift, the trade setup becomes a high-probability opportunity.
Rules for the Quad Rotation Setup:
- Track Multiple Time Frames: Use stochastics on four different time frames (e.g., 1-minute, 5-minute, 15-minute, 1-hour) to track momentum shifts.
- Align the Signals: The setup is valid when all four time frames show a similar pattern of oversold or overbought conditions.
- Wait for Confirmation: After the alignment of stochastics, look for additional confirmation from price action (like a reversal candlestick) before entering the trade.
- Avoid Chasing the Market: Only trade the quad rotation setup when the market is at a critical point—near key levels or during a trend shift.
Channel Breakouts and Pullbacks: Trading the Trend
Kurisko also emphasizes the importance of channel breakouts and the first pullback after a breakout. These setups allow traders to enter a trade early in a new trend with a solid risk-to-reward ratio.
Rules for Channel Breakouts and Pullbacks:
- Identify a Channel: Look for a price channel formed by at least three pivot points—two on one side and one on the other. This indicates a defined range.
- Wait for the Breakout: A breakout from the channel signifies that the market is moving into a new trend. Enter the trade after the breakout has occurred, but be patient for confirmation.
- Trade the First Pullback: Once the breakout happens, the first pullback (a retracement to the trendline) is your opportunity to enter the trade with a good risk-to-reward setup.
- Use Stochastic Confirmation: Ensure that the stochastic oscillator is in the oversold (for long trades) or overbought (for short trades) zone before entering the pullback trade. This gives you the confidence that the market is about to continue its trend.
Trading with Discipline: The Business Plan Approach
One of the cornerstones of John Kurisko’s approach is treating trading like a business. He stresses that without a clear plan and strict discipline, traders are more likely to fail. John’s business plan includes clearly defined rules for when to enter and exit trades, how much capital to risk, and how to grow a trading account systematically.
Business Plan Rules for Traders:
- Define Your Product: Know exactly what types of trades you’re looking for. Kurisko focuses on just three setups: stochastic divergences, channel breakouts, and quad rotations. This keeps him from overtrading and trying to catch every market move.
- Set Clear Entry and Exit Rules: Have a detailed plan for when to enter a trade (e.g., after a divergence or breakout) and when to exit (e.g., when the stochastic becomes overbought or oversold).
- Risk Management is Crucial: Always have a stop-loss in place. Never risk more than 1-2% of your total trading capital on any single trade. This ensures that one bad trade won’t wipe out your account.
- Take Profits Early: Kurisko advises traders to lock in profits quickly. If a trade moves in your favor, don’t wait for it to hit your ideal target—take some profits early to reduce risk and secure gains.
The Power of Automation: Using Bots for Alerts
Kurisko believes in the power of automation to help him stay disciplined and avoid missing high-probability setups. He uses a custom-built bot to monitor stochastic setups and alert him when conditions are right for a trade. This automation helps him stay focused and take trades without having to constantly monitor the markets.
Automation Tips:
- Set Alerts for Key Setups: Use bots or automated systems to alert you when key setups occur, such as a stochastic divergence or a quad rotation. This ensures you never miss a trade.
- Automate Entries, But Manage Exits: While automation can help you enter trades, Kurisko recommends managing your exits manually. This allows you to respond to market conditions and adjust your position if necessary.
- Use Automation to Reduce Overtrading: By setting up alerts and only acting on specific setups, you can avoid the temptation to chase the market and overtrade.
Mastering Momentum: How Stochastic Divergences Lead to High-Probability Trades
John Kurisko’s approach to trading revolves heavily around momentum, specifically using stochastic divergences to spot high-probability trade setups. A divergence occurs when the price moves in one direction, but the stochastic oscillator moves in the opposite direction, signaling a potential reversal. John believes that these divergences are one of the most reliable indicators of market shifts, as they reveal when price momentum is weakening, even though the market may not yet reflect it. By waiting for these divergences to develop fully, traders can position themselves ahead of the trend reversal, improving their odds of success.
For John, recognizing a divergence is just the start. He emphasizes the importance of patience and waiting for confirmation before entering a trade. If the stochastic divergence aligns with key price levels like trendlines or support/resistance zones, it strengthens the trade setup even further. Kurisko also advises that traders track divergences across multiple time frames to increase the reliability of the signal. By combining his understanding of stochastics with strict entry and exit rules, John has turned momentum-based trading into a systematic process that eliminates much of the guesswork and emotional decision-making.
The Quad Rotation Setup: Aligning Time Frames for Perfect Trade Entries
John Kurisko’s “Quad Rotation” setup is a unique strategy that involves aligning stochastic indicators across multiple time frames to identify high-confidence trades. The setup relies on monitoring four different stochastic oscillators, each set to a different time frame, such as 1-minute, 5-minute, 15-minute, and 1-hour. When all four time frames show the same momentum shift—whether oversold or overbought—it signals a powerful trade entry. Kurisko believes that this alignment across multiple time frames drastically improves the accuracy of a trade, as it confirms the market’s underlying trend across various perspectives.
For John, the key to success with the Quad Rotation is patience. He warns against jumping into trades too quickly, advising traders to wait for all four time frames to align before entering. This ensures that the momentum shift is not just a short-term fluctuation but a more solid, market-wide trend change. By using the Quad Rotation setup, Kurisko has been able to pinpoint setups with a higher probability of success, keeping him disciplined and focused on trades that meet his strict criteria. This method allows traders to avoid overtrading and helps them stay in high-probability trades for longer, maximizing their profit potential.
Trading the Trend: How Channel Breakouts and Pullbacks Drive Profits
John Kurisko places a significant emphasis on trading trends, particularly by capitalizing on channel breakouts and the subsequent pullbacks. He believes that once a price channel has been established—defined by two pivots on one side and one on the other—a breakout from that channel signals the beginning of a new trend. Kurisko’s approach is to wait for the breakout to occur, then enter during the first pullback to the trendline. This offers traders a prime entry point at the beginning of a trend, providing an excellent risk-to-reward ratio.
For John, the pullback is key to entering the trade at the best possible price. He teaches traders to wait for the price to return to the trendline after the breakout, ensuring that the new trend is solidified. To further increase the probability of success, Kurisko looks for confirmation from the stochastic oscillator, ensuring it’s in the oversold zone for a long trade or overbought for a short. This setup reduces the risk of false breakouts and helps traders catch the trend early, ultimately making their trading more systematic and disciplined. Kurisko’s method of trading the trend through breakouts and pullbacks allows traders to ride the momentum for maximum profits.
The Business Plan for Traders: Discipline, Defined Risks, and Consistent Growth
John Kurisko’s approach to trading is all about treating it like a business, with a clear, defined plan to guide every decision. He emphasizes that without a business plan, traders risk becoming overwhelmed by emotions and making impulsive, undisciplined trades. For John, this plan includes strict rules for entering and exiting trades, managing risk, and continuously improving performance. By treating each trade as part of a larger business strategy, he’s able to maintain consistency and growth in his trading career.
A key element of John’s business plan is risk management. He stresses the importance of limiting losses by defining the maximum amount to risk on each trade, typically no more than 1-2% of the total account size. This disciplined approach ensures that even if a few trades go wrong, they won’t derail the entire trading account. Kurisko also underscores the need for patience—traders shouldn’t chase every market move. Instead, they should focus on high-probability setups, as outlined in his business plan, and wait for those opportunities to materialize. By sticking to his plan and exercising discipline, John has been able to trade successfully for decades, and he encourages other traders to build their own plans for long-term success.
Automating Alerts: How Bots Help You Stay Disciplined and Seize Opportunities
John Kurisko is a big advocate for using automation to maintain discipline and catch high-probability trades. He utilizes bots to monitor his key stochastic setups and alert him when the conditions are right for a trade. This helps him stay focused on only the best opportunities and avoid the temptation to chase the market. By automating these alerts, Kurisko ensures that he doesn’t miss any high-confidence setups, even when he’s not actively watching the markets.
For John, the key benefit of automation is that it takes the emotional aspect of trading out of the equation. He can set the bot to alert him when specific conditions are met, such as a stochastic divergence or a quad rotation setup, and then manually assess whether to enter the trade. This method helps him remain patient and disciplined, taking trades only when his system provides the right signals. By incorporating automation into his trading routine, Kurisko not only improves efficiency but also reduces the risk of impulsive decisions. This technique allows him to focus on quality setups while letting the bot handle the monitoring of conditions.
John Kurisko’s trading strategy is built on a solid foundation of discipline, patience, and a clear business plan. He emphasizes the importance of using stochastics to track momentum and identify key market shifts, particularly through stochastic divergences, which serve as the backbone of his high-probability setups. By waiting for these divergences to fully form, along with alignment across multiple time frames (his Quad Rotation setup), Kurisko can stay focused on the best trade opportunities.
His approach to trend trading through channel breakouts and pullbacks further showcases his methodical nature, where he enters at the most favorable points in a new trend. However, what truly sets him apart is his business-like mentality towards trading, treating each setup with defined entry, exit, and risk management rules. Kurisko’s use of automation, such as bots for alerts, allows him to stay disciplined, remove emotion from his trading decisions, and capitalize on opportunities even when he’s not actively monitoring the markets. Ultimately, his strategy teaches that consistent success in trading comes from sticking to a well-thought-out plan, focusing on high-probability trades, and managing risk carefully, all while avoiding the pitfalls of overtrading and emotional decision-making.
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