John's website: DaytraderRadio.com

Tim Bourquin: Hello, everybody and welcome back to traderinterviews.com. Thanks very much for joining me for another show this week. We're going to be speaking with John Kurisko and you may know him as Day Trader Rock Star. He's got a great online radio/webcast show he does live every day at daytradingradio.com. We're going to talk about that. But he is also a trader and he trades live in front of these folks. We're going to ask him about his strategies, how he finds good opportunities in the market each day. It's unusual for us. We usually talk to traders that nobody has ever heard of because they're trading from home in Nebraska or Maine or wherever they are, but John is well known just because of his show. But I've watched this stuff, it's fantastic, and I wanted to get him on and talk to him about how he finds good trades. So John, thanks very much for joining me on the phone today.

John Kurisko: Oh, thank you very much and it's great to be here on Trader Interviews.

Tim Bourquin: Great.

John Kurisko: Yeah. I'm excited to finally talk to you.

Tim Bourquin: Great. Well, you know, I've been following you for a long time and I've always been impressed with how upfront you are about the trades that you're getting into. But for people that don't you or haven't seen your show, can you kind of describe the kind of trader you are, a day trader, a swing trader, what markets, that sort of thing?

John Kurisko: Well, you know, I would probably class myself as a short-term swing trader but the market -- because the market -- I'm in front of the screen all day announcing the market so I basically cover everything -- day trades, swing trades, all the way to long-term entries on good investments. But being on air from 9:00 to 4:00 each day, you have to be a day trader. You got to be a swing trader. You got to have all those things wrapped up.

Tim Bourquin: Now, we see your charts on the show that you do and as you're looking at, you talk about them. What's a good garden variety chart that you like to watch in terms of timeframe and anything you put on it?

John Kurisko: Well, that's a good -- I love technical analysis and I love charting so I've gone over my -- over 20 years of trading developed, you know, learning which charts work out the best in different scenarios and underlying those with a set of technical indicators that just add to these patterns. So patterns are very important to me. I pay attention to anywhere downward a sloping pattern, be it a wedge or a downward channel. I'm always looking to buy the pullback off the lower trend line because it gives you the best risk/reward and you're talking about a bullish pattern which tends to break out to the upside once you had established certain criteria on that pattern to tell you exactly when that's going to happen, which is not that hard to do.

Tim Bourquin: How about timeframes on those charts?

John Kurisko: Timeframes on the charts. I usually start off looking at daily charts, but when you talk about those types of charts, they work across both the 60-minute, the 15-mintue, the 5-minute chart, even on the 1-minute charts that I trade the ES on. So if you see a falling wedge on the 1-minute, it's still going to move a measuring move. You know, a 1-minute chart would move versus a wedge on a daily where you might get that multiple day move, but I love to trade wedges and downward channels overall on a daily so you get the biggest return. So you got that multiple day run and that's -- the further you go out, the better the runs you're going to have.

Tim Bourquin: Now, you mentioned the ES E-mini futures. Do you trade individual stocks as well?

John Kurisko: Yup, I do both of them. I'm always tracking the ES, the S&P 500, and I track reviews in the E-mini. That way if I do see any of these pattern setups, I'm able to call them out in the market. You actually see the trend lines being formed and the reaction and just basically I'm doing the play by play of the setups. So if I do see that channel looking at the lower channel's line support or watch the stochastics turn around, all the indicators will be there. We'll see them come up here. You'll hear audio alerts of buying coming into the market. It actually makes it very interactive and educational.

Tim Bourquin: Now, the audio alerts. I've noticed that you got somebody doing audio in the background. Is that Traders Audio or something else?

John Kurisko: Yeah. That's down the S&P pit and I play that ever so often and it's just the sound of the trading up in the S&P in Chicago.

Tim Bourquin: It kind of gives you a feel for the freneticness, if that's a word, of the market I guess?

John Kurisko: Yes, exactly.

Tim Bourquin: All right. Now, you talked about these trend lines, these support lines. Let's talk a little bit more about those falling wedges because what is sounds like to me is you're trying to find kind of these short-term bottoms where it's coming down and you're going to pinpoint. You're trying to find where it's going to reverse. How do you keep from kind of catching that falling knife as they say and getting burned on that?

John Kurisko: Well, first of all, you got to stick to quality. I've tried to stick to stocks above $20 that kind of have a fundamental book about them. It's not something that's a fly-by-night stock or a Chinese stock that you haven't heard about. So when I see like a wedge pattern starting to form in a stock like Hewlett-Packard or Intel or even a stock like Macy's or something, Colgate, any of these big stocks that you know have a reputation, these really work great using old style technicals. To get caught in something that's a falling knife, I have rules against that. [0:05:00] I try not to take a stock that's dropping after a gap down. I wait for the other indicators to set up. That's the main key to my trading is I don't rely just on the pattern. I have to have the pattern set up. Underneath that, I have to have a certain support level, either be that's 20 to 100 or 50 EMA. There has to be a rising trend line or some type of trend line support. The moving average has to be a recognizable pattern and it might even have to have support and resistance. And on top of that, you could go all the way out to just classifying different candlesticks on that daily chart as a reversal candlestick. So you take all those five plus that one indicator. You try to get three out of the five lining up and your probability becomes much better because even though a trend line might hold, it might be a 200-period moving average underneath that that the stock is eyeballing for whatever reason, and that's where you're going to see that bounce. You're going to see that trend line being broken down but you got to know that stuff. You can't just like rely on every -- just one indicator. You have to have the real good ones lining up for you. And even if it takes you a week to figure out a good position to get into on a stock, you have to wait for those things to line up. That position is going to keep you out of more pain in the long run.

Tim Bourquin: Right. Now, you mentioned I think the three moving averages are the 20, the 50, and the 200 is what you watch?

John Kurisko: Yes.

Tim Bourquin: And are those exponential or simple?

John Kurisko: These are exponential.

Tim Bourquin: Okay. So -- and you got me on one question I was going to follow up with. You said the three of the five I want to see lined up. Is that kind of the minimum you want to see before you'll consider to trade?

John Kurisko: Yeah, I have a thing, what's called the high probability setup and that's where we're going to take again, we're going to take the stochastics which is my number one indicator. I didn't even mention that before but the stochastics have to be in an oversold level. The pattern, you know, the stock has to be coming to a lower trend line and there should be a pattern associated with that lower trend line. Then there's going to be a moving average somewhere on that chart. If that moving average is pushing underneath that and crisscrossing that trend line right where that price is coming down and oversold stochastics are also lining up, that's three indicators. If there happened to be a support resistance lying underneath that, that's even four indicators. So as those indicators all line up at that price level, there has to be all that price level. That 200-period moving average or 50 have to be right where that price is coming down to and that trend line has to be right there and it has to be part of that channel pattern that I recognized and I know where it's going to move from there. That is the golden -- the high probability setup and that's what I try to bring to everyone. It might not happen every day but when it does happen, it's like it's a ray of sunshine. Today was Colgate-Palmolive, CL. We picked that up yesterday and it was -- I had a tremendous today, even better that I ever expected, and it was basically a high probability setup. Everything was lining up, support levels, channels. Everything was really nice on that and in this market, so these things really do work out as long as you have the patience.

Tim Bourquin: Yeah. And I would imagine that there are a lot of traders watching those same things and so it's almost a self-fulfilling prophesy when it gets to those levels.

John Kurisko: It is. That's part of it. You know, that's honestly part of it when they talk about algorithms in the market. These computers figure out these levels. You could already have a trend -- microtrends, 5-minute trends, 3-minute trends, 2-minute trends. Those lines, once you have two points, you could draw a straight line. The last part of that line, you could extend that and plot that out on a computer in nanoseconds. When that price hits that, triggers go off. Buy programs, sell programs come in and the market is now being traded just on patterns and algorithms.

Tim Bourquin: A trader I was talking to last week said, "I like all those things when it's coming down into a line of support but I wait for it to bounce off that support, come back down, and test it again before I get in that second." He has called it the second mouse gets the cheese. What are your thoughts there?

John Kurisko: Yeah. I think it's a great technique. You know, it's step by step. That's the first bounce you're going to get and then you're going to get that second bounce which is technically a double bottom. But it depends, if that first and second bounce you're coming in here, you remember you also might begin a weaker level down there. You want to really depend on it. But most of the time, you see that first bounce in that retracement. So you're buying off the retracement off of that first bounce, which I think is a great rule, and I try to always talk about it that first retracement. You get that spike down, you got that first retracement and that pullback off that retracement, and then the trend starts. So that's a perfect opportunity to do that on that retest of that support level.

Tim Bourquin: All right. So on these trades, this ideal trade if you will, are you looking at the 5-minute chart and then entering on a shorter timeframe?

John Kurisko: Yeah. Well, you do your stock research each night and I think it's very important to go into the markets, having a focus list in front of you, knowing what's going to move at the time. Like if you have a setup that's in a wedge pattern, you know if they pull back down to 2350 it's going to hit that lower trend line. So you have to have that trade planned out so when it does come to that level you could take it, you could watch that level. You don't want to just be lost in the markets scanning through hundreds of stocks. So when I do take it, I usually break it down to the 5-minute chart based on my daily analysis and I look for my entries down there. And once the entries are in, I usually scale in a quarter. If I take four positions, 100 shares a piece just to give it a number. That first position is going to be off of that support line. Once I get the confirmation crossed over on the stochastics because we should be in the oversold level, then I could double up. Once the pattern is defined and actually the pattern is intact, normally I will be in the best part of the pattern so we're going to get a pattern breakout. Then I could add to my shares as we get that pattern breakout. So it's a building position that where I scale in based on support levels. I double up based on confirmation and then I continue from there.

Tim Bourquin: Do you happen to know the settings of your stochastics that you use?

John Kurisko: 14, 3, 3 and they're full stochastics.

Tim Bourquin: Okay. So I like the fact that you scale in and wait for it to be basically tell you if you're right or not. How about if you're wrong? Where about would you set a stop based on those support levels?

John Kurisko: Well, that's a good question. I think that's a question that most traders have issues with because when I trade a pattern or I'm a pattern trader here and I'm picking up at a lower point, there could be an opportunity where the market kind of trickles down and holds that pattern. So there's always a level of give on a pattern trader versus a person who just puts a line in the sand and says, "I'm not going to take a dollar loss." But what I like to do, I take the entry I want, I take that previous day's low, and I think that's probably a good level to watch the previous day's low of the entry the day you're entering on. And I just watch that level and then I'll, you know, again, each stock has a stock-to-stock basis. I know stocks swing down. I know all about the shakeout process. I know about reversal candlesticks. I know about trend lines where a stock will come down, gap down under the trend line midday, close above the trend line. So everything comes down to the end of the day and the closing prices. And once those closing prices confirm then I'm more than likely to take my tradeoff.

Tim Bourquin: Now, I know a lot of traders hear us talking about a strategy where it comes down and then they almost expect to exactly hit this level price then bounce off of it, but it's always a little bit of give that may bounce through it a little bit. I mean, how much play do you give it around that support level to decide when it's time to get in?

John Kurisko: You're looking at a position. When you're taking a pattern position like that, it all depends on the timeframe you're taking it. If I'm looking at an ES E-mini trade and I'm seeing a wedge pattern, I'm seeing a lower -- on a 1-minute chart, the 200-period moving average coming under and I'm coming down to a lower trend line and there might be a power area there, meaning there might be a Fibonacci retracement or some other things out there underlying support, then I'm going to take that trade based on that 1-minute chart. So I'm going to be in the S&P trade or the E-mini trade for whatever how many minutes it takes to get my thing. But on a daily chart and I'm looking at an entry on a pullback on Intel down into 1960, I might take that entry there and know that I'm going to hold it for at least a week to get the full. Don't let it shake me out. I know it's going to base here and it's going to start moving up off this level. It just has to get passed, you know, this is where we plan to get in and we're going to let it work out now.

Tim Bourquin: And I guess if you're taking, if you're kind of legging into the position, you have the opportunity to not have to be so precise with your entry.

John Kurisko: Exactly. That's very important that you scale in if you have your senses of value. It gets disappointing when you see people jump in 'cause they see a good position but they get in too far over their head and not understanding the market, how the market tends to -- either they're going to get tired of the trade or they're too early or they're too heavy and they get scared out of it because it's not moving in the right direction. But if you scale in properly, this is first of all the best risk/reward trade. You know, you should be buying it on the pullback here. So you're only going to be going in on a better position normally than you would have not knowing anything in the market. A lot of people just chase things and end up getting caught at the top. So I feel much more comfortable with the scaling process.

Tim Bourquin: So how many of these trades, these ideal trades that you're on do you find a day or even a week?

John Kurisko: I try to make a goal of putting together a good watch list each week. Each Sunday I want to have at least ten good setups. Out of those ten setups, I'll have maybe three high probability setups which are the multiple indicator setups we talked about. And then with those, those are usually -- you could break those down into better bets and just work with those. But, you know, it's so important to have that focus list in front of you before you even go into the market. So at least have something that you're looking for. So if I can get three to five setups a week, that would be great.

Tim Bourquin: And that's interesting 'cause you have to be in front of your screen the whole time so it takes a lot of patience. I'm sure the traders that are watching you want you to trade. How do you kind of balance there any one thing you did to find a good opportunity and realizing you got to be patient?

John Kurisko: Because I mean, there is so many good opportunities out there and I'm scanning the markets and I have several monitors in front of me. Each one has about 50 stocks on it. So I'm looking at a big range of stocks that are showing relative strength. So I'm actually broadcasting the market like so and so is making 52-week highs or that stock is breaking down or coming down. So I'm just scanning the markets here. Anything that's hitting an important pivot area, a moving average, I'm announcing. So it keeps, you know, I bring it up to the screen here, Intel pulling back to support level. Here it is right down. X marks the spot. I move on and oh, Colgate is making new highs on the day. We're approaching resistance so I bring it up. So there's always stocks being shown on the -- I'm always doing my research which is good. It keeps me in the market 110%. People are relying on me to bring them some good setups and I think that's part of the job is just to constantly bring setups in the market even the ones that I don't even take. I find myself saying, "Oh, I love this stock. I don't why I'm not in it but it sure looks good." And it's just bringing it out there.

Tim Bourquin: For a lot of people in chat rooms though, I think they have this issue too. It's like which ones do I take and so, how do you kind of deciding, kind of filter out for me as a trader personally, which ones I should be taking and which ones I want to avoid and how do I know?

John Kurisko: Well, I mean, there's -- I definitely coin stocks, you know. I definitely have some coin terms like if there's a stock that's really very strong, it's like a rock hard stock and it's just a trending stock. I continue to come back. There's about ten stocks that just continue to make 52-week highs week after week, and I just bring those to you and update those. But those other stocks, if I'm taking a position, I'm usually telling you like I'm taking this as a high probability setup. This is why I'm taking it. And if there's a stock that comes up and I'm saying, "Well, I just don't feel comfortable in it. It doesn't look like a good setup." To break it down what's good for everyone is really, really tough because of the range of traders on the site, the range of people listening on the radio. Some people are playing with $5000. Some people are playing with $5 million and it's really tough. So I think it's important for me to bring just a large spectrum of good setups. Know, you know, bring good information, the setups, the technicals, the education which is important because eventually, you're going to have to do this on your own. You're going to have to find the wedge patterns. You're going to have to find the channels, the inverted head and shoulder patterns. Know what that means. Know what that means and this is me just passing it on, you know.

Tim Bourquin: How about a day like today when people are hearing this? It won't be today but FOMC Day, Fed Day, Decision Day. Do you trade any differently in those types of days?

John Kurisko: Oh, yeah. I just tell everyone what this type of day is, you know. Again being in the market every day, you kind of like remember the last six FOMC meetings. We talk about that. We talk about what the effect was the last time and the sideway strategy and going into the FOMC meeting, the choppiness and how important it is to stay on the sidelines. But normally, knowing that we have the gap down that we normally addressed up into the FOMC meeting, yeah, we took some trades today and they were good. I mean, they were just trades on pullbacks and the markets ended up moving up into the FOMC and they're actually spiking up and then closing kind of muted. But, you know, other than the FOMC meeting today, I'd rather not trade it.

Tim Bourquin: I was reading something just today about how the cues had their lowest volume on Monday than they had in a long time. Has it been tougher to find good opportunities this summer?

John Kurisko: Not really. I mean, I don't know if this is my big misconception. I was always taught volume is an important indicator and then I was like, you know what? You hear all these things from these experts and these people on TV and everyone makes a call in the market and stuff. But volume is important but volume is also relative. The market can move up on light volume and move down on light volume just as well as it can move up on strong volume, and the important thing is knowing when that strong volume to the downside is going to come. The distribution days or the accumulation days are coming. You could easily -- I think the setups are just as good now even though it's a little -- it's not as exciting. I don't feel like the underlying -- but the moves are there still. I mean, there's definitely still good trades in this market in the summertime. It's just not as exciting.

Tim Bourquin: Right. And you know, a lot of traders are looking for excitement when probably we should all just be looking for the money, right?

John Kurisko: You should be having patience and discipline, you know, if you want to do this full-time, which I think a lot of people who get into the market are tired of their jobs. And they want to do something for themselves and they know they can, and my main focus is to try to get those people motivated to do something on their own because you're only here a certain amount of time. And the freedom that trading gives you, as long as you could get through the learning curve.

Tim Bourquin: Talk about that for yourself. How long did it take you to really get comfortable with your trading and confident with your strategies?

John Kurisko: You know, I can go for hours on this thing. It has a lot to do with psychology in the market and the fear in the market, and when you start to do something -- when I started, I quit my job. I was working at the post office and I had a friend who traded. He used to trade on a little machine called a CoTrack and I went down there and watched him every day trade and I had learned about it. I just took my first trade in AOL back in 1992 I think it was and I was hooked ever since. I made some money on it, you know. I opened my Schwab One account and then just quit my job. Soon afterwards, $12,000 in the bank. But I was a bachelor. I had nothing to worry about. No worries in the world. No worries in the world. I was like, "All right, I'm prepared to try this." You know, because I was -- and got the market and got a good time but didn't learn the proper way and then fell into the traps that a beginner trader is going to fall into, not knowing where to look for information, not knowing how to do research, taking other people's words, going into Yahoo Finance and trying to find the next Holy Grail of a stock, and getting caught into penny stocks and boilers and you had to go through all that. And thank God, you don't have to go through that as much this time around, but the newer traders still don't know how to do the proper research and stuff. So, you know, it took me a while to learn that and I need to learn what news could do to a stock and I went through that. No one ever thought me this stuff. I had to learn from experience. So it took me blowing up my account twice.

Tim Bourquin: Twice.

John Kurisko: Yeah, blowing up my account twice. One time, you know, doing stupid stuff, getting in over my head, being fully margined out, being in the stocks that being run up and then the rugs pulled. But this was again early '90s, not knowing what I was doing, learning then how to pick myself back up, save up money, get back into the market, and start learning from my mistakes, not holding these aggressive penny stocks anymore. I was starting to get more quality, learning about technicals. All this started to play in. I started building the account. I began learning patience and discipline. And then 9/11, you know, and the Tech Bubble and everyone was trued at making a million dollars and blowing half of it in the Tech Bubble, which was, you know, that was a learning experience too. But then after that, you start to experience the market and then you start to get responsibility. And then, once I started to get responsibility, having a family and stuff, I buckled up as a trader and said this is a job, this is a business, this is not an arcade where I'm going in there and just trading. Now, I sit down, I do my homework. I'm prepared each day. I know where my stocks are going to be getting in. And once I could take the greed and the fear and stuff out of that and just try to become a business, success is just -- has been going up and it's just discipline and patience that you really have to develop. And it takes that type of personality too. I'm not the best person for discipline and patience.

Tim Bourquin: How about goals for yourself? Do you set monetary goals, how much money you want to make? How do you kind of judge success for yourself?

John Kurisko: Success is being happy with what you do. I think, you know, I understand that question totally. I find it very hard to set goals in the market because you're going to strive to overtrade. You're going to try to meet those goals. I think you have to have those overhanging goals in your life, but monetary goals daily, I don't find those enjoyable. Some days the market is not going to want you to -- you know, you're not supposed to trade. The market will be totally just screwed up for whatever reason and if you have a monetary goal or you're trying to get to that level, you might force yourself just to take bad trades. I think you just have to narrow your focus and your discipline and your technique down and get that technique really down. Take the plays that come to you. Be like a machine. Take profits off of it. And as your account grows, so will your -- you will continue to build on that account.

Tim Bourquin: The business side of this, do you trade through a corporation or how do you do that?

John Kurisko: Yeah. That's something else I had to learn. As you become a trader, you have to learn how to -- I currently trade under a corporation. My accountant will probably tell you I'm not a good tax specialist guy.

Tim Bourquin: Do you have a trader status with the IRS?

John Kurisko: Yes.

Tim Bourquin: Okay.

John Kurisko: Yeah.

Tim Bourquin: All right. Was that tough to get?

John Kurisko: No, it wasn't. It was just a -- I had to trade for a while and just gave him my records to prove it's a job for you.

Tim Bourquin: Right. Okay. All right. What's your goal? I mean, every trader has got things they think they could do better, improve upon. Even trading for a while now, do you still find things that you need to be better at, improve upon, how you can make your trading a little better?

John Kurisko: Yeah. I mean, definitely. Going back to discipline in the markets and being, you know, the markets -- and I don't want to make trading sound like gambling but there's this aspect of that money being right in front of you. Sitting in front of your computer, you could just touch a button and you could be in a trade and you could be out of a trade and be $5000 richer in a minute. And it's that type of lure that is very hard for a lot of traders. I find myself sometimes taking these stocks that I'm not waiting for, you know, a whole [0:25:37] [Inaudible]. Let's put it that way. You know, doing things that you should be, you know, learned your lessons from but you strive for that big, you know, you want to make that money. The market is there. The opportunity is there. But, you know, I try to convince people. I said, "You know what? Once you take the play out of your hands and take something to overnight hours or something at the news, it just takes the play out of your hands and no longer does your system work." Now, their systems are working because you let their rules play now.

Tim Bourquin: All right. Well, listeners, of course you can go to John's website. It's at daytradingradio.com. We'll link to it in the transcripts as well. John, thanks very much for your time today. We'll look forward to seeing you online and your next radio show.

John Kurisko: Thanks, Tim.