64

Anton Kreil
Million Dollar Trader
Reveals Trading Secrets
Anton Kreil is a professional trader formerly of Goldman Sachs, Lehman Brothers and JP Morgan. Whilst at university and
by the age of twenty he built a profitable portfolio and was hired by Goldman Sachs to work on Wall Street, later returning to
London to trade on their Long/Short Pan European Equities desk. At the age of 26 Kreil was a Vice President of JP Morgan
European Equities. He retired from the Investment Banking industry at the age of 28, and after travelling the world, returned to
London in the summer of 2008 to film the BBC T.V. programme Million Dollar Traders. Eight novice traders were provided
with two weeks training and one million dollars to trade during the financial crisis. They outperformed professional hedge fund
managers by four percent over the two month period. Whilst most of the contestants could not handle the pressure and were
either fired or resigned, the show proved that normal people can actually trade on par with the professionals given the right
instruction. The show was aired in 2009 and received global cult status, reaching territories as far as Australia, catapulting Kreil
into the limelight during the ensuing credit crisis. Kreil is now the CEO of the Institute of Trading and Portfolio Management
in London and spends his time managing the Institute of Trading and Portfolio Managements global trading portfolio. The
Institute also provides educational support through trading seminars to independent traders and provides resources to those
traders and their brokers. Today Kreil gives us a rare glimpse into his trading methodologies and his life.

TRADERS: Can you explain
your personal background, and
how you rst got in touch with
trading?
Anton Kreil: Firstly thanks to
TRADERS Magazine for the
opportunity to talk about my
passion. I have been trading
since I was 16 years old. I am
thirty three now so obviously
that is over half my life. That is
longer than any company I have
ever worked for, longer than any
girlfriend I have ever had or house
I have lived in. Trading has always
been there and will always be
there. One thing I have learnt over
the years is that people, careers
and possessions come and go,
but the market will always be
there on Monday morning. For
me it truly is the gift that keeps on
giving.
I guess I got into trading pretty
much like anyone else probably
would. When I was fifteen I was
watching a documentary on
Thatchers Britain and what
the deregulation of the financial
markets in London had done for
the British economy. Not just
the numbers but also the social
trends. I saw a lot of TV clips
of people who did not look so
smart with lots of cash and got
very excited. This got me curious
in thinking that if they could do
it, then so could I. So I started
investigating. I then came up
with a two pronged plan. Firstly
I opened an account with a few
old traditional stockbrokers in the
 TRADERS PEOPLE
TRADERS
North West of England. I started
investing and trading in physical
shares. There was no leverage
and I was paying stamp duty and
commission on each transaction.
I was making money on the
positions so I added money every
week from evening and summer
jobs I was doing. Secondly, I
also chose my A-levels based
around the idea that I wanted a
career in the financial markets.
So I made sure that I chose
Economics. I wanted to learn
about the financial system and
how everything worked.
TRADERS: When did
you decide to aim for a
professional trading career?
Anton Kreil: After finishing my
A-Levels I studied Economics
at the University of Manchester,
by which time I had managed
to build a decent size portfolio
at the time from trading. I was
not a typical student per se.
I hardly ever went to student
nights instead preferring to go
out to local bars, restaurants
and nightclubs. I also attended
only about one third of all lectures
and tutorials over the three
years I was there. Economics
at Manchester had over four
hundred registered students in
my year. The lecture theatres
were always packed and it was
always difficult to get the seat
at the back that I wanted. This
wonderful thing called the internet
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had just become available
and the course administrators
had decided to put the entire
course notes online. So I bought
a personal computer from a
government insolvency auction
for next to nothing and attended
university most days from my
bedroom, choosing to spend the
majority of my time researching
and putting on trades.
TRADERS: How was your
thinking different compared to
other students?
Anton Kreil: I pretty much
operated on the fringes of the
student community. Beyond the
odd conversation, I just did not
get on with most students. They
all seemed to be at university
because they could not do
anything else or did not know
what else to do. I guess that
is fair enough if daddy or the
government is paying.
Also at university I could not
understand why so many people
wanted to become accountants.
The argument seemed to be
that the average national salary
is 25,000, but if I work for one
of the big accounting firms I will
earn 40,000. My response was
so what? That is about 550 at least ten before I considered
per week after tax. Surely if I was
working and living in London as
an accountant I would spend
that? So it is therefore a zero sum
game and a total waste of time! I
realised quickly it was not about
65
the money for these people. It job as a trader at an investment Goldman Executives and outside
was to enable them to do a safe bank. contractors. The real education
and respectable profession that started when I actually started
perhaps mildly impressed their TRADERS: Did you manage to doing it. It is really funny looking
parents and other people. As long get a foot in the door? back at my first day on the desk.
as those people told themselves Anton Kreil: It worked. In my final I sat down and the boss gave
they were great then they year at university I was given an me a $10 million limit. The guy
all must get some sort of self unconditional offer to work on the next to me was told to make
affirmation out of that. Goldman Sachs Pan European sure that I do not do anything
Equities trading desk. I had stupid and to teach me how to
TRADERS: Certainly you would basically by-passed the Human use the system. It was the tech
not have wanted to be an Resources department and had boom, we were in a massive bull
accountant in the rst place. eight interviews in one day. I was market and they threw me in at
Anton Kreil: I decided the deep end. My first
I was not going to thought when looking
measure myself on a
relative basis but on The guy I was sitting at the screen was
that the bid and the
an absolute basis.
All these people next to was one of the offer were the other
way round to what I
telling each other
that what they were largest tech stock was used to. I asked
the guy next to me
doing was the right
thing just all seemed traders in the world. if that was right and
he said yes. I asked
totally wrong. None him if that means I
of them seemed to have to now learn
have the ability to think outside given the contract to sign at 8pm the opposite of everything I
the box. The way I viewed it was in the evening by the head of had ever known. He laughed
that my downside would be that Equities. hilariously and told everyone on
I ended up doing an average job the desk. The message back
for 25,000 a year, so a 15,000 TRADERS: Please tell us about was Absolutely. Try to learn the
difference or 200 difference per your training and your rst day opposite of everything you have
week to being an accountant, but on the oor. ever learnt about trading. I came
I would also have infinite upside. I Anton Kreil: When I first got to realise that this was so true!
decided to multiply everything by on the trading floor and was Soon I found out that the guy I
shown my seat at Goldman I was sitting next to was one of the
it so that any opportunity would had already been in training largest tech stock traders in the
have to present me with the in New York for a few months. world!
potential to earn ten times the The training in New York was
national average salary within a not training for becoming a TRADERS: So you had the
few years. So I just focused solely trader. It was a generic all round opportunity to get in touch
on my own trading and getting a applied finance course, run by with the top traders in the
 TRADERS PEOPLE
world early in your career. That
is really impressive. How did
things develop further?
Anton Kreil: After working on
desk projects, taking my trading
exams and being the desk bitch
for a few months, I was officially
given the U.K. industrial sector to
manage and given my mentors
who ran the U.K. Telecoms and
Media trading books. The Risk
and Profit/Loss from my book
was bolted onto the Telecoms
and Media book so it was well
within the interests of my mentors
to teach me well. I was also the
sweeper for the senior traders
in Telecoms and Media so I got a
lot of experience in those sectors
too, even though I was junior and
I was the number three trader on
the book.
TRADERS: What was the
most important lesson in your
career?
Anton Kreil: My most important
and first big learning situation
was in the U.K. industrial stock
Invensys. The company issued
a second profit warning that
year and I was asked to make a
price before the market opened
for a hedge fund. The research
analysts thought the stock
would be down 5-10 per cent.
So I made a fairly tight price of
down roughly seven per cent. I
got hit and the stock never saw
that price the whole day. It was
down 15 per cent+ all day and I
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was down $500,000 and never
recovered. I had to crystallise the
loss and it was gutting. However
my mentors at the end of the
day, made me keep a diary of
what lessons I had learnt. It was
reviewed each week, not just
by my mentors but also by the
head of the desk. The lessons
I had learnt were pretty simple.
Firstly that analysts are generally
useless in fast market situations
and in times of panic. Valuation
does not matter. Reaction
and momentum are far more
important. Secondly, that hedge
funds who want a pre-market
price have more information than
you and in a situation like a profit
warning the first trade is more
than likely going to be a sale,
so I should have made them an
aggressive sellers price and sent
them on their way. Third, when
reading and reacting to a trading
statement I should decide what
I want to do first then make my
price around what I want to do,
not what the market wanted me
to do. Lastly, that a stock that
has poor fundamentals will just
go down and a stock with good
fundamentals will just go up.
Technical levels are irrelevant in
these situations. The discipline of
the fundamental backdrop and
being aggressive with conviction
was instilled in me very early
on. A few months later Invensys
had another profit warning and
I made about $700,000. I went
66
into the next trading update short
and added to the position on the
open. I ended up doing all the
business in the market that day.
This was about six months into
my career and I felt vindicated.
TRADERS: How long did it take
you to become consistently
protable?
Anton Kreil: In terms of becoming
consistently profitable it took me
about a year till I was consistently
knocking in good returns every
month.
TRADERS: How large was your
trading book at the time?
Anton Kreil: After my first year
I was moved to trade the U.K.
banks, Insurance and transport
stocks. I was not a big trader
on the desk to begin with. For
example the $500,000 I lost on
the first Invensys profit warning
was nothing in terms of the F1) Spread Trade Entry in April 2011
desks overall daily Profit/Loss
at the time. After a year I had a
proprietary trading book of about
$50-$100 million although there
were no official limits at the time.
In terms of market making there
was no limit to what we could
do, but anything big had to be
cleared with the boss before
making a price. Big at the time
was around a $25 million price to
a client.
In my second year at the firm The Spread shown is (Autonomy + SAP) / (Dell + Hewlett Packard)
denominated in USD since September 2005.
management decided I deserved
to be promoted and teamed
 TRADERS PEOPLE
me up with a senior trader on
another sector, so I was number
two on a sector instead of
number three. I responded to that
aggressively and basically lived in
the office. That year we were up
about $100 million in total. That
was split amongst $80 million in
commission generated within the
sectors I was trading with clients
and $20 million in proprietary
trading revenues. Pretty much all
proprietary trading revenues were
generated by me and commission
for the sector was far greater
than the year previously. I was
a very aggressive market maker
and we ended up becoming
the market in a lot of the stocks
we traded. The figures at the
time did not accurately show
the overall performance and my
individual performance at the
end of the year. For example, one
proprietary trade I did generated
over $12 million and was
accounted for as a one off item
somewhere else.
TRADERS: What was the most
important experience in your
trading career?
Anton Kreil: The most important
experience was actually at the
end of my second year of trading
for Goldman Sachs. My trading
stats were not accounted for
in the way I had expected they
would be, on an absolute basis
for the team and on an individual
basis. I was told at the end of the
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year that my total compensation
would be $180,000. That was
a real low point in my career.
They paid me a seriously low
bonus for what I had achieved.
They did this because they knew
they could hold me to ransom.
My trading stats were not
accounted for in the way I had
expected due to the insistence
from management that profit
for trades like the one I did had
to be accounted for in different
way. It was also a bad market
for hiring at the time and that
I probably would not consider
leaving the company until I had
been officially promoted. What
was even more gutting was that
the bonus pool was actually up
that year. Basically it seemed like
my bosses and the partners were
paying themselves the money I
had made and not cut me in on
what I deserved. I had basically
been shafted on a promise of
becoming promoted. At the same
time many of my peers that had
been on my training programme
two years earlier were being let
go.
I figured out the likely game
that was being played but there
was nothing I could do about
it unless I left the company.
The bonus was not in my bank
account yet so if I kicked up a
fuss I might have been choosing
to pay them more. The mistake
they made was thinking that
I would forget about it within
a month or two and just get
on with things. They probably
thought I was like one of those
guys I had gone to university
with, comparing my overall
compensation that year with the
national average salary to make
myself feel good about it. I did
not give a toss. I just wanted
what I deserved which was
far more than I had been paid.
Based on the compensation
metrics of the industry at the
time I probably should have
been paid ten times that.
Instead it probably went
to other traders and sales
people who could have been
replaced by robots. The
most money probably went
in my bosses pocket.
TRADERS: What did
you learn from that
experience?
Anton Kreil: That was a
seriously valuable lesson at
the time. I decided to look
upon it positively. I had been
paid to learn a very valuable
lesson. No-one is your
friend and everyone, when
the numbers are big, even
your peers and bosses will
try to take responsibility for
the gains. That is a valuable
lesson not just in investment
banking but in most
businesses. I was still twenty two
years old at the time and had
confidence that if I carried on with
what I was doing, but not allow
this to happen again then I would
succeed as a trader and get paid
properly.
The next few years worked
out okay and I did get paid
well. This then culminated in
Lehman Brothers knocking on
my door and offering a large
guaranteed bonus to move
there. Consequently, I actually
only had one year in the city
where I was paid lower than
the previous year. That was in
2006. Lehman Brothers always
had an internal policy that if they
67
made an experienced hire and
guaranteed someone a bonus
in year one at the firm, they
would always pay them lower
no matter what in their second
year at the firm. I guess that is
fair given that experienced hires
generally changed the basis of
their compensation by moving to
Lehman Brothers.
The whole experience also
taught me the most valuable
lesson of my career. Trading
at investment banks and
trading generally in the city
as a professional is not really
about trading at all. Bonuses
are discretionary and not a
fixed percentage. It is what
you get paid at the end of
the year that matters. That
was a big disappointment to
me to find that out. However
it hardened and made me
more cynical, which helped
me read between the lines
and made my trading a lot
better.
Generally speaking the
city was then and still is full
of people that genuinely add
no value to the businesses
they are in, yet they still
get paid a lot of money.
Finally they are getting
found out now and the
industry is genuinely going
through a structural change.
Traders, research analysts and
Corporate Finance are actually
the most important people at the
 TRADERS PEOPLE
banks. Sales people just provide
distribution to the producers to
sell a deal. They like to pretend
they are smart but they are
not. Forwarding a Bloomberg
message from the traders to your
clients can be done by a five
year old. Yet they still claim that
their relationships and expertise
with the clients they cover
brings incremental commission
dollars into the firm. I have been
right on the sharp end of these
businesses and I can tell you now
that if a sales person leaves or
is fired, the account is handed
to another person that again
forwards the traders Bloomberg
messages and the amount of
business the client does never
ever diminishes for the reason
that the sales person has left.
So much money is wasted in
the city on useless functions
and talentless individuals it is
not even funny. In any business,
those that produce the returns for
shareholders should get paid, not
the other way around. That is the
only way to have a sustainable
model that works; otherwise you
just end up with resentment and
backlash within society. That is
what we are witnessing right now.
TRADERS: How are you
trading today?
Anton Kreil: Now I am trading with
my own money which is basically
100 per cent the Institutes
portfolio. I will not go into the
01/2012 www.tradersonline-mag.com
size of it but it is fairly sizeable.
The portfolio is leveraged around
three times deposited margin.
It is myself and only myself that
trades the portfolio, so I eat
what I kill. I will not take outside
investment because I know going
into each year that I will always
have at least three months plus
where I will probably lose money.
I do not want to be on the phone
the following month and on email
constantly explaining to investors
why I lost money last month. I
would rather be trading trying to
make it back. I have been offered
outside investment several times,
but I firmly believe that outside
investment and a management
fee will just turn me into a bad
trader. Also the returns I make
in absolute dollar terms I am
more than happy with. I measure
myself against the market and I
do not need to measure myself
relative to people who generate
no alpha and take a management
fee. They are not traders, they
are just sales people that take
positions. It took me a while to
get used to it and I much prefer it
this way. It is actually a lot harder
trading with your own money than
with someone elses and takes a
while to adjust to.
TRADERS: What markets do
you trade?
Anton Kreil: In terms of what I
trade? Generally speaking the
portfolio will be weighted around
68
70 per cent Equities, 20 per
cent Commodities and ten per
cent Currencies. I do take the
occasional punt in bonds and
rates but tend to avoid it. I find
not taking positions in bonds
or rates, but using them as
indicators to trade other assets
works better for me. Especially in
Equities as there is always a lag
between asset classes and the
bond market is often right vs the
Equities markets. The Equities
market always focuses on the
positive spin and the potential
upside, whereas the bond market
prices risk and is forced to think
about the what if or worst
case scenario.
TRADERS: Can you please
explain your approach?
Anton Kreil: Within Equities I will
hold around twenty positions at
any one time. It is a long / short
portfolio split into themes. I take F2) Spread Trade Exit in August 2011
a Macro approach to decide
whether my book should be full of
bearish themes or bullish themes.
I then construct the portfolio
around these themes and the
beta net long or short I want to
have in the overall portfolio. I tend
to restrict myself from opening
up the book too much to market
risk and generally speaking I
will hardly ever be above plus or
minus 25 per cent beta net long
or short. Everything has a 60 Figure 2 shows the development of the spread trade until Anton exit
in August 2011.
day plus time horizon and I place
mechanical stops and targets
 TRADERS PEOPLE
(not automatic) on spreads,
themes and the whole portfolio.
So basically because I am trading
Equities and focusing on Gross
Domestic Product for the next
twelve months I split everything
up into financial quarters.
At any one time I am always
asking myself the following
questions; What is my view on
the Economy? The Market?
Cyclical & Defensives Sectors?
And Stocks within those sectors
for the next twelve months, nine
months, six months and three
months? So I am always looking
sixty trading days plus. Generally
speaking if something has not
worked within sixty days then
01/2012 www.tradersonline-mag.com
it probably means I am wrong
as the market is always looking
at least one year ahead. So I
generally take a view on my
stops and trade out, before I get
stopped out. That simple three
month rule has saved me tons of
money over the years!
In terms of frequency I probably
do on average about twenty
trades a month. Ten per month
in quiet times and 40 per month
in volatile times. Most of the time
I am just trading around core
positions that I have on in the
portfolio. If I think I can add value
to the position for example buying
more for an intraday punt then
I will not be afraid to do that in
volatile times. In quiet times I read
a lot of research, reports and
try to sit on my hands and allow
my positions time to just work
or not work as the case may be.
Too many people think trading is
about bashing a keyboard every
60 seconds. That is what I used
to do as a market maker, not
as a proprietary trader. A good
proprietary trader participates
only on a short term basis when
the opportunities exist. If they do
not exist then sit on your hands
and do something else. That is
hard when you are working for
someone else because people
have to always try to justify their
positions. However, if you sit on
your hands and just make money,
no-one will argue. In my position
it is a pleasure to not have to
pretend that I am busy. So if I
think just being long for the next
year is right then I have got a
year of reading reports, teaching
through the Institute, playing golf
and travelling to be getting on
with.
TRADERS: What does it really
take to adapt and succeed in
the very long run from your
point of view?
Anton Kreil: Success in the
long run for me is defined as
consistently positive returns with
a consistency for never losing
69
too much money when things
go wrong. For those starting
out I think it is very important to
develop a trading strategy that
will stand a very good chance
in working through all business
cycles. The world looks very
different now to what it looked
like in 2006, 1999, 1991, 1982
and is forever changing. Trading
strategies that depend on a
certain market environment will
always get found out when the
market environment changes. As
a trader you want to be trading
from now till the day you drop
dead. I always use the analogy
of a casino. You can walk in at
lunchtime, sober, count cards,
 TRADERS PEOPLE
stay at the table till they kick you
out and take the houses money.
Or you can walk in at 2am, drunk
with a bunch of women, put all
your money on black and wake
up in the morning with only
enough money to buy yourself a
coffee and not remember what
happened. If you want to be
consistent for the rest of your
life you need a framework that
adapts to the changes that occur
in the world.
TRADERS: How can traders
use this advice in practical
trading?
Anton Kreil: Do not just use one
tool. Technical analysts love to
go back to things that they know
and they are comfortable with.
They learn one or two technical
indicators that a broker once
taught them and think they are
traders. Those indicators were
taught to you for a reason. The
reason being that the broker
wants paying trades every day,
so they showed you some sexy
lines on a chart that worked a
few times and now you think they
work all the time. If you happened
to read it in a book that is even
better for the broker. Then it is
not their responsibility. That is not
a trading strategy. When you look
at a chart of a stock for example
its telling you what has happened
in the past and some indicators
might give you an indication of
what may happen in the future
01/2012 www.tradersonline-mag.com
over the time period you choose.
However it is just a guess at the end
of the day. You are not counting
cards. This to me is just walking into
the casino at 2am drunk.
You need a lot more than a
few inputs to decide whether
to be long or short an asset.
An argument used by technical
analysts is that everything you
need to know is displayed by
the chart. Try explaining that one
to Bear Stearns and Lehman
Brothers shareholders who
bought every Technical Rally
and in the end got totally wiped
out! It is perceived by most
people that Fundamentals are
hard to understand. They are not.
You just need a good mentor and
to do your homework. Technicals
are far easier to understand for a
reason. That is because it takes
no brainpower and application
to draw a line on a chart and
deduce that something is
bullish or bearish. I would not
give a penny of my money to a
trader that only used technicals
to decide what to buy and sell.
If ever I asked them a question
of why they were long or short
something, the response would
be because this line says so.
That is just not good enough.
TRADERS: So what is the
value of Technical Analysis
from your point of view?
Anton Kreil: I am not advocating
that technical analysis should
not be used at all. On a similar
note I would never give my
money to someone who only
used fundamentals. My belief
is that you have to use a mix of
everything to make your mind
up as to whether you are being
dumb or smart. Take Price
Earnings ratios for example.
Imagine a $10 stock with $1 of
earnings. If earnings go to $0.90
next year, where does the stock
have to go to maintain ten times
earnings? It has to go to $9 right?
The stock could be at $0.10
(down 99 per cent) and still be
trading on ten times earnings.
That is why most
analysts are totally
useless. They try to
predict the future using
default discounted
cash flow models and
they respond to news
and do not predict it.
They are always late!
That is because they
have careers and pensions that
they want to keep and they will
very rarely stick their necks out.
I have only experienced a few
analysts in my career that have
done this. The rest are at best
average at what they do. When
someone tells you something is
cheap it is not cheap. There
is no such thing as cheap or
expensive. This statement should
be treated in the same way one
treats the statement from a
technical analyst that a stock is
going up because the line says
so.
TRADERS: What does your
combination of Fundamental
and Technical Analysis look
like?
Anton Kreil: Personally I use a
mix of 80 per cent fundamentals
and 20 per cent technicals. I am
also always looking for the piece
of information in the market that
is contrary to my opinion. If I am
bullish on something I want to
find the guy that is bearish and
find out why he is bearish. What
the hell do I want to speak to an
The bond market is
often right vs the
Equities markets.
analyst for who has a buy rating
on something I am long? I am
already long and I know all the
reasons why I am long. That is
just called confirmation bias.
It is a waste of time and will just
lose you money over the long
run. You are long something and
you spend all day on the phone
and reading research reports
seeking out information and
drawing charts that support your
views, because it makes you feel
like you are doing the right thing
70
and you have a good position.
Everyone pats each other on the
back and congratulates each
other for agreeing and having the
same view. That is a seriously
bad habit and a clear recipe to
lose money over your lifetime.
In summary, what I believe
will work over my lifetime is a
trading strategy that adapts to
the changing world, one that
utilises both Fundamentals in the
majority and Technicals in the
minority and a curiosity to seek
out information that is contrary to
my opinion.
TRADERS: Where
do you see your
edge compared to
other traders?
Anton Kreil: Very
simple. I believe very
little anyone says.
I know, regardless
of how good it
sounds, or whatever
their pedigree, whether they are
wearing a tie, a $50 suit or a $2000
suit that at the very best they will
probably only get half their trades
right themselves. If they get over
50 per cent right, it just probably
means they are long the market in
a bull market and short the market
in a bear market. In that case they
do not deserve capital to trade
with as their risk is not truly under
control. So I guess you could say
I believe my edge comes from
not believing that anyone does
 TRADERS PEOPLE
71
have an edge, including myself. Anton Kreil: In April this year I earnings surprises in Cloud revenue model providing strong plus fees) in the equities portion
That is the basis for my approach. bought Autonomy as part of a stocks. It became apparent that cash flows, combined with the of the portfolio if I was stopped
Consequently, just by having that, it theme in the portfolio, which was software stocks that presented notion that in an austere world, out. I was actually nearly stopped
filters out a lot of noise for me on a basically long Cloud software medium sized businesses businesses would simply have out in absolute terms on the
daily basis. I do not get distracted stocks for businesses switching globally with Cloud solutions to migrate to the Cloud for theme a couple of times on the
each day by information that is to the Cloud and short P.C. on a pay as you go model did cost effectiveness, ease and way up. However the rest of the
irrelevant and get on with the task Hardware for a fall in Gross not deserve to be classed fully efficiency savings made software portfolio was paying for it and
at hand. Which is to provide myself Domestic Product growth and as Cyclicals anymore and the and Cloud names extremely more. You remember I mentioned
with the greatest probability of decrease in capital investment sector was seeing fresh money appealing relative to hardware earlier a portfolio stoploss?
succeeding in the near, medium and consumer discretionary that had never owned software and in particular PC stocks. I Major things happened when
and long term. spending. There were several stocks before coming into the knew I was not early to the trade I had the spread on. Hewlett
positions as part of the same sector. The old licensing model of but I thought there was a lot more Packard beat Q2 earnings and
TRADERS: Please could you theme. The Cloud switchover unpredictable chunky revenues juice in it. guided down for the year. Dell
describe a trade you have done for medium sized enterprises at the beginning and end of the So the positions I had on beat Q1 earnings and guided
recently that highlights your was really just beginning in 2010 year had put many investors off to play this theme were long up for 2012 and traded flat over
strategy and set-ups in detail? and it started to cause positive for years. A more streamlined Autonomy, Long SAP, Short Dell two days after reporting. Both
and short Hewlett Packard. these events gave me a lot of
confidence to run the spread
T1) A Typical Day for Anton when Working from Home TRADERS: How did this trade even when the market collapsed
develop? in August.
6am Wake up, check Bloomberg, have shower, eat breakfast, watch news Anton Kreil: I put the trade on On August 18th in the evening,
7:15am Get ready for market open and run scenarios in the portfolio and work out what my actions will be if various scenarios play out during during the first trading week in Hewlett Packard announced a
the day. The scenarios can be anything that is happening at the time. I am basically trying to plan what I will do if certain things happen
April when the spread blew out takeover of 25.50 per share for
8am Sit in front of screen and watch volume trade. I never trade in the rst hour unless I have a very strong view
above the 1.5 level. I worked Autonomy and announced their
9am Trade if have to or want to
into the spread over that week exit from the P.C. business. The
9:30am Go through tons of emails
with a 1.55 limit. So whenever spread went immediately above
10:30am Read reports, news
the spread got to 1.55 or below 2.3. The U.S. market was closed.
12:00 Lunch
I would buy Autonomy and SAP I had already got a lot of the
12:30pm U.S. Economic numbers preparation and run portfolio scenarios again
and short Dell and HP at the Institute traders that subscribe to
1:45pm Chat to institute traders and brokers in U.S.
same time. In terms of risk I my monthly report into the trade.
2:30pm Watch screen for U.S. open
was Beta neutral, each position I had a flight at 06.05am on the
3pm Trade if I have to or want to
represented five per cent of the 19th from City Airport to Ibiza and
3:30pm Read more reports and news
equities portion of my portfolio had to stay up most of the night
4:10pm Re-check market and all positions in Europe into the close and trade if I have to or want to
and the theme represented 20 sending SMS messages to the
4:40pm More Phone calls, usually to the U.S.
5pm Chill on sofa and watch news. Keep eye on market
per cent of the equities exposure guys that were in the trade and
6pm Generally responding to emails, reading reports (research) chatting to brokers and Institute traders, always keeping eye on market
of the portfolio. Throughout the also to make sure that they had
8:40pm Re-check market and all positions in Europe into the close and trade if I have to or want to
life of the position, a twelve per their exit strategy correct for the
9:45pm Dinner, TV, Relax
cent rolling stop on the spread morning. This was because I was
00:00 Bed
was applied and a 36 per cent touching down in Ibiza on the
rolling target. So basically I was market open. The plan was to just
likely to lose 2.5 per cent net (2.4 sell Autonomy at 25.00 and get

01/2012 www.tradersonline-mag.com
 TRADERS PEOPLE
out of the rest of the trade in the
afternoon. The trade paid 45 per
cent net in five months; however
during the life of the trade
I did assume some market
risk occasionally and ended
up making over 50 per
cent. Not bad. Not only that
but Institute traders, who
are all just independent
traders, all trading with their
own money and most with
day jobs, had a blow out in
August when the rest of the
world was losing money.
Looking back at the trade
I definitely had the right
spread on fundamentally
and it was working well
even before the takeover. I admit
that I did not see the takeover
coming at all and that I was
clearly lucky. But hey, you make
your own luck in life!
TRADERS: What is the course
of events on one of your typical
trading days and weeks?
Anton Kreil: I spend Mondays to
Wednesdays working from home.
Thursdays and Fridays I spend in
the office in the city and organise
all my meetings for those days.
Sunday is spent at home, seeing
friends and or playing golf. My
typical trading day is to be seen
in Table 1.
TRADERS: What is the
major difference in the way
professional retail traders
01/2012 www.tradersonline-mag.com
and professional institutional
traders approach the markets
and trading and what are the
worst mistakes traders do over
and over again?
Anton Kreil: I think the main
difference is approach and risk
management. A typical retail trader
will usually react to a piece of news
in the media and get sucked into
being long or short the situation
based on a media report either on
TV or in a newspaper. For example
this year and the last few years
actually, Lloyds has probably been
the most traded retail stock in
value terms in the FTSE. Every time
you see retail broker reports citing
the most popular stocks traded
today, Lloyds is always top of the
list. I always wonder what the hell
attracts people to trade Lloyds.
TRADERS: What exactly do
mean by that?
Anton Kreil: Well, it is a penny
stock first of all that has fallen
from being a large cap liquid
name and that always
draws a lot of retail
attention. Most people
think if a stock has fallen
by a lot then it must go
up at some point and
when it goes up it will go
up big. Only problem is it
can still go down 50, 70,
80, 90 per cent before
it ever rallies. The main
reason however people
buy stocks like Lloyds is
because it is always in
the media and therefore it
gets everyones attention.
It falls from grace for genuine
fundamental reasons and makes
a great shock horror headline
because shareholders
have been burnt, everyone
wants to lynch the CEO,
shareholders of other
banks get worried etc.
Also at some point you
always get some monkey
who goes on TV or in the
newspaper; usually an
analyst whos estimates
that were made two years
previously and tweaked
a few months before
the event, defending his
position by downgrading
the stocks rating but telling
people he still likes it and its
cheap. Or at some point the
stock finds a short term floor and
people think it is a good idea to
get in and try to make money on
a mean reversion or contrarian
rally. At that point they do not
even realise it but they are now
emotionally married to that stock
and they will continually try to
pick the bottom and get stopped
out, either until they get wiped
out or it goes to zero.
TRADERS: How can one nd
out if they tend to be hoping
instead of selling losing
positions?
Anton Kreil: Here is a typical
Goldman Sachs question we
used to ask graduates when
interviewing for trader positions.
You are now a trader on the desk.
You walk in on Monday morning
and you buy a stock at 1.00.
In the afternoon you realise ten
minutes before the market closes
the stock is now trading at 92p.
72
1. Do you buy more, hold or sell?
You have to make one of the
three choices. Please write
down your answer.
The next day, Tuesday, you
walk into the office and the stock
opens at 87p.
2. Do you buy more, hold, or sell?
You have to make one of the
three choices. Please write
down your answer.
In the afternoon you realise ten
minutes before the market closes
the stock is now trading at 81p.
3. Do you buy more, hold, or sell?
You have to make one of the
three choices. Please write
down your answer.
The next day,
Wednesday, you walk into
the office and the stock
opens at 67p.
4. Do you buy more, hold,
or sell? You have to make
one of the three choices.
Please write down your
answer.
My guess is by now
most people have sold
their position. When
talking to retail traders I
always ask this question. You
would be amazed at how many
people in each of the four steps
 TRADERS PEOPLE
choose to either buy more or
hold.
The point is regardless of what
is in the media and whatever
anyone says, on day one you
should be cutting the majority, if
not all of that position. If you had
come in on day two and seen it at
87p you could have shorted it and
made all of that money back and
more.
Human beings are risk seekers
when faced with negative
outcomes and risk averse when
faced with positive outcomes.
Retail traders get sucked into
situations that they can never get
out of because they do not know
why they are in the situation in the
first place and how to get out of
it.
TRADERS: What about
professionals?
Anton Kreil: Professional
traders take a totally
different approach. It is
actually the exact opposite
in terms of approach and
risk management. Instead of
reading a newspaper article
and reacting to it, professional
traders realise two things.
Firstly that what ends up in the
paper is old news. It is what
happened yesterday. Secondly,
papers are in business to sell
papers and TV channels are
in business for ratings. Both
report the news and do nothing
to attempt to predict the future.
01/2012 www.tradersonline-mag.com
Professional traders spend their
entire lives trying to predict
the future. What ends up in the
paper is either confirmation that
you are right or confirmation
that you were wrong. The point
is professional traders are
trying to predict what will be in
tomorrows newspaper and in
the newspaper in a years time.
If I am fundamentally short
the market, what do I want
there to be in the newspaper
in three moments time? I want
to see Armageddon! I want to
see occupy riots, Greek and
Italian prime ministers getting
fired, the Euro collapsing etc.
I do not want to see it in the
paper and then get short! At
that point I know I am late to
the party.
In terms of risk management, in
the situation above a professional
trader would just cut at least
some if not all of that position at
92p.
These are the mistakes that
retail traders make all the time
AND professional traders are
guilty of it too. I have seen careers
ended by traders who have been
trading on a professional basis
fifteen and twenty years because
they were in one situation that
destroyed their year all because
they would not cut a position. It
happened to me many times in my
younger days. It is an awful feeling
having to cut, but you just simply
have to do it.
TRADERS: How would you
dene trading when you
were asked to write a short
summary for a dictionary?
Anton Kreil: Sadomasochism by
numbers.
TRADERS: We have heard
about your plan to y to space
soon. Please tell us more about
that.
Anton Kreil: I have bought a ticket
to fly on the Lynx XCOR Mark II
in January 2014 with the Dutch
company Space Expedition
Curacao. The project is being
run by Michiel Mol who was
the founder of the global media
company Lost Boys International
and is a team principal of the
Formula One racing team Force
India. We will be flying
from a newly built
spaceport from the
island of Curacao in
the couth Caribbean.
It is a really unique trade I did generated
once in a lifetime trip.
In the shuttle I will be
by myself with the
pilot, NASA astronaut
Rick Searfross. We take off on
a runway like a normal aircraft
and travel at Mach III to 103 km
above Earth. 100 km is officially
Space. So basically we will be
going 2400 miles per hour and
will reach space in four minutes.
When were up there we will be
weightless in the cabin and be
able to see the full curvature of
the Earth. We will spend an hour
up there floating around before
coming back. The plan is to shoot
a live broadcast of the entire
trip via the internet so the whole
world can watch it.
I have to do quite a bit of
training to get used to the
sensations of flying at that speed
and being in space. So in 2013
I will be doing G-Force training
in a centrifuge, like from the
James Bond movies and I will be
taking practice flights in an L39
Albatross Jet. I will also be doing
parabolic flights to get used to
the sensation of weightlessness.
What really excited me about this
trip is that once I have completed
the training and been 100 km
above Earth I will officially be an
One proprietary
over $12 million.
Astronaut. This will be quite a
nice addition to the resume. The
idea is that one hundred normal
people will become Astronauts
on this trip. Then in about ten
years time were going to try and
fly from London to Sydney in one
hour forty five minutes, using the
same craft but slightly modified. It
is a pioneering project and I just
73
want to be involved in everything
this project has to offer for the
rest of my life. If space travel can
become viable and significantly
break the time barriers to global
travel, then I want to be right at
the forefront of it.
TRADERS: What other
extraordinary adventures do/
did you pursue?
Anton Kreil: I love travelling
and doing Extraordinary
stuff. Extraordinary however
implies abnormal, but to me
I think anything is possible
and I do not like to define
what is normal and what is
abnormal. What is a normal
life? Everyone has an amazing
story to tell and stories that are
unique. The space
trip is just another
experience and
unique story that I
can personally tell.
That is what is so
exciting about life.
Ten months ago
I was not going
to become an
Astronaut, now I am going to
be. It is going to be an amazing
experience. There have been
many experiences before and I
am sure there will be a lot more
before I really leave this Earth.
Thanks for the interview!
This interview was conducted by
Marko Graenitz.