Thread: Vicky Karambatsos-Kitson on spread betting and trading

Spread Betting - Discussion between NLP trainer Michael Beale and Vicky Karambatsos-Kitson



(You can listen to the MP3 file below but please allow up to two minutes to download)

http://www.nlp-expert.co.uk/Money/vicky_trading.mp3

1st Draft

Michael: Good morning Vicky. I delighted to speak to you about trading, would you start off by introducing yourself?

Vicky : Yes, Good morning Michael. My name is Vicky Karambatsos-Kitson. I'm a full-time trader, a independent financial markets trader, and I'm also a trader coach, so I trade, coach and teach and mentor traders to become profitable.

Michael: What is spread betting and how does it relate to trading?

Vicky :That's a good question because that's something that people tend to get mixed up quite a lot with, and partly to do with the media. Spread bidding or spread trading is one product, if you like, that a trader can use to enter the market in trade. There are other products like CFDs - contracts for difference - you can by the shares themselves just so share trading, traditional share trading - you can trade in currencies, you can trade in options, in futures - the list is endless.

So the traders size of account, their style of trading, their objectives and goals financially, will largely determine what's the best product to enter the market with. Spread bidding or spread trading becomes really popular - its still embryonic in the UK, but still very popular - because its brilliant with the people starting with a small account which could be as little as Five Hundred pounds with a broker, it's great for people who are in and out of a trade quite quickly, buying-selling, buying-selling, because the costs are so low per transaction, as compared to traditional shares.

And the final reason that it 's so popular is that it is completely and utterly tax free in the UK!

Michael: Interesting, give me some of the benefits and rewards again?

Vicky : Yes - so lets compare it with traditional share dealing or share trading because that's what people are really familiar with. So in the share world, to do a typical transaction where you have five thousand shares, that kind of thing, you need something like - it depends on the price of the shares before - five, six, seven, eight hundred pounds just to get into the trade.

So you need a large account. There are also lots of costs due to the government, its like buying an asset, buying a house - you've got to pay the broker substantial amounts, twenty pounds a go at least t buy and sell the shares for you, the stock exchange - and before you know it, a large chunk of what your profits.

So traditional share tradings are excellent for people with very large accounts, and I'm talking about people with a hundred thousand and over, and for people who are buying to hold stock, I would say that they're perfect. But for anybody who's got a medium or even a large account, but is going to be trading constantly - buying or selling, three, four, five times a day, if you like - fifteen trades a week, if you like.

And the costs of the share trade are much, much, lower - negligible in fact - and you've got a massive advantage, which is that you don't pay tax, which you do on the share-trading.

Michael: What are the disadvantage and risks?

Vicky : Well that's a brilliant question, because it comes to the heart of the matter in terms of whether you're trading as professional or not, and the heart of the matter is risk. Professional trading, if I had to say it in ten words or twelve words, to what is processional and profitable trading, it would be; the measurement, the management, and the utilization of risk, such that it works to your advantage every single time.

So one of the disadvantages if you like, or one of the challenges, of spread trading, is that its a leveraged product. And what leveraged means, is just like a home loan, or mortgage - you put in some money - the bank gives you the rest, maybe with a twenty, thirty, forty thousand pound deposit, you've got a one thousand, two thousand pound property that you've got access to much quicker than you otherwise would have been able to - that's leverage.

Spread trading is also a leverage product - Now that means, you can make money ten times faster and ten times greater - absolutely without a shadow of a doubt - but you can also lose money ten times faster and ten times easier and ten times greater if you re not trained enough.

Michael: Does that mean you can lose a lot more money than you bet?

Vicky : OK, lets be really clear. If you were to do a share transaction, and a spread-trading transaction for an equivalent amount - an equivalent underlying share value - the amount that you'd lose on both is equal.

However, because you only need one tenth of the amount in your spread trading account, because it ' s leveraged. To do the trade it feels like you're doing more, it that makes sense - because you've only got a small amount in your account - you can actually lose more, if you're untrained - than what you have in your account.

However, professional trading is all about, never, ever, ever being in that situation. We risk-manage, every single trade, to a tiny, 1% value of our account.

Michael: Realistically what are the actual entry costs including time, PC, trading account, training etc? to give yourself a fair chance of winning?

Vicky : Yes, I would suggest that people start with, if not end with momentum or position trading. I love position trading, because it enables you to trade at the end of the day, outside market hours - you don't need the best PCs in the world or the best broadband connections, or anything like that - you're placing your orders or your trades outside of market hours - there's about five of them a night - and you can expect three or four of those to trigger the next day - you're looking at about fifteen trades a week.

So it takes about forty-five minutes a night to do this. And what you need for this style of trading is - an OK PC, and I'm not talking about anything more than four-hundred pounds worth of equipment. You might have an analogue connection, it wont matter at all - I'm assuming that most people have broadband at home these days which might be slightly better.

You need Skype, which is completely free, obviously, over the Internet, www.skype.com
You need a broker account, now there's many, many great brokers out there. And I'll give anybody that's interested the contact details of the brokers out there - I need to ask some questions about what their needs are, but I could certainly sort them out with a broker - some are brilliant, some are not so good. You need a broker account.

And you need at least five hundred pounds in your account, A good size trading account would be about five thousand pounds - about four or five thousand pounds - that you could start without a shadow of a doubt for as little as four or five hundred.

And I would say, that you categorically need to train.

Michael: What would you suggest people put aside for training?

Vicky :Approximately - we tend to train throughout our careers, and it becomes self-funding obviously. I would say probably about two and a half thousand pounds.

Michael: What sort of people do you think should consider spread trading, and what sort of people shouldn't?

Vicky : Yes, great question. Who should - well we get all sorts of people training with us. Our youngest ever was thirteen years old and her mother is actually a trader - and she trades already, although she technically trades on her mothers account, because shes too young to have her own account.

Our oldest ever trader Eighty Seven years old, so age is absolutely no restriction at all. People tend to think that trading requires a lot of mathematics, probably below O-level, so probably gcse mathematics. All of our wonderful systems take care of all of the hard work for us. So its actually simplified down to the essential trading skills.

You need some tenacity. You need to get in, spend forty-five minutes, get on with it - five days a week ideally. You don't have to, but that would be the ideal, I ' d like to see that discipline in someone.

You need discipline. If you haven't got it, than you need to develop it. That's something we focus a lot on in our coaching of new traders.

Michael: What do you mean by discipline?

Vicky : Yeah, absolutely - what I mean by discipline is the ability, willingness - the ability to consistently trade to the exact basic rules of every single trade without variation - despite boredom, despite anything.

Consistently, over and over and over again to the same set of rules - and they're very few rules - without variation, because that is what will guarantee success.

Michael: Who shouldn't consider this?

Vicky : Anyone who is not able to dedicate that time every night - that forty five minutes - in fact, it can be in the morning as well because you can actually do it at six, seven o clock in the morning as long as the market hasn't opened at eight - but if you struggle to find that time slot five days a week, it would be hard to trade, it would be hard to dip in and out.

I would say don't start trading with your life savings. If you've got some money that you've got, put it aside where you can use one or two thousand pounds as starting fund, that would be good - but certainly don't go in with your life savings.

And don't go into trading if you are highly pressured to succeed - in other words, it is best entered when you've got a nice stable job, a regular income and then you start building your trading skills alongside that and eventually, of course, you will have to make the decision to whether you love trading and whether or not it is making you enough money or not.

Michael: Where and where do people trade?

Well, we teach all of our graduates to start trading on the FTSE 350, that just comprises the 350 largest companies in the London stock exchange. And the FTSE's wonderful because it lends itself wonderfully to you setting up your offers and your trades after market hours - its not particularly volatile, but it has been a little bit more recently, obviously.

It's a great market to start with, and in fact a lot of people never, ever move from that market. You can become very very profitable trading one market as opposed to stretching your skills across three or four or five markets.

So FTSE 350. We trade after 4.15 in the evening when the market closes in the afternoon, and before 8 in the morning when the market opens again. And we trade five days a week from anywhere that we've got a broadband connection.

Michael: What are some of the behaviors of successful traders?

Vicky : Well that's a really interesting question. Some of the behaviors are a complete willingness to trust the trading strategies that have been developed for many, many years in the financial markets. So completely, unquestionably rolling out trade, after trade, after trade, trusting the strategy, trusting the statistical performances of what you're applying, and just letting the results speak for themselves.

A great trader focuses on discipline, focuses on excellent risk management - only one percent risk on every trade, after trade, after trade - and the money takes care of itself.

Michael: Different sort of question, what sorts of capabilities do successful traders have, where have they picked up these skills?

Vicky : They don't always come to trading with success in other fields, by no means. But when they enter the trading world, particularly if they're surrounded by people in a business environment, or a training environment - by people who are highly successful at training already, their belief system tends to shift, and all you need is that initial kick-start of change of a belief system, and then the coach can take it from there.

We give our new graduates very low initial targets, and they hit those targets in the first six weeks of their trading - and then it kicks off the belief cycle, if you know what I mean.

But people come to it with success in other fields. Maybe in starting businesses, other fields that they've been successful at - and they've already got a belief system in success which we just need to leverage from.

Michael: Are there any beliefs that good traders have? .

Vicky : A winning belief. A belief in themselves, a very strong belief in themselves - and if its not their already it will completely develop. A trust in the system of trading.

Let me put it this way - One of the most common things that I come across is this - One of the first things that I ask a new graduate that I am about to coach is of course, who are they, and all of that, but my first question to them is - and I say it really bluntly - because I'd like to flush them out - I ask them how much money they'd like to make.

And I get all sorts of responses out of that. Some people get uncomfortable with discussing money. Some people are like "Wow, I want to make THIS" and they're really open about it. Some people are "Well, I'd like to say, but I might look a little bit greedy if I say what I'd like to",

One response is to really underestimate, and really bring down the number heavily - and all types of things are going on there, like a fear or failure, a fear of disappointment - that's a really big one that comes up a lot. If I say twenty thousand pounds a month as a target, and I don't make it, that will be really disappointing, and will impact my belief systems going forward.

So all kinds of things come up - but when I ask that question, that's where I get a full scope of why people come into trading. The different attitudes.

Michael: We're obviously going through an interesting time in trading, what sort of strategies works now.

Vicky : Not so different at all. The strategies are the same. We risk manage every single trade to 1%. We, and all traders in fact, train trading as the market is rising, and selling, or going short, as its known, as the market is falling - so we have the ability to make money on both sides of the market, and do.

Whats changed at the moment is that there's more volatility in the market, so we're actually paying very close attention to our risk management there. Increased volatility though means that we're actually making more money than usual.

So there are some of the things to consider in the current market conditions.

Michael: Moving on another question that's always interested me, who do you pay if you loose, who pays you when you win?

Vicky : If you make money it comes from the broker. In other words, they pay you. If you lose money it goes to the broker. But that's a very simplified view of the world, because actually, because the broker has a very complicated position in the market, if you see what I mean.

So, for example, if I bought if I bought a few thousand BT shares, and you Michael, ha some BT shares - that broker would have no position in BT shares, because he'd be letting off our transactions. They can do all kinds of things. So although it looks like you're in it with the broker, he or she could be doing all kinds of things in the market which means that your counter-party might be a different person altogether, like you for example.

Michael: So it's the broker that holds your money

Vicky : Yes, the broker is the middleman, and your trade, if you like, it made with the broker.

Vicky : Yes, absolutely, they could cancel each other out - they could technically be completely position-free at the end of the day. If he or she does have a position, than they may decide that they'd like to keep that position because they may agree.

If they feel that BT shares are going up, and they hold a buy position in BT as a result of all of their clients activity, they may decide to hold that, and trade themselves.

Michael: I appreciate you answering my questions, is there anything you would like to emphasise? Also as you given your knowledge and advice, anything you would like to plug?

Vicky : I think we've covered pretty much everything. One thing that I would stress very heavily is the importance of training and one thing I say to my students is that you wouldn't dream of someone taking a pair of hairdressing scissors, very nice ones, nice and polished - you wouldn't dream of having someone take them to your hair - because you worry about how you're going to look for the next three months.

But people regularly open an account with a trading broker, go in there and start having a little go. "I'll go in there and I'll work it out."

Please, please, please don't do that. Please learn to trade, if you've got a friend who's a trader and who's willing to do that - to guide you and mentor you in a structured program, by all means go to them. If you haven't, then think about getting together with an organisation with a great track record of successful teaching and trading.

You read about our free seminars and the organisation that I'm with is Knowledge 2 Action, we're on 02077518900.

Michael: I have to say I attended one of your seminars, which I really enjoyed - and there was no sales pressure at all, which I commend you for. So I'm happy for you to give it another plug.

We run fantastic two-hour seminars completely free of charge all over the country - you just go online at , and you can just book it, and it will give you a great insight to what professional profitable trading is all about - at the end of that two hour seminar you can choose for yourself.

Vicky : At knowledge 2 Action we run seminars all over the country, they're completely free. They're about two, two and a half hours long - and in that time we talk about some of the key principles about trading. We actually play some virtual trades - we look at the structure of a trade, why one would spread versus trade shares, for example.

We look at what great risk management in trading is. And trading is a really counter-intuitive skill. If your gut is telling you that you're supposed to do A, chances are that you're supposed to do Z, so it lends itself beautifully to structured training and stepping away from what instinct would tell you.

So we spend a lot of time really highlighting what that really looks like in practical trading skills. So at the end of two, two and a half hours, what I want people to have in my seminars in for people to have absolute clarity is for trading in nominal, secondary, or even primary income is or is not, for them - and I definitely think our seminars deliver that.

Michael: I'd like to clarify something, are you saying you recommend never using your intuition?

Vicky : No, we trade mechanically. We have something called a trading plan - all professional traders use a trading plan. Its a bit like a business plan, but for trading. And in that plan we document absolutely everything we will do, everything we wont do - including how we enter a trade, how we exit a trade if it doesn't work out - how we exit a trade if its really working out - etc etc etc.

And we trade to that plan. That is professional trading.

Michael: Thank you very much for your time

Vicky : You're absolutely welcome, thank you.

Seminar details