Insight 13: Volatility trading on Footstock by Vespasian

This article gives us more from our resident writer Vespasian on his Footstock (FS) trading. Some of you may have read a slightly shorter version of this on the official Footstock blog- but here, you get the full version.


His opening paragraph raises a great diversity point that I'm always keen to encourage and it echos my approach (and this websites basis!) of trading football across multiple platforms- try them all, find the one that suits you but keep a hand in them all for diversity! My reason for doing so is the same as his. I'm finding different platforms allow for different strategies. I'm most confident in my long term strategy on Football Index; I've now got several players that have paid their cost in dividends and grown substantially cap app wise too. But I have started to improve my short term game on Footstock- something I've tried many times before on FI but not had much success with- similarly I'm finding long term strategy on FS less successful! Luckily, FI with commission involved and FS without, suits that set up for me too! I'm still learning my way on Sorare, so can't say which strategy I'll end up with on there, but I will be sharing my trading on Sorare soon.


With all the platforms being young products, there is risk involved in not just the players you choose to buy, but the platforms themselves (but also probable early adopter benefits if they are a success). Anyone going long term with their football money, should consider spreading it across platforms from a risk point of view. Beware it does take up your time and brain space though!


I use to hate volatility on any of the platforms. But having spoken to Vespasian a lot about how he makes his money from short term trading, I am starting to embrace it on Footstock and now even miss it on Football Index! I'm not sure how well I'd do if both platforms become volatile at the same time though. I don't mind riding dips on long term holds- it's where I've made most of my money so far, so I'm hoping there is always a steady platform to use at any one time.


It will be interesting to see how volatile FI becomes when full order books are in play, like they already are on FS, and if that shakes up our strategies.


Read on to find out how Vespasian thrives on volatility.



Traders' Paradise by Vespasian



‘Traders' Paradise’ is a term I’ve used a few times in recent weeks to describe Footstock; before I explain why in a bit more detail, I’ll give a little insight into me as a trader and Footstock user (for those who don’t follow me on Twitter or via our website www.footballtradinginsights.com where I wrote my beginners guide to Footstock Vespasian Journey into Footstock)

I am a football enthusiast, a gambler and a trader across multiple platforms. In the last couple of years all three interests have merged, like a perfect storm, into Sports (predominantly football) trading on gambling products. Football Index was my gateway drug; but now I am diversifying across multiple platforms to find the pros and cons of each (you can see quick details on them by Westy here) and determine which platforms are best for certain strategies, which ones I enjoy the most and, of course, by diversifying, adding a layer of protection to my investments from the inherent risk of investing large amounts of money into relatively young companies.


I joined Footstock approximately 3 months ago. There is still a lot I don’t know, and I use the Slack group, the Official Blog, as well as some other community content providers to take in a broad range of information, ideas and experience from the user base. I was really drawn in by the Virtual Tournament aspect during a time when getting a football fix was particularly difficult. I didn’t really know a great deal about the product and certainly didn’t anticipate such a liquid, volatile marketplace (and its COMMISSION FREE!).


One last spiel before I talk specifically about why I’m enjoying and thriving on the trading side of Footstock; I mentioned the volatility of the platform. To me (and I’m sure any fellow traders reading this) it’s a hugely positive statement. However, it would be naive to think this isn’t a scary and off-putting reality for some users. Anyone who is finding it difficult to understand or worrying from a risk perspective, I recommend reaching out to the slack group for advice or indeed I am perfectly happy to offer some advice if you want to contact me directly (though I always implore people to seek advice from a group rather than individuals as you can iron out bias and get a wider viewpoint with which to make your own mind up). Volatility is good, trust me!


Trading – why is volatility good?


To many this is a simple concept, however, it’s easy to forget or ignore the simplicity of it when you are seeing big gains or losses on your collection values from one day to the next. It’s easy to react emotionally to large gains and losses when you should be reacting logically based off of considered foresight.




We can see in this chart the difference between a volatile market and a less volatile market. It’s important to remember that both appeal to different investors. More passive traders – or perhaps in Footstock terms, those users who focus more on tournaments and perhaps like a stable market in the background (although if you play for tournaments, the potential to buy cheaper cards should be seen as a positive) – may be content with low volatility or not really care. Perhaps a large budget investor doesn’t have the time or inclination to actively trade, so stable growth may be preferable to volatility. However, for the active trader like myself, we absolutely want the volatile line.

Let’s pretend the graph represents a Footstock card's price over time and put some numbers to the graph. The active trader (CAVEAT if he times the market efficiently) could potentially make a lot more by selling above the red line and buying below, than a passive trader who rides the growth.


On the graph we use the bullet points down the left-hand side as £1, £2, £3, £4 and we start both lines from £2 and finish at £4


Passive trader: invests £10;

buys 5 @ £2 – finishes with 5 @ £4, now has £20.


Active trader: invests £10;

buys 5 @ £2

sells 5 @ £3.50 (£17.50)

buys 8 @ £2 (£16 + £1.5 cash bal)

sells 8 @ £4 (£32 + £1.5 cash bal)

buys 22 @ £1.50 (£33 + 33p cash bal)

sells 22 @ £4 (£88 + 33p cash bal) = £88.33


Easy right?! … wrong. Timing the market is a skill which comes with risk, luck, research and more.


Understanding Volatility


To trade volatility using logic rather than allowing emotion to take over and in essence… PANIC! You need to form a strategy based on understanding fundamentals. After that, it’s about backing your research and judgement.

From my limited experience and observation, I have a shortlist of events I look for that will cause value to change on any given player. I could go into each in depth so for the sake of brevity I won’t, but feel free to contact me to talk through any aspect in more detail;


· Fixtures – identifying a winnable match/matches on a player’s horizon for which he is likely to play in and perform well. Other traders will be doing this both in advance and nearer the time, so the further in advance you can do this the better, however, football is fluid. If you act too soon, you increase risk of circumstances for the team/player changing i.e. injury, change of personnel.


· Form – players' values aren't only determined by what they do on a given matchday. This season, Footstock calculated players form by way of a scoring matrix over a rolling 19 game period. Therefore, buying reactively isn’t always too late. Footstock runs virtual games and tournaments alongside real football matchdays and a players PPG and match actions determine how effectively they can be used in these side games. Goals, assists, clean sheets, crossing and more can pay dividends even after the full-time whistle, especially if a player is compounding good performance on top of good performance.


· PPG – in line with above… however, it is also worth looking back as well as forward. As mentioned, it is a rolling 19 game calculation, so it’s as important to know what the earliest form of the run was as well as the most recent. Being aware that a player in good form or with a good fixture is about to replace some old low scores with potentially some new high scores puts you in good stead to react quickest to a potential PPG or category change.


· Transfer, retirement, relegation – no player is worthless in Footstock. As if for any reason a player become inactive (no longer available to use in tournaments), you can ‘swap’ them for an active player. You may not like to take these risks or pay per play games yourself, however, you can be sure others will. Therefore, value of a player nearing inactivity can change significantly based on the average prices of their category bracket.

· Proximity to virtual tournaments – virtual tournaments bring a whole different dynamic to match days. Users are effectively playing with a loaded dice where the likelihood of positive outcomes can become tangible and calculatable. Value will change drastically on a player based on whether they go into sustained periods of virtual tournaments with a high PPG (and relevant match actions) or low.


· Category – more theoretical than something I practice… but essentially players should be rarer the higher their category, thus, category changes should impact their value. There’s other mechanics in play, such as being available for more tournaments the lower a player’s category is etc., so it isn’t really important. It would become more important as the market matures and market prices become more in line with packs again… as the chance of packing the rarest players is minimal, so if another user wants them, they would be more inclined to buy from market than try to ‘pack them’.


I’m sure there are many other trends, events and effects in play that help you build an idea of a player’s value (Monday sell offs, start/end of free roll tournaments) and of course external factors such as marketing and the user base growth.


All this information helps you form judgements on the value of players and where they might be on their value curve.


A few things are important; self-assessment (check how well you are doing occasionally!) be patient but also adaptable – sometimes it won’t happen how you planned, so re-assess the players value, if you still back your original assessment it could just be a blip so be patient, if you now realise there is good reason why a player is further below or above the expected values… act accordingly, don’t be stubborn!


Tips


I employ a number of strategies within Footstock, I collect players for tournaments (player likely of high scores), for future growth (wonderkids), for future developments (i.e. a lending system), for rewards (yes sometimes you just need to pad out your collection if you are chasing the rewards!) and for trading (buy/sell based on value fluctuations). So …


TIP 1 if, like me, you have multiple strategy… it’s probably worth ignoring your ‘collection value’ as a barometer for success. i.e. I bought someone like Jota (I think he’s my worst offender and best example) as a tournament differential. He is capable of high peak scores as witnessed by his multiple hattricks in Europa League. One day I hope he will be the differential that wins me a large tourney pot. I have bought him as high as £18 and he is currently half that value. It wouldn’t be wise to assess my trading strategy based on Collection Value, because Jota forms part of that (as do many others) and yet I have no intention of selling him.


TIP 2 remember why you bought a player – just like above, it’s important not to lose sight of why you bought each specific card. Are they still of value towards that strategy? It will help you react logically rather than emotionally.

TIP 3 don’t be afraid to have concurrent orders. If you value a player at £3 – why not put some buy orders in up to £2.90 and some sell orders in from £3.10. You can make money while you sleep!


TIP 4 A recent discovery for me courtesy of @irish_fi – you can bulk buy. Take that player you value at £3, if he is currently £2.50, you can put a bulk order in at £3 (or where you see fit) and buy all of the sell orders up to that value. I had previously been of the understanding if I bid £5, even if the sell order was £4 it would take my buy order. It doesn’t work that way; it charges you just the cost of the sell order.

TIP 5 If you find yourself in a pickle or simply confused by some price movements (or indeed any other strategies not going to plan) reach out to the community for help before you decide to buy/sell.


Examples


Two players exemplify my approach to trading the volatility (many of my trades are more one-off spotting opportunities, whereas these two I have been trading in and out of many times for weeks). Aurier and Xhaka; they are both capable of a decent match day score, but not quite exciting enough to really maintain consistent growth. This is a perfect environment for volatility based on fixtures and form. Either, on their day, could bag a PPG of 20-30 with an assist and win and due to the nature of their play and their position, they are good picks for roulette games too. I’ve set an internal value on them and a large quantity of buy and sell orders either side of that value. If they have a stinker and drop value, I sweep them up, because I think the next good performance is around the corner… if they play well and demand goes up, I sell, knowing they just aren’t that exciting and as people scour their collections looking for expendables to raise cash, these two could be rabbits in the headlights.


The following are a small sample of examples from a large number of ongoing trades!


Aurier;




Xhaka;







Football is fluid. By the time you read this, these players' values, or the landscape in general, may be significantly different. This is an example only and not a ‘pump’ or ‘tip’… hopefully the principle and idea behind the trade is understandable and transferable though.


If you want to discuss more my DMs are open on Slack (Vespasian) or Twitter (@fti_emperor)


Embrace the volatility!

We aim to find the best sign up deals and offers for our readers on carefully selected and affiliated products that may be of interest.


We update these regularly so make sure you check for new ones!


Sorare:


A new football trading platform is emerging! This is a chance to get in extremely early on a new global product.


So far, Sorare is a 1-year old platform. They are already among the Top 3 dApp in the gaming space (in terms of volume as tracked by nonfungible.com). They are growing and very ambitious.



By signing-up through our link Click here, you will get 10 free player cards with increased odds of getting better cards than their normal sign up offer.


Terms and Conditions apply

BeGambleAware

18+ only


Footstock:


The Footstock concept is simple: you buy and sell - on commission free - full order book system. Enter your collection of Premier League players to try and win real cash prizes in Fantasy Football contests. Footstock, at its core, is a mixture of stock market trading and fantasy football.



Click here for a generous 50 player & tournament entry coupons trial offer to experience their fun -and highly competitive- cash prize tournaments.


Terms and Conditions apply

BeGambleAware

18+ only

Affiliate with Footstock:


If you have football trading or betting content online, or a large social following, register here to promote one of the better ways to bet on football knowledge! Click here


Football Index:


Football Index has elements of a stock market mixed with betting on players future successes in the real world. It is a move away from traditional bookies and can reward football knowledge and/or stock market trading skills. Become a football Trader.



Get a £10 bonus credit and trade up to £500 in a week-long trial; see if you like it: Click here


Terms and Conditions apply

BeGambleAware

18+ only


Football Index Club:

For advice and tips on Football Index, checkout this service. Click here


Football Index Edge:

For Football Index data services, take a look at what Index Edge offer:

Click here

FanTeam:


FanTeam has been mentioned by quite a few Footstock traders to us. It's the biggest daily fantasy sports site in Europe! Click here for new user offers.



Terms and Conditions apply

BeGambleAware

18+ only

18+