Updated: Dec 1, 2020
This article mainly looks at finding a trading strategy that suits you along with some tips on managing and tracking your Football Index portfolio.
There are many strategic decisions to be made during your football trading journey. In our last article Insight 4, Vespasian showed us how we could adopt a short term strategy on Football Index (FI). Here I discuss more strategies available and hope it helps you find one suited to you.
I have seen an influx of questions from new traders on the Football Index Forum, Twitter and Facebook. This is not quite a beginner’s guide- there are numerous guides already available (see our trading checklist). But here is a run through of what I did as beginner starting with £250, and what I do now, nearly two years in managing a five-figure portfolio. My strategy and style won’t be everyone’s cup of tea. In fact, I am pretty much the polar opposite to Vespasian and we have many debates about our trading. It comes down to your personality and lifestyle. I will show you some of the choices available so you can investigate doing things your way.
I joined Football Index through a referral offer. It gave me, as a new user, a positive starting point and money to use just to test certain players and see how the market moved. If you haven’t joined Football Index yet, use our link to get started now!
I started off slowly and bought a mix of youth and the best players in the world to test the market (with admittedly no real knowledge or understanding really of FI).
It wasn’t until I joined the forum that I got clear advice on how FI worked. As much as FI try to match the best performers in the world to the Index, no PB matrix will ever do so consistently; it will always favour some playing styles or team tactics etc. more than others. So you must study it and understand it. Would Teji Savanier be a household name for me if it wasn’t for a PB matrix where he was winning regular dividends when I joined? NO! The best advice on the forum came from Misto. It was at this time that he was putting together his ‘All things Index’ thread to help new users. It may have some out of date information now, but mostly it still applies and is a great starting point for any questions a new user has. It is still where I’d recommend new users go to first along with FI’s own guidance material ‘The Academy’. Both are must reads before putting serious money in!
Once you understand how Football Index works, and you’ve tested the waters with a small amount of money, it’s time to realise what type of trading style will suit you. Doing the quiz below, might help guide you. I think personality and circumstances play a big part. I definitely suit one style much more than others.
Finding your main trading style at some stage requires a lot of self reflection, discipline and the ability to act when a trading style is not working for you. You will need to find a style that suits you and one with principles you can follow consistently- even when it is not performing optimally! I’ve been tempted many times recently to ditch my diverse approach, to try and make all my funds work for me at the current given time e.g. MB top 5 period, but I have learned to stick to my strategy.
A common mistake by new traders is to change trading styles and strategy at the first sign of losses. It can be the biggest mistake to make. Constantly changing strategy due to impatience or indecisiveness potentially exposes you to getting caught in a cycle of losses. Once you are comfortable with a trading style- that suits your personality and lifestyle- try to really focus on the reasons it suits you and play to its, and yours, strengths.
I have tried multiple styles, either due to circumstances changing e.g. time off work in school holidays (I'm a teacher- not a child!) and more time available to be on FI and the news alerts, or giving in to jealousy over those churning out quick big profits in a day compared to what I did in a month (note- don’t believe every screen shot you see on social media!).
However, I don’t think it can just be down to circumstances, personality plays a big part. Whenever I try short term styles, I don’t do as well as with my long-term trades. All sorts of factors need to be taken into consideration. I don’t think I am cut out for the quick decision making needed or the pressure involved in short term trading. In fact, most of the casualties from the short-term trades that went wrong are now just seen as long term holds with the rest of my portfolio in a strategy that suits me much better. It may be partly down to the fact that I have mostly tried shorter term approaches during the madness of transfer windows- a perfect storm!
Experience is a factor too. I didn’t do well in the Summer transfer window, but I did learn from it and did much better in the January window.
Will I try the Summer transfer window again? Yes…I can’t resist the buzz! Will I attempt short-term strategies during the season? No - apart from trying the odd flip with dividends winnings. I’ve learnt my style and will stick to it.
Use the questions and trader descriptions below to help understand which strategy may suit you best. The main factors to consider personally will be:
How active you can be on the market.
Your targets for your money.
How much time you can spend researching.
What risk level you can take.
Whether you enjoy analysis.
Experience and skill levels in trading.
Time available to devote to Football Index.
It’s by no means an exact science, and I do not pretend to be an expert! You may relate to more than one. I hope it helps in some way though.
I relate mostly to a fundamental trader and position trader.
Strategy Quiz - What type of trader are you?
For each question, simply choose either statement 1, 2, 3 or 4.
Which type of activity are you most likely to do in your free time?
Action-packed adrenaline activities with high energy and risk! Like going to your local shop, crowded with oblivious OAPs, for milk and biscuits during COVID19 lockdown.
A wide variety of activities, open to ideas and opportunities on the day. Spontaneous.
Well planned activities, ones that further my knowledge or experience. If it’s not booked and agreed as a social outing- well in advance-, your ‘busy’.
Slow paced strategic games like chess or the glory of a European conquest campaign on Napoleon Total War or taking Weymouth FC to champions league glory on Football Manager.
Which best describes your lifestyle?
I could practically live in front of a screen. I can follow all the news. I can analyse all the data.
I work part time and have some time to look at data and keep an eye on the football news.
I have time to look at data and follow the football news, but I don’t like to be in front of a screen too much.
I work full time and cannot look at the football news or data all day.
Which best suits your personality?
Which is the most attractive method of trading to you?
Closing trades within minutes/hours
Closing trades within days
Closing trades within weeks
Closing trades after long term holdings (months/years)
Which best describes you?
I can only handle dips on specific holds/my whole portfolio for a very short period.
I can only handle dips on specific holds/my whole portfolio for a short period of time.
I can handle dips on specific holds/my whole portfolio for a long period of time.
I can handle dips on specific holds/my whole portfolio for a very long time.
Which best describes the way you think?
I relish making quick decisions whilst under pressure.
I like to take some time to make my decisions however not too long, as I feel I may miss out on opportunities.
I like to take as much time as possible to asses a situation. I wait for confirmation that I am making the right choice.
I like a clear plan of action before I make my decisions. I'm willing to wait for the right opportunities, but I’m not willing to wait too long.
Are you willing to keep a hold that you have already made 100% ROI on if there is the possibility to make 1000%?
No not at all. I would have probably sold much earlier (10-25%).
I would have sold as I approached the 100% ROI mark.
I may be able to hold it for a bit more growth.
Your Results (a rough guide):
Swing Traders- You mostly answered 2 and 3
A swing trader is someone who typically wants to trade short term holds. Generally, they don’t monitor data, news or graphs throughout the day but they still dedicate a couple hours to analyse the market when possible before making decisions.
If you’re a swing trader, you appreciate the analysis side to trading. You try to find patterns and exploit them. Because you place fewer trades (consolidated chunks at a time) on a daily and weekly basis, you will need to be strict with a sensible profit target per trade plan.
Losing trades could impact your actions greatly as you move your pot from one trade to another, so keeping your longer-term goals in mind and sticking to the plan are imperative.
Position Traders- You mostly answered 3 and 4
Traders that make trades that they then hold long term- months or even years. They are happy to leave money in and wait patiently; usually having strong convictions in their holds, and they won’t budge on their decisions unless a fundamental aspect suddenly changes unexpectedly e.g. when FI updated the PB matrix in 2019.
Position traders know that underlying themes will be the main factor when analysing the market. The PB scoring system, historic data, player graphs etc. will all be studied before trades being made. They have a much longer time frame in mind than most other traders. Usually based on a fundamental perspective, sentimental, or supply/demand reasoning, they brush off the fear of short-term dips. They are the ones that steadily buy any dips.
Position traders are much more tolerant of holding through losses as they still believe in the hold. They can take losses for a very long time before finally admitting defeat- see Hindsight 1!
Scalpers, Day traders & Flippers- You mostly answered 1
Traders looking for quick, marginally profitable, opportunities in the market that can accumulate over time. They are very active traders, possibly available 24/7 and keep moving their money around.
These short term traders try to be on the system at prime times: checking BBC gossip column when it is released late the night before the next day’s news in hope of margins to be made on early MB runners. They are on the press conferences prior to the weekend for any sign of money making team news. They will have multiple goal alert websites loaded along with the likely striker's FI profile pages set ready to click buy- at the same time on multiple devices and screens- ready to pounce and flip!
Scalpers can hold onto a player just for a few seconds or a few minutes. Rarely do they hold for longer than a day. Their main objective is to get in and out quickly hoping for any profit (after covering commission) and not end up with a stagnant hold.
It actually takes a high level of discipline! A bit of greed, enticed by the flashing green lights, could easily mean you can’t sell the player quick enough to get onto the next flip.
A scalper doesn’t have the patience to hold a player for a lengthy period and they grow bored easily when keeping trades active for too long. They want the excitement of seeing fast-moving money. They won’t be happy with a losing trade, but due to the small nature and frequency of trades there could be less financial damage on a loss and less emotion as opposed to the position trader who spent ages researching that hold.
Sentiment Traders You mostly answered 2
Traders that identify and participate in current trends. They do not attempt to make the market timing calls. Instead, they attempt to jump on them and buy players that are rising with the momentum of the market. They then aim to get off when they sense the market is moving to its next trend.
Commission, market volatility, and accurately assessing market sentiment are some of the difficulties involved in sentiment trading. But, overall, they find it a more secure approach to some of the other methods.
Market Timers You mostly answered 3
Traders that try to guess which FI trend will come next. They will move from near the peak of one trend to hopefully setting up and being ready to maximise profits from the beginning of the next big market shift.
They generally look to data to predict the direction of the movement. It is very difficult, even on FI, to predict the direction of market movements. Just when we think cycles are in place, new promotions, or unexpected events can throw a spanner in the works. I last wrote about timing to buy the PB dip in Foresight 3; this was a market call move of trying to time the bottom.
Initially, with news of fixtures to be completed one way or another, it has seen market movement and been profitable- however for how long? Some will say it’s not worth shifting funds from MB to PB for just a few weeks PB then for MB to return again. the French league decision is a concern.
Gut Traders You mostly answered all over the place (no clear pattern-we all have different guts!)
Traders that just go with their gut! A style of investing in which decisions to buy and sell players are made without the use of fundamental data. They generally make short-term trades to profit from various market trends or personal beliefs in players.
Rather than analysis of possible holds, it will mainly be other market activity, or watching real player performances that sway their choices. Gut traders can often be exposed to suffering from poor timing and over-reacting to both good and bad market or individual player news.
Fundamental Trader You mostly answered 4
Traders that focus on specific details to determine who to buy and when to buy them. They study each player using underlying parameters like the PB matrix or historic data and then decide whether to buy or not. It can be done with both short-term and long-term perspectives, but it is more closely coupled with a buy-to-hold mentality.
Fundamental trading will appeal to investors, or those treating FI like a savings account (be careful of doing so, they are very different!), as decisions are based on logic and facts supported by data.
It can be very time consuming to begin with due to the research and analysis done; and they can’t relax too much once that is done as constant dilemmas for fundamental traders on FI will be:
A) Other traders do not always behave in logical ways
B) FI can change the parameters by which you need to trade by!
How to identify which players to buy:
Strategy will play a big part in how you find the players to put your money on but there are several resources that may come in handy.
Short term traders:
If you are a gut trader, a swing trader, a sentiment trader or a scalper, you will largely monitor the market and go with trends. This can be done by simply watching the trading ticker on the website/app. Or looking at the market lists and watching the daily increase and decreases. You will learn the general cycles the market goes through during the calendar year.
For a premium services to support this, IndexGain offers a buzzbot on Slack where you can request notifications on market and player movements. Another premium service for trend identification etc is Football Index Club; they do the leg work for you and provide lots of information to base your trades on.
You will also want to monitor player actions in real life, scoring a goal etc. Being one of the quickest to react to a goal alert can be profitable for short term traders. VAR decisions have dented the profits for these quick fingered traders this season, but it can still be done. I recommend having Sofascore and Flashscore both set up. They tend to be the quickest along with BT Sports live scores show. It will largely depend on your signal as to how close to real time you get. Sky Sports and BBC seem quite a bit delayed. Live game watching also seems to be severely delayed compared to the app notifications.
Live game watching however is very useful for injuries. You will see the injury happen, you will see the player’s reaction to it, commentators love to create a bit of drama about them and will monitor the player for you. This will all happen before any notifications of a substitution are sent out on apps. Even then, it takes a very keen and active trader to notice substitutions and look for a reason to every sub made on game day! Short term traders will need to act very quickly to any major injuries.
Long term traders:
Positional traders and fundamental traders will seek data to support their decisions. I use aspects from many different providers. As my portfolio has grown, I find it very beneficial to get regular price updates and alerts, but I also find all the different data tools very handy for searching for new players to buy. The free versions of the data providers are all great starting points. There is Index Gain, Index Edge, Footy Index Scout and as mentioned before, Football Index Club.
You can use historic data to try and predict future outcomes. You can see which players have performed well in the media for MB dividends and the PB matrix for PB dividends. There are all sorts of ways to use and interpret data. Recently, I’ve been filtering data by age, PB average and PB peaks to find players to buy during the dip. I went for the players whose graphs I showed in article and it seems many more identified them too as they have steadily risen. It will be interesting to see how they fare when football returns; some holders will be looking to trade them short-term and sell on the return to fixtures whereas I will be in the group of traders just happy to have topped up my holdings for the long term. One of the players I mentioned in buying the dip for long term holding also featured in Vespasian’s last article on buying the dip for short term trading! Evidence that data and graphs can meet different criteria for different traders and strategies.
Diversity versus consolidating holds:
Now you know your style, can plan your strategy and find players to buy, there are more choices to be made. In Hindsight 3 we discussed some of the pros and cons of having a diverse portfolio versus a consolidated one with John Nellis (host of the FI based HWAH podcast) going to an extremely concentrated portfolio of just 5 players. My preference is diverse- currently holding 165.
In brief, diversity reduces your risk but also the potential for higher gains. I am going to analyse my portfolio soon where I have been tracking my portfolio and the footie. Generally diverse portfolios will be tied closely to the performance of the overall market. If I am not beating the market, I will start culling my holds to concentrate a bit more on players I think will beat the market. I did have around 250 at one point, and I have got it down to 165 . I win dividends most days due to using data and covering who I deem potential MB and PB winners. I invest these dividends back into the market more freely than I do with my cash deposits; I do take some punts and try some short-term trading or buy players that the market is ignoring. But mostly I top up any long term holds that are dipping at the time.
Managing a large portfolio can be tricky. Unless you hear the news as it happens, or monitor your players closely (which is unlikely) a broken leg could go under the radar until it is too late to react; however the reason you may not have noticed it is because the rest of your portfolio have absorbed the blow. Often, I will see a player of mine crashing, but others rising; the money flowing out of one to others I hold, so the portfolio stays stable.
A concentrated portfolio has increased risk, but also increased opportunities for potential gains. If you have backed a dividend winner, you will be rewarded with larger sums coming in. If you have backed a player that rockets, you may hit your profit target quickly. But it’s the ‘What ifs?’ that will plague your mind. What if they break a leg? What if the market moves away from them?
It is easier to manage and keep track of your players though, so you may be able to react quickly to negative movement.
Managing and tracking your portfolio:
Now that you have a portfolio, as mentioned, it can be hard to manage and keep track of it, especially a large portfolio!
When I started, I use to log my trades and player prices daily in a book with a few different coloured pens! It was very old school and very time consuming, but I did enjoy it as it made me analyse each buy and each hold time and time again.
As I got deeper in with more money and more players, it became impossible to carry this on. I used Football Index Scout’s spreadsheet and adapted it to suit me. I like to track each trade completed using the ‘Trading Tracker’ part largely the same as Footy Index Scout’s original. I have just added two columns to show the share price you bought and sold at.
It gives me valuable feedback and chance of reflection on my decisions; especially when I end up rebuying a player I have previously sold!
On the same sheet, I have added my own ‘Portfolio tracker’. A couple of times a week, I log my portfolio stats and the footie. My portfolio tracker allows me write notes alongside the footie. For example, I have started tracking bonus offers. It gives any portfolio or footie movements context. I am starting to notice patterns.
Highlighting rises green and dips red (none of this light blue nonsense here! 😉) allows for a quick show of growth then dip, growth then dip. I will be looking into that pattern in more detail soon. I use yellow for all-time highs in £’profit’ and %’profit’. In my calculations on the portfolio tracker, I have not built in the 2% commission, and I realise I would not get market sell price on all my holds, but it gives me a rough figure of ROI to go by.
You can also see me there tracking the Footie (the only figures visible) alongside any key notes made about market announcements etc. A quick glance at that small section goes to show how many offers FI have dished out recently! Again (when I look at the overall picture on my screen) I am starting to see a pattern emerge that I will investigate further soon. Here is a further snippet showing more of the sort of things I note. Incidents that may have impacted all traders or just my portfolio:
To make my log of further of use, and especially if I had a smaller port, I would track the instant sell port value as well. You can download my version here. You can easily make alterations, add or delete bits to suit you.
Should I track my ROI or my IRR?
As I haven’t withdrawn much money yet, I am happy using ROI for now. I just want to know my overall profit or loss from the total amount of money I have put in. Obviously as you drip feed deposits in over a length of time, the ROI doesn’t show the most exact figures to measure trading by. I try to make this clear, on my trading log, for myself with highlighting new deposits in orange as they will bring the %’profit’ down each time. You can see this evident in 'Tracker snippet 1' above.
IRR is probably a better calculation for very active traders to be using. I have added a column for this to be logged, as I will start using it periodically. The formula is set up on a different sheet of my trading log for calculating it.
There has been a good thread on the forum to help with this by Coleyscrooge, and he explains why he uses IRR here:
''A good way of tracking an annualised rate of return from any investment is by calculating your “Internal Rate of Return” (IRR) on Excel. Unlike other, simpler calculations (such as ROI), an IRR takes account of the dates of all of your deposits and withdrawals, and calculates the rate of return over a 12-month period. Although Football Index should never be equated to a savings account, it is a good way of seeing your annualised return from your trading and comparing this to what you would have earned if your money was sat elsewhere.
The calculation is fairly simple on Excel, and can be seen in the screenshot below. The important thing to remember is that all deposits should be shown as a negative, all withdrawals as a positive, and the final entries should be your portfolio value and cash balance, both as a positive, and both as at today’s date. Once you’ve entered the formula (shown in the formula bar at the top of the image) make sure that cell is formatted as a percentage to get your annual rate of return.
In the example below (and on the F.T.I. Trading log), the trader has made regular deposits over an eight month period. An ROI calculation would show a return of 43.25% - not bad! However when you factor in the fact this portfolio has only been going for 8 months and the deposits have been “drip fed”, the true annualised rate of return (IRR) is actually 156%!''
Judge your own success.
The penultimate thing for me to mention is only you can judge your success on Football Index. You will know how much time you invest as well as how much money. You will have your own measure of what means success to you. Do not let screen shots of other portfolios change your trading behaviour. Different strategies can easily lead to misleading stats; A trader that puts £10 on one player to test the market and has a bit of luck could have a very high % increase figure in a short time compared to someone who has invested £10k and had to spread it around more players. It all needs context.
However, there are some personal indicators to help assess whether you are being, or setting yourself up to being, a successful trader or not.
1. You have a strategy.
2. You also have a plan for changes on the market.
3. You have understood your risk exposure.
4. You have only put in what you can afford to lose without drastic lifestyle changes.
5. You calculate a stop loss per hold.
6. You resist urges to over trade.
7. You are organised. You log your trades and track your portfolio’s performance.
8. You’ve done research on your potential buys.
9. You are able to realise when to take the profit.
10. You are enjoying it!
1. You don’t have a strategy in mind. You keep following your gut.