Becoming a trader on the Football Index (FI) is really exciting!
You have probably seen the rewards on offer for good trading. Not to mention, it’s a lot of fun too. So you are probably itching to dive in.
But FI can also be incredibly confusing and is full of traps for new traders, so it is worth taking a bit of time to familiarise yourself with the platform before you commit money to it.
There is a lot to learn and not all of it is explained particularly well by FI themselves. And, you have so much noise on social media with people often telling you to do totally opposite things.
In this three part Guide series I’m going to give starting advice to help new traders get on the right path to good trading. I’ll cover the stuff the official guides don’t tell you rather than explaining the platform itself. For more details on that, see FI’s own tutorials.
Let’s kick off with a quick word about me.
I’ve been trading successfully on FI for most of it’s life, and writing about it for over a year.
Since early 2018 I’ve established a thriving site at https://footballindextrader.co.uk/ which has a mix of free and premium content. The site contains free guides and two public market analysis articles each and every week. There is also a members area which hundreds of traders now use every day to get strategy guidance, market analysis, detailed match scouting from an FI perspective and transfer tracking.
Lots of people claim they make a lot of money but not many can publicly show how they did it over a season. On day one of the 18/19 season I started a New Trader Challenge with a £1,000 balance and a new portfolio from scratch. I regularly published my selections and reasoning behind them throughout the season on my blog (post archive here).
By season end, the £1,000 portfolio had a value of £3,208. That’s a whopping 220% profit. You can see the final review here.
That’s a good result but more importantly, it was achieved without bonuses, without holding 10,000 2017 Neymar’s, and without having to be a full time trader who spends all day checking the news. In fact, this was achieved with just 40 trades all season. I wanted to prove this can be done by people with full time jobs and life commitments too.
What’s my trading style? I call it “tight aggressive” (poker players will recognise the term and it is adapted from this concept and applied to FI). I’ll go into this in more detail in the advanced guide. But to sum it up in very simple terms, it’s about investing aggressively when you are very likely to win and not taking the 50/50 gambles. That sounds simple but making sure you are very likely to win is not easy and requires strong player analysis and the ability to read the market and see trend shifts in advance.
We’ll get to how you can learn those skills later, but for now, let’s focus on some basics!
The most important rule of FI and indeed any form of investing or gambling is:
Never put in more money than you can afford to lose.
Despite all the claims of huge profits on FI, and lots of them will be true, you can lose money too and I am sure many people must do and keep it quiet.
If someone risks more than they can practically or emotionally stand to lose they are known in trading as a “weak hand”. This is a poker term for someone who has to fold at the first sign of resistance.
If you are relying on the money in your Index account to pay your rent next month, you’ll get stressed and set yourself up to panic and make poor decisions. The best decisions are made when we are focused but relaxed and capable of taking a reasonable loss without it seriously affecting our emotions.
Therefore, it’s best to start with a sum you are comfortable with and add more as you grow in confidence and can afford it. Eventually, if you are doing this to make serious cash, you will have to put in enough to make it worth your time. But, work up to this, don’t do it all at once.
Especially when the market is rising there is huge Fear of Missing Out (FOMO). Really though, I can’t think of a single time in recent years where I could not have started on any day and made a decent profit with good decision making. But I certainly could have lost money by jumping in before I understood the platform.
Don’t let hype in the market rush you.
I have a strategy that I think is best for me and it is delivering very strong returns consistently, and in the advanced guide I will go into that in detail.
However, I would say there is no “best strategy”. Different people have different skills and time commitments.
Some may like to be very active and trade often, others really don’t have much time at all and want a safe and reliable portfolio they don’t have to change much.
Some may be exceptional with stats and spreadsheets and spend days trawling stats to find the hidden gems. Others may have a good gut feel for the market and it’s trends, not really caring whether the player is really good as long as someone else is going to buy them!
Others can be like dogs chasing cars and have no idea what they are doing, although the young and growing FI market has been kind enough to reward them anyway! It won’t always be like that though and FI will definitely get tougher as time goes on.
Ultimately I think there are many different ways to profit on FI. I do however think there are some sound principles to follow no matter what strategy you are using.
- Following trading is losing trading. Do not chase rises in players you wish you had bought last week. Let it go and find something else.
- Respect the trends and use them to your advantage. But do not mistake following the trend for following other people into an over-hyped player who has already risen sharply in price. Follow the trend by understanding what the market considers desirable and find good value players that match up.
- Keep in mind what real value is. The only source of real value on FI is current and potential ability to win dividends in future. Anything else is hype and bluster. Over hyped players are fun whilst the party lasts, but are the first to get dumped when the market starts struggling. And all markets have rough patches eventually.
- Knowing when to sell and being disciplined enough to take profits is much harder than knowing what to buy. When a player has reached a very high price and is being hyped up, do not hang onto them too long, especially when that high price rests on a gamble like an unpredictable transfer. Take your profits and reinvest them in something else at better value that can rise more and is less likely to crash back down again.
- Price is everything. A player can be as good as you like but if everyone knows that already and the price is too high vs what they return it is unlikely to be an optimal trade.
- Pay attention to what is coming up, not just what is happening today. Traders on the whole are very short term minded. Care less about what people are buying today and care more about what people will want to buy tomorrow, next week, or next month.
What’s your Football Knowledge worth? That’s the advertising tagline.
To be brutally honest, on it’s own without knowing about FI and it’s market as well, it’s not worth much!
General football knowledge is important. But, FI has some pretty big quirks that aren’t obvious straight away and you need to know what they are.
Don’t assume that a player who is considered good in real life will be good on the Football Index. They have to match the specific FI scoring system as well as the market trends.
I’ll cover player selection for performance scoring in more detail in the final part of this guide. But as a crash course:
- Good FI players generally need to score goals regularly. Unsung heroes who make good contributions but don’t score generally stay unsung on FI. There are a handful of honourable exceptions. But not many.
- Goal scoring alone can get you quite far, certainly for In Play Dividends which are much simpler. But to really hit high prices and contend regularly for performance dividend wins, they also need to make a big overall contribution to the game. A goal poacher who doesn’t do much other than score will usually be fairly weak, where as a player like Messi who runs the match and scores bucketloads on top will tend to do extremely well.
- For media dividend purposes too, big goal scorers are almost always the focus of news stories. Outside of transfers or very specific events, it is the goal scorers who get the headlines and the column inches.
- The players overall circumstances have a big impact on his value too. Is he at a strong performance suitable club that win the vast majority of games and have high possession? Will they play the full 90 minutes every week? Play in the Champions League? Start for their national side? Get a favourable transfer in the next window? Are they young or old? Are they at a value price? All of these things are really important to trading and what matters most will change heavily depending on the stage of the season and what events are coming up.
One of the first things I say to new traders is this:
Football good and Football Index good are not always the same thing.