A Guide to Market Trading on Footstock

May 13, 2020


A Guide to Market Trading on Footstock

Flippin’ heck, that escalated quickly!

It started last Sunday night, the 3rd of May. I’d just finished my first week on the Footstock platform and thought I would try my hand at flipping some players. Fast-forward to seven days later and I’ve done over 370 flips, making just over £200 profit. I posted that story on the Official Footstock Slack channel (join up if you haven’t already, it’s a great resource) and Noely reached out asking me to write up a little blog about flipping, insight into the Footstock market and general hints and tips for you. And here we are!

The story so far

I’ll start by telling you a bit about me and how my experiences have helped me on Footstock as a newbie – and then how my experiences can help you too! I’ve been investing on the markets for over 15 years, gaining experience in small cap (AIM) stocks, index funds, Exchange Traded Funds and Investments (ETF/ETI) and spread betting. I also mined crypto (ETH) and traded that for a while when it was booming a few years back – unfortunately, I didn’t get off the ride in time so my paper profits are way down from their all-time high. The good news is that I sold my mining rig for more than it cost me to build so all of my crypto is actually free!

Most recently I was on Football Index and made a decent profit in two months, before getting out as the COVID-19 situation developed. I then stumbled across Footstock and have invested £500 over a few separate deposits to test the water. I’m probably looking at putting some more money in over the next few weeks; I’ll keep you updated on that.

Getting to grips with Footstock

I’m going to be honest, when I first found Footstock, I wasn’t sure about it. It looked complex and easy to lose money. It took a great sign-up offer that was around to get me involved and testing it all out (if anyone needs a referral code, let me know!). However, after spending a bit of time on it and figuring out the mechanisms, I’m a lot more comfortable and even happy to support the community by writing this blog.

To me, Footstock is a cross between three things I really like: fantasy football, investing and collectable card games (CCG). I’m not sure if you know what a CCG is, but a couple of popular examples are Pokémon and Magic the Gathering. How it works is pretty simple: you buy packs of cards, or individual cards from traders, to make decks to play against other decks – not a million miles away from Footstock … Anyway, I’m digressing …

My first week on Footstock

I didn’t want to jump straight in, so to find my feet and to learn how the games and the tournaments worked, I bought some packs – a couple of £24.99 packs and a bunch of £4.99 packs. I then won and lost some cards on stat roulette, so I decided to stick to what I know and focus on the Footstock market. The biggest revelation for me was realising that Footstock, unlike most platforms, don’t take a commission from the market – all of their revenue comes from people buying packs or playing single roulette.

This means that we get Direct Market Access – no trading execution fees and 0%-commission trading – all for free. That’s an amazing deal, so I needed to figure out how to make money out of it … That’s when I decided to become Footstock’s version of a market maker, or ‘flipper’. A market maker on the stock exchange will buy and sell shares to increase liquidity in the market and will aim to make money on the spread – the difference between the buy and sell price. I could see it now: fast cars, a big house and Margot Robbie explaining confusing terms in a bubble bath. That dream was all the motivation I needed to start my journey into being a Footstock flipper.

If you don’t already know, flipping is buying something and then selling it again for profit. You’ve probably seen adverts on your Facebook (if not, does that mean the algorithms are working, or not working?) about how to be a flipper and take advantage of BOGOF offers on random tat to resell and make money? Well it’s not really that different to flipping on Footstock. You buy low, sell high and complete the flip!

How to flip

I say that like it’s easy to do, but it isn’t always. I’ll try to talk you through it and help you understand what I like to look for when I’m trying to flip players. The first question to ask yourself is, where is Footstock going in the next day, week, month, 6 months, 12 months and then in the longer term? This is an important question, because various time frames are great reference points for investment decisions. I think we can all agree that Footstock is in a period of growth, so I would expect you to be thinking along the same lines as me that the Footstock market will be going up. Remember, nothing goes up in a straight line, so keep your conviction and don’t be panicked into selling at a loss – unless that’s part of a plan and you need the capital.

Next question is, who do you want to buy and hold in your collection? I use this as a constraining factor to limit the pool of cards that are open to me. I only open a trade if I would like to keep the card in my collection long term. This gives me comfort that if his price drops massively and I’m caught with my pants down, I won’t be holding a player that is not useful in the game. Also, don’t become emotionally attached to a player you are flipping, you are trying to make money, not find a new best friend. For example, I bought and sold Jordan Henderson three times in one hour, making a profit of £3.50 on a player that dropped 4p in value over the same period.

Highs and lows

OK, so how did I do that and how can you do that? This type of flipping is very short term and takes advantage of the spread – as mentioned above, the spread is the difference between the buy and sell price. In that example, Henderson was £10.04 to sell and £11.22 to buy. I was able to have three orders filled at £10.04, list immediately at £11.22 and have them bought at £11.22 and £11.18. It sounds simple in theory, but if it goes against you, you could be holding three Jordan Henderson cards – probably not too useful for most people. Personally, I think he is really undervalued, and I will talk about why he is, and understanding value, in another article.

A lot of you will think that putting £30.12 of capital at risk to make £3.50 isn’t worth the effort, and to be honest it’s not going to be for a lot of people. But if this does appeal to you and you are going to try flipping, I’d suggest starting at the bottom end of the market – sub-50p players – and look for spreads of 15p or greater. This should give you good returns and not expose you to too much risk while you are practicing it. Do 20 flips at these levels to see how the market works before moving on to £1 players. Unfortunately, the only way to find these players is to work your way through the Footstock market and check the buy/sell prices of lots and lots of players until you find the right ones.

How did I do in my first week of flipping?

That’s the real money question. I ended my first week of flipping with over 370 completed trades and just over £200 in profit. As you can see, it’s a very small margin of profit on each trade – and it’s very time consuming. My collection also increased in value by about £260 over the two weeks, putting me on just under 100% profit from my original £500 investment.

It’s not all rosy in the garden (is that an expression? I’m not sure!): I made a few bad calls, such as selling Haller at £4.24 an hour before he started his run up to around £8, and taking a loss on a Danny Ings flip just before he jumped in price as well. But it’s OK, the theory is still right, so I don’t let the result of a handful of bad trades sway my conviction. My single best trade was on Adama Traore, where I made £5.44 over about an eight-hour trade. The top end of the market seems much more volatile that the middle/bottom, so while the return was good, I don’t think it justifies the risk to my capital. If I was trying to sell the same card today, I would be about £5 down on him.

I hope you’ve enjoyed reading this blog and if you’ve got any questions then just drop me a note on Slack and I’ll try to answer. In my next blog entry, I’ll update my second week of flipping and any new trends that I’ve identified, as well as talking a bit about value and how to value a player effectively.

Until next time …

Change is a relative newcomer to Footstock but has many years of experience on various trading platforms. He's enjoying applying that expertise to the Footstock market!