Market Updates

Market Volatility and Trading Opportunity

July 22, 2020
Vespasian

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Market Volatility and Trading Opportunity

Remember, Footstock is a gambling product. Any methods outlined in this article do not guarantee profit, nor should they be considered a viable way of making money. Only gamble what you can afford, and when the fun stops, stop.

‘Trader’s 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).

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. I diversify across multiple platforms to find the pros and cons of each 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, this blog, as well as some other community content providers to take in a broad range of information, ideas and experience from the user base.

Why Volatility Matters

To me (and I’m sure any fellow traders reading this), volatility is a hugely positive feature of Footstock’s market. However, it would be naïve to think this isn’t a scary and off-putting reality for some users. Volatility is good: trust me!

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 cards price over time and put some numbers to the graph. The active trader (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.

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 value isn’t only determined by what they do on a given matchday. Footstock calculates players form by way of a scoring matrix over a rolling 19 game period. Therefore, buying reactively isn’t always toolate. 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 totake 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.

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 player’s 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. the lending system), for rewards and for trading (buy/sell based on value fluctuations).

TIP 1: If, like me, you have multiple strategies, 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. One day I hope he will be the differential that wins me a large tournament pot. I have bought him as high as £18 and he is currently half that value. Still, 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. There are no guarantees, but you might even make a profit whilst 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 that 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.

A Case Study

A player that exemplifies my approach to trading the volatility is Serge Aurier. He is 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. On his day, Aurier could bag a PPG of 20-30 with an assist and win and due to the nature of his play and his position, he’s a good pick for roulette games too.

I’ve set an internal value on him and a large quantity of buy and sell orders either side of that value. If he has a stinker and drops in value, I sweep him up, because I think the next good performance is around the corner. Conversely, if he plays well and demand goes up, I sell, knowing he just isn’t that exciting as people scour their collections looking for expendables to raise cash.

Football is fluid. By the time you read this these players value or the landscape in general may be significantly different. Aurier 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!

Remember, Footstock is a gambling product. Any methods outlined in this article do not guarantee profit, nor should they be considered a viable way of making money. Only gamble what you can afford, and when the fun stops, stop.