Tricks of the trade: Edition No.09 with Stu Macdonald

In this weeks edition, we’re joined by a man who went from never gambling on football to making life-changing profits on Football Index in a matter of years, with an interesting matched betting journey entwined between the two (which he discussed in detail in a previous article here).

@Stumacdon1 has now become a prominent figure of the Football Index community on Twitter and Slack and now manages his portfolio based on what seems simple, but has proved rewarding, player criteria.

Here’s what we discussed.

Firstly, give us a bit of background Stu, how did you end up on Football Index and How’s it gone so far?

Stu: I fell into it really through matched betting. It was supposed to be a quick ‘risk free’ sign up offer.  £500, in and out, with hopefully a couple of quid profit to show for it at the end. If not, then get my money back and move onto the next thing. Nothing to lose and quite standard for a matched better. 

That was the plan, except i joined during the Coutinho to Barca transfer drama in Aug / Sept 2017. My port flew up but then crashed after the Risk Free deadline expired, which meant I couldn't get my original money back. I was now stuck with cash tied up in this thing and no real idea what i was doing, but I could see its potential even if its daily swings freaked me out a bit. The market was ridiculously thin back then, just one prominent trader's tweet could cause ripples for days on end. 

I’ll be honest, for a good 6-8months it was a bit of fun and very much secondary to the matched betting I was doing at the time, so I mostly dicked around without thought or strategy. Every now and then I'd want to buy a new player that was flavour of the day so would add more funds in dribs and drabs until it kinda dawned on me that i was getting hooked and wasn't playing with pennies anymore. This was around the World Cup time and I remember going away on holiday and my port being absolutely decimated. It was full of crap that I obviously missed the boat on selling and nobody wanted any more. That was the turning point for me and I decided then to IS my entire port and start taking it seriously. Just shy of 2 years later I've just celebrated moving into the 100k club and my two most profitable months ever mid global pandemic, which is just bonkers really. 

Before we get into further questions, can you explain how you keep track of your Football Index portfolio and profits? That spreadsheet you have is very impressive and actually inspired me to start tracking my dividends in more detail!

Stu: For anyone who didn't read my original blog, I started matched betting with the sole objective of making enough money to pay for a holiday for me and my partner to celebrate an upcoming landmark birthday. Id never gambled before and there was still suspicion in my family circles around its viability, so I was quite anal about keeping records of where my money was to track progress. It definitely, definitely wasn't anything to do with being competitive against my mates who were also matched betting, honest.

I would track progress monthly, be that regular offers, advanced accumulator techniques, dutching, casino offers and crypto trading. It was important for me to know a) where my money was, and b) how successful each venture was in relation to time spent.

The spreadsheet has now morphed into this behemoth of data spread over many years, but is actually pretty basic. I update it once in the morning and once in the evening (when i remember) and have a couple of cells I manually update (port value, cash balance, dividends made per category). Then I have a separate tab that pulls the data through to give me a dashboard on progress daily, weekly, monthly and even yearly on any metric you can imagine. I can even tell you which day of the week trends to be the best day to buy or sell based on my port growth. I realise how sad this makes me sound. 

The biggest benefit I've found is the ability to be able to zoom out and look at the trends over a period of time, rather than put too much onus on any short term spikes or drops. It's also helped me understand the value of dividends by calculating dividends made vs trading performance per month, invaluable on slow months where I’ve made more through dividends than trading.

I also have a column that I use as a kind of journal where I make a note of anything of that day which may be of interest. Be it a good or bad trade, an incident in the real world that caused a big price movement, and any announcement from FI. Found it really useful in the early days to keep track of these things as a learning tool.

In your matched betting article you talk about falling out of love with football and focusing solely on the results. We often see players rising for a multitude of reasons, not just winning dividends, including just playing well (or playing at all!) So, how much has Football Index brought your attention back to performance and actual gameplay rather than just results? 

Stu: Without any shadow of a doubt, the Index has brought back my love of the game. I've watched leagues, teams and players I'd have given zero interest to previously outside of perhaps picking them for a random game of Pro Evo (Fifa can get in the bin) with the lads. It's made me think differently about the game and I now have a team per league I've decided will be ‘my team’ and grown affinity towards them as a result. I still find myself having internal arguments about who I like as a footballer, and who I like as an FI-friendly footballer. That took me some time to distinguish between the two and I’d have made a lot more money if I'd worked that one out quicker. Understanding what's going on out there in the other leagues is essential for ongoing successful trading, and not only on-pitch actions either. I've a much greater appreciation for the game now than i've ever had.

Another key difference between the two forms of betting is the shift from a binary outcome to a bet with long term chances to “win”. How do these two forms of winning differ in terms of satisfaction? 

Stu: I totally get the thrill of a bet coming off, even a low risk matched bet that goes in your favour, but I also remember the frustration of nailed on favourite deciding to not turn up and losing a ‘sure thing’ (yes Milan, i'm looking at you, conceding a stoppage time goal via the Benevento goalkeeper!!). The elation from an 80/1 acca coming in isn't the same as a 3p Media win, so i appreciate why FI isn't for everyone immediately and patience is needed. But, the satisfaction for me comes from identifying and executing a trade on a player and watching him grow in value and return dividends along the way. You just can't underestimate the enjoyment of the PB chase, cursing every missed pass and cheering every shot on target and vice versa when it's not my player. A last minute game winning goal in the last game of the day can be as euphoric as it could be heartbreaking. But regardless, there is always the next game where we get to go through it all over again. 

I often see the argument of ‘no point me holding that player for my port size for a small dividend win’, and I can see the argument, but for me it's not about a singular event. It's the chance to win multiple times with the same bet, and with it benefit from the rising prices too. 

Following on from the above, would you say transitioning from matched betting rather than straight traditional betting is easier because you’re more used to larger stakes to make percentage returns through arbitrage that expecting big winners?

Stu: I think so, yes. I’ve never been a gambler, and even with a 100k port, I feel sick at the thought of losing a daft £5 bet I might have on a game I'm watching down the pub to keep it interesting. Yet I think nothing of laying down thousands of pounds on a random player from Italy that the majority of my mates would think was a spice from the ‘World Food’ aisle in the supermarket. I think it gives you a different perception on calculating risk vs reward and a tolerance to larger stakes with the understanding winning (relatively speaking) little and often is better than one big win among many losses. I work for a bookies and there are seldom few winners overall with the big wins masking the multiple losses which are temporarily forgotten about 

Let’s move onto your current strategy, can you describe it briefly and how you came to implement it?

Stu: So as I said earlier, i spent a lot of time dicking around on FI in the early days. I would switch strategies on a whim and probably listened to too many other people assuming they knew better, rather than following my own path with conviction. Then as I became more experienced and understood the market cycles, I spent a lot of time trying to be 1 step ahead of the trend to profit when they hit. Don't get me wrong, that was indeed very profitable, but also time consuming trading in and out of players, riding the day's market sentiment wave and following socials for any wind changes. 

Then I think towards the back end of last year the market tightened a little and the liquidity dried up, probably waiting on an announcement from FI (seems we were always waiting on a bloody announcement back then) and there was a lull. There was a lot of chatter in various groups I'm involved in regarding what will happen from the announcement. Every day, for weeks and weeks on end, it was about predicting who will benefit etc and I decided I didn't want to be in this situation of limbo again. I had so many players that didn't offer any real intrinsic value when times are tough and where demand is dependent upon the mood of the timeline. If that announcement would have been Order Books, I wouldn't have been confident there would be the demand for a lot of the players in my port at that time.

So, I spent last November and December restructuring my port to cover bases which I feel in the longer term will be low risk and offer great rewards, cutting my port down from around 90 players to 25ish with bigger positions in those I'm most confident in. A costly exercise at the time for sure but reaped the rewards since.

The criteria is simple really, with the cornerstone of my port being built on players offering 2 or more of the below:

  • 24/25 year old maximum 
  • Getting good playing time - I don't want unknown quantities and would rather lose a bit of value in buy price to ensure I'm on the right player longer term. 
  • Offer a goal threat - It's always easier to get out of a position / build momentum if they are capable of bagging a goal or two.
  • Playing for either a dominant team or a traditional stepping stone club with a good history of selling players upwards. I like a long range transfer 
  • Capable of high peak scores on a regular basis.
  • Has a current media appeal now or I see one developing, with global media a consideration.

None of that is rocket science, but I know that if I'm on players that fit into several of those categories, barring complete loss of form or bad injury, the player should grow in capital appreciation and hopefully return dividends over time. Age is important because they still have to be appealing to the next buyer. I will hold to the point where I feel the player has exceeded fair value in relation to the market at that time. If necessary I've no issues with buying back the same player, even at a higher cost than I sold him for if the circumstances warrant it. Things do change quickly in football, nothing is set in stone and there is no room for stubbornness.

I then have a smaller pot to move in and out of players fluidly, something which is harder to do with large positions or with higher value players. This pot is always increasing as I compound the dividends from my main group of holds. Short term trading can be highly profitable if done correctly, but it doesn't suit the lifestyle I ideally want as I find you need to be more active to make the optimal returns.  I therefore only do it when I see genuine opportunities rather than chasing money. I’ve fallen foul to a lot of FOMO in the past and it's something I'm very conscious of nowadays. I would rather miss out on today's rise if I'm not comfortable than be stuck with an overpriced asset. There will always be a new opportunity tomorrow so it's always worth keeping a cash balance if possible (something i'm actually terrible at despite the best intentions).

Does this strategy mean you don’t really own Defenders/non-attacking midfielders? Does that feel like theres a gap in your portfolio in terms of having opportunities to win every positional dividend on offer?

Stu: Pretty much, yeah. I own a couple of defenders (literally 2) but only the ones that have high PB and MB profiles. I'm not against defenders as such but they have been lower on my list to add to my port as I built positions in more urgent players. There are plenty decent value defenders and an area I'll be looking at over the summer as I come out of transfer players I imagine. 

With defensive mids, I don't really see the attraction personally. Yes some have very good baselines, but good baselines mean nothing on a silver or gold day if they don't score. You don't need to be a genius to work out that if they don't get many goals per season, this means low volume of wins which means a natural ceiling on prices. It's all about the players ability to hit peak scores frequently that interests me, both from a dividend perspective and an opportunity to move out of a position if I wish to.

Football Index Player positions vs price increases

Analysis of the last six months prices show Stu is correct. Forwards and midfielders (in Europe's top leagues) not only have much high average price but also increased considerable more than Defenders. 

Football Index individual positon vs price increases

However, it can also be shown how important picking the right attacking players can be because, in general, they are more volatile and their larger average price allows for larger decreases as well as increase in price. This data covers 6 months price changes of players in Europe's top 5 leagues. It was compiled using Football Index Edge's Downloadable Data, which can be trialled here

I think age has gradually become a more important factor to a lot of traders over time as you can see by the Price/Age graph shown below what made you pick 25 and under specifically? 

Football Index Player Age vs price increases

It is clear from looking at the above that although younger players come at a premium, they're still the ones in demand the most and have seen, on average, the largest price increases over this period. This data covers 6 months price changes of  all players . It was compiled using Football Index Edge's Downloadable Data, which can be trialled here.

Stu: It's not a hard and fast rule as i do have a couple of older players in my current port, but that's because they fit other criteria in my list. But to answer your question, there's probably 2 facets to this one:

  1. When I'm buying a player, ultimately my goal is to sell him at a higher price to another trader. Now, the person who is buying from me also has the same goal and should only buy if they think they can also sell at a higher price further down the road. Logic says to me, that the older the player, the less probability that he will continue to rise in price for the next person to also think they can make a profitable sale.
  2. I want my portfolio to contain those players that I feel will be the dominant stars in the coming years and have their peak years ahead of them. I truly believe that this platform will eventually go global, and if they fulfil their promise based on the data we have available, these players could hit any price if we fast forward a year or two. I don't want to be playing catch-up again.

It's important to note however that youth in itself doesn't mean value, likewise it also doesn't mean all older players have no value. My young players are specifically chosen based on actual information, not pure speculation. I have no issues waiting until I'm certain of a player before buying in, even if it means buying a little more pricey than ideally I would have liked. 

On last weeks edition, LDN discussed how gambling can impact your wider life. To quickly contract with matched betting again, it is often considered costless, but as your previous article alluded to, the cost of time spent is often not factored into that. How does that differ with Football Index and how does your strategy, in particular, allow you to use your time more freely?

Stu: Writing that article was probably the biggest catalyst in my decision to change my strategy. It made me realise I was being a hypocrite and whilst I was extolling the virtues of time saved on FI over Matched Betting in the blog, in reality I was still spending way too much time doing FI related stuff at the expense of ‘life’. Spending hour after hour in group chats, or on social media, fretting over this line-up or the seriousness of an injury. Having the fate of my players at the behest of a fickle one time event that may or may not happen, or a price based on the mood of the timeline on any given day.

I think reading it back, it clicked with me that I needed to be able to step away and not worry about being on holiday, or away from my phone on match day (especially as virtually every day is match day’. That i could go for an evening meal and not be hooked on sofascore or social media to see what was happening in case i needed to act fast.

Ultimately I have faith in the product, so on that basis I shouldn't have to worry about short term price-points if i have a player of genuine intrinsic value that has numerous strings to their bows. Pivoting to a longer game has given me so much time back and arguably better rewards as I'm not overtrading and falling fowl to commission and trying too hard to beat the market. I'm trusting my players to recover from any setbacks they have, with the best course of action being no action at all. 

Of course I still need to be aware of each player's form and narrative because things can change quickly. But by and large I'm set up in such a way that even with a low number of players in my portfolio, the majority of the time they are competing at the upper end of the PB leaderboard or in the mix with MB. In fact looking back at my faithful spreadsheet, the longest I've gone without making a dividend since the strategy shift in Nov is 4 days, and that's happened twice. It just goes to show you don't need a huge number of players to make dividends, just be focused and smart with the ones you do have. The power of compounding dividends really has been a huge factor in my portfolio growth over the last 5 months or so. It's important to understand that you don't need a big holding to make a difference over time either. 

To expand further, I've muted pretty much all notifications and don't have the constant pinging of the phone drawing me away from life. I now go into any chat or onto social media at a timing of my choice which is healthier overall. It's the most hands-off I've ever been yet the most profitable and stress free too. 

It certainly is a strategy that picks out quality players (I’m going to insert a list of players fitting the criteria). Is a potential cost of the strategy having to buy expensive players? How do you deal with the trade off of waiting for a young player to prove his quality with minutes and risk having to pay a more inflated price by that time?

Stu: Ideally the plan is to buy before they get pricey, but as I touched on in the last question, I have belief in the product and the platform and wouldn't buy them if i didn't see them being much more expensive in 6 months time.  Don't misunderstand me though, i'm not waiting for a player to play 1000 minutes before buying, but there has to be a clear route to the first team and / or dividends, not just someone who is playing ok for a u21 side for a team that doesn't give youth a chance.

If there is one thing I've learnt, it's that it's never too late on FI if you're looking longer term. I remember people saying Neymar would never go beyond £7 or Sancho wouldn't go above £10, yet each time they have smashed through the psychological barriers placed on them. In reality we are still in the very early days of FI, with loads of room for improvement with territory expansion, order books and goodness knows what innovations they have up their sleeves. We aren't even mainstream in this country so as I look at it, no player is anywhere close to peak yet and market cap is a long way off.

It's also a protection thing too. If Order Books were to come in tomorrow, or another region was announced, I want to be sat on players that I know will be in demand and not worry about where a buyer is coming from. I don't think the majority of traders appreciate how much order books could change trading behaviour when demand for the player is transparent. I don't want to be on the wrong end of this next step of FI’s evolution. 

Of course there is the argument about percentage gains further down the price pecking order and I have nothing against cheaper players, I have a couple sub-£1 players myself. There is good value at the bottom as well as bad value at the top. However cheaper players are generally cheaper for a reason and often require more attention which goes against the aim of my strategy.  If I have to pay a slight premium as a trade-off for a more fulfilling home life and better nights sleep, then so be it.

Quickfire questions: (just a couple of words answer, no explanations necessary)

  • Largest hold? - Jadon Sancho
  • A player you think the market is sleeping on? Rashford 
  • The player who’s football index value exceeds their actual ability/ potential ability the most in your eyes? Tough one, but looking down the top 100, Grealish is the one that stands out. If Villa go down i could as easily see him playing for Everton. 
  • One thing you wish was included in the performance scoring matrix that isn’t?Penalties won
  • What’s the thing you’re most excited about on Football Index in the next twelve months?Order Books, it’s going to be a game changer in a positive way. 
  • Who’s the next £10 player? Bruno or Mbappe (rightly or wrongly)
  • When will we see a £15 player? June

Finally, this product has gone from a background passive sports income to your main (possibly only?) gambling source. How has your confidence in the platform changed over time and how do you feel about it going forward? Has this current period during a global pandemic added to or changed these views all?

There have been 2 events that really cemented FI as a brand that's solid in its foundations and given me the confidence that it's here to stay. 

The first one is as you mentioned, this bloody virus that is ruining so many lives and has no immediate end in sight. The way Football Index themselves handled it was superb in my eyes, but also the way it bounced back after the initial fright of games being cancelled. I have a number of my friends now wanting to get involved as they have no cash stream with no sport, yet MB offers this every day of the year. This is as much the USP of the index over any bookie and people are starting to realise it. FI is gaining such a foothold in the gambling space now I find it hard to imagine a competitor coming along to steal its thunder. If you couple that with the backing and know-how of the likes of NASDAQ and the obvious improvements on the road map (MB being one ironically), then moving forward I only see positive things.

The second was the injury to Depay, a player I had a large stake in at the time. For me, my bet was placed on him a) having 2 functioning knees, b) his PB ability with Lyon, c) a likely summer transfer and d) the euros

In one incident, all of those things were taken from him. Yet I was able to market sell immediately and his price is continuing to soar despite the horrible changes to his circumstances. If people are willing to gamble on a player not expected to play for so long, and may never be the same player again after an ACL, with no transfer likely, then I've less fear about any of my players' prices falling off a cliff long term.

Any closing remarks Stu?

Stu: One final tip, "don't buy shite and you’ll do alright!"

Stay safe out there folks!

If you missed last weeks editon with FootyIndexLDN where we discussed the future of Media Dividends, check it out Dont buy shite and you’ll do alright here 

If you missed Edition No.07 with KBrown about PB and "Crossing" index, check it out here!

Some data in this article was taken from Football Index Edge or compiled using their downloadable data section. You can get a 14 day free trial to check it out yourself here!

If you're new to Football Index and want to continue to learn the ropes, check out my free guide here!

Check out last seasons Tricks of the trade editions below:

Edition No.1 with Big Don who owns over 1500 players   
Edition No.2 with
Stamford who's a renowned buzz man                                              Edition No.3 with Pierre who buys on Sunday and sells on Friday                                  Edition No.4 with  Ryan Pearce talking transfer trading                                                  Edition No.5 with Buzzing Paul with great data insight                                           Edition No.6 with Andrew Allen Discussing IPO trading

Got some thoughts on this article? Why not tweet them to us at @footballindexLM or @Footballana

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