Welcome to this week’s edition of Tricks of the Trade. In this edition, I caught up with notorious rat-catcher Stamford, who I’m sure many of you follow or have seen in and around the Football Index Twitter community. He’s one of the old guard in terms of being on the platform since the near-beginning and for as long as I’ve known him, he has stood strong on his strategy of believing in the platform and buying to hold and there’s no denying how profitable it has been for him!
He has provided me with some incredibly comprehensive answers, offering food for thought for all traders and some great lessons for new traders too! Here’s what he had to say:
How long have you been on the platform now, seems like it has been a while?
Stamford: Hi all, I’m certainly not one of the originals but I have been involved in the Index since late 2016 and begun seriously investing over the course of 2017. For some context, my net deposits are in the region of £35,000 and my portfolio has grown well in excess of 6 figures with a dividend haul of over £30,000. Some big numbers there, but as with most traders, I didn’t lump in all in one go. My investment grew in line with my confidence in the product and that’s something which bodes extremely well for the immediate future of the Index with the volume of new sign ups we have seen recently. I fully expect that as their confidence in the Index grows, their investments will too, and that’s extremely promising for the future.
How would you describe your strategy in your own words?
Stamford: My strategy is largely geared towards the long term with low-medium risk and heavily focused on dividends. I am very much an advocate of accruing dividends and using them to compound gains which has been key to my success. There are a few important things here, time, risk and dividends. Let me explain each a little further:
Time – Let us be clear, you can earn more money with a more mobile strategy. However, the more mobile you are, the more of your time this will command, and this won’t be suitable or profitable for everyone. My advice has always been to trade to your lifestyle and you will enjoy the Index more for it. Personally, I can think of nothing worse than sitting there with my laptop open trying to flip players in-play rather than enjoy the game and watch your well-researched picks deliver returns over the course of a season, or in many cases, over the course of 3 years. My time is the most treasured resource in my life, and I spend a large amount of it out of the country where trading is just not possible (I do enjoy committing part of it to winding the flipper rats up on twitter though!). It’s for this reason that I have adopted a low maintenance strategy and I rarely get involved with short term trades, and absolutely avoid in-play trading. I’ve tried it and I’m simply useless at it. That said it is key to understanding the Index as it will help you enter and exit trades more effectively.
If you are one of my lovingly coined flipper rats, do read on because it’s important you understand other strategies as much as your own to build a broader understanding of behaviour and you will be a better trader for it too.
Risk – This largely depends on your strategy. Firstly, given your stake can’t be wiped completely off the table on FI, you are inherently making a lower risk bet than many of the options available at the bookies. Good choice. So how can you address risk on FI?
Dividends – Wow, well this is rather a bone of contention for me on the Index currently. So why are dividends important? Fundamentally, this is the only thing that underpins a players value. Given FI is based on trading virtual shares within a set of game rules, the only thing that gives one player value over another is that one will return more dividends than another based on those defined rules – otherwise we may as well just be trading different coloured balls, and that just wouldn’t work long term. Earned dividends are a means of partially cashing out your bet each time they are awarded. Its cash in your bank to do with as you please, its no longer at the mercy of the market and its not subject to spreads or commission, its all yours. The yields of some of the top dividend earners are very impressive, Ronaldo £5.94, Pogba £5.52, Neymar £4.36, Salah £4.23 and Messi £4.04, all in just 17 months and excluding In Play Dividends. Cumulative dividends are both under-represented, underappreciated and misunderstood on FI and new users have not yet seen the consistency of some of these dividend returns. So why is the market currently neglecting dividends in favour of speculation?
You’ve often preached about not paying commission as a positive of holding, but holding over a long period requires longevity in the platform, which in turn requires Football Index to make a profit (via commission) in effect if everyone followed your strategy the whole thing would surely fold? What are your thoughts on this?
Stamford: FI will not function if everyone had my strategy. For some context for every £1 earnt in dividends I pay out approximately 7.5p in commission in return. This figure is surprisingly consistent in my portfolio over most months. However, FI needs people like me just as it needs flippers. More passive accounts provide stability and a cushion for many of the flippers. Additionally, over time, as the index grows, passive accounts slowly build up the base price of players, which in turn, increases the commission for FI. I’ve always said liquidity is essential to FI but volatility is not. FI are acutely aware that the success of this platform is built on a delicate playoff between the two and they will act if the market swings too far one way or the other. Overtrading is one sure way to kill your profits in commission. Those who don’t know the merits between market selling and instant selling then watch some content on it. It’s essential you understand the difference.
What’re you’re thoughts on In play dividends? Are you a fan? Have you earned much from it?
Stamford: I like in play dividends, but I don’t trade them. However, it does represent a good opportunity from a strategy perspective to time your entry and exits into long term positions, so I do pay attention to them. I don’t earn a lot in them and I see it very much as a bonus, but I like that they give more value to more players. What’s more is FI are shedding out all this extra cash in DIVIDENDS which are largely reinvested so that’s good for everyone. FI have learned a lot from the integration from the in-play dividends and I think they are stronger company for it, particularly from a customer engagement perspective. I will leave that there!
You’re thoughts on 2019 for the platform and any changes in strategy?
Stamford: As I eluded to earlier, the influx of new traders we have seen in January will undoubtedly lead to further investment as their positive experiences are rewarded. I expect Q1 and Q2 to be very strong with European football sharpening the focus on the pitch and engaging traders in high dividend reduced player pool trading. The share split will also offer traders opportunities to diversify their portfolios and you only need to look as far as the football index Facebook group to confirm that this is how the split is being interpreted. My personal plans for the Summer are largely to keep only those players with a strong transfer behind them. I learnt a lot from the World Cup and players that didn’t have the promise of strong World Cup involvement fell much more than those that did. I anticipate this being similar with players without the backing of strong media links through the Summer transfer window. I think it’s going to be a very busy Summer transfer market and I expect to see a lot more action than we have this January which has perhaps lulled traders into a false sense of security on how volatile these times can be. I don’t think it will be the transfer volatility of old though, the market is so much bigger than it was a year ago and that will provide some cushioning to the dips as some patient traders prepare for the new season. Order books – I’ve kind of lost interest in this until I know more. Dividend increase in 2019? I would be surprised if there wasn’t in some form.
Who is your favourite/best hold and why?
Stamford: Anyone who returns me some of these dividends. Unfortunately, I don’t have Android so I will have to wait until I know who my most profitable trade is, but I’m pretty sure it will be Pogba or Neymar. I think many forget the profit formula on Football Index is:
Profit = Sell Price – Buy Price – Commission + DIVIDENDS
I’m happy to take any question via DM to my twitter handle @Lukey0625
Very best of luck to you all!
In case you missed last weeks edition with Big Don and his 1000+ player portfolio catch it here
If you’re new to Football Index and want to continue to learn the ropes, check out my free guide here!
I hope this article has been as interesting and useful to you as it was for me. We’ll be back next week with another top traders story!