This post is intended for people who want to build a strong youth team — one that can compete at the highest divisions and perhaps bring some trophies home.
I'd like to start by saying that I'm not exactly a top tier manager when it comes to youth teams, but I've read a lot about youth team building (mostly brazilian and argentinian content) and had the idea of bringing the basic principles together for anyone that wants to give the youth competitions a try.
So, without further ado, let's get into the details.
Planning is key
18-year-old players are the core of any good youth team. They are usually the most developed and also the most experienced. Generally speaking, the more 18-year-old players you have, the better your team is expected to be.
However, in order to develop great 18-year-old players that will carry your team through the season and put them together in a tactical system, you need to wisely train them since the day they arrive in your club as 16-year-old rookies.
In other words, you need to start planning your youth team two seasons beforehand. You can't build it overnight. Understand that you need to plan and be patient.
This is not about selling players later on
One thing that needs to be made clear about the process of building a competitive youth team is that sometimes you'll need to stick to players that will go straight to the trash bin once they turn senior. Those players are really useful for youth teams, but wouldn't have a chance at senior level. Take this player as an example:

He absolutely bosses the midfield in youth matches, trust me, but unfortunately will never become a good senior player due to his own limitations. And sometimes you'll need to embrace players like this one to get better results.
Of course there are players out there with a lot of potential that end up being good prospects for our youth teams as well. You can still make money from your youth players or develop national team players even if you want to be competitive. However, the point I'm making here is that your main goal isn't training players for transfer market purposes. You should focus on building a strong youth team instead, and anything else is a mere bonus.
Youth academy setup
Regarding the youth academy, we can have up to 23 youth players from different ages (16, 17 or 18 years old).
Every manager has their own approach, but the most consistent and balanced one is having all the 23 players and 7/8 players from each age group (8-8-7, 7-8-8, 8-7-8 and so on). That lets the team remain competitive for many seasons in a row in spite of the 18-year-old players (the core of the team) turning senior.
So, your starting team would usually consist of eight 18 year-old players and three "filler" players (that could be 16 or 17 year-old players depending on the point at which we are in the season) every season.
Some managers choose to train more than eight players for a specific season. That can lead to an outstanding youth team, since the more 18-year-old players the better (in theory), but that also means unbalancing the youth academy arrangement and putting consistency into risk.
What would you prefer? Consistency or going all-in? Make your choice and adjust your youth academy setup accordingly (the youth exchange tool is your friend).
Choose a tactical system
Choosing a tactical system for your youth team is very important, the main reason being the fact that it will guide your players training: they will be trained in accordance with the system you elect.
The most used tactical systems are short passing and wing play. Again, make your choice. And take into account that you can thrive no matter which tactical system you choose (there are top teams playing both short passing and wing play tactics).
Here are the most used tactics in this day and age:

I got the tactics above from the Top Series world league, but you can give the tactics your own personal touch of course.
Assign each youth player a role
Assuming you choose the consistency route, you'll have seven or eight 16-year-old players ready to be trained at the beginning of each season. You must assign them a position that suits your chosen tactical system.
If you're a short passing oriented team, make sure you have at least:
– 1 goalkeeper
– 4 defenders (3 defenders if you have only 7 players)
– 3 centre forwards
If you're aiming for wing play tactics, make sure you have at least:
– 1 goalkeeper
– 4 defenders (3 defenders if you have only 7 players)
– 1 winger
– 1 poacher (a forward who can score headers)
– 1 centre forward
When a new season begins, check your 16-year-old players and assign them a position in accordance with your chosen tactics. Use the youth potential tool to aid in this decision-making process. For example, if a player has tackling as one of his low potential skills, he can't be a defender (note that having tackling as one of his highest potential skills is not necessarily needed though).
Also, don't be afraid to assign roles even if it looks like there are no good players for a certain position. For example, let's say that there is no player that looks like good enough to be your goalkeeper. Pick a player anyway. You will probably swap him for someone better later (through the youth exchange tool), but you need to ensure that you have a backup keeper in the case you don't find a better one.
After assigning each player a position, use the youth exchange tool to polish your 16 year-old team as the season goes by. Exchange a player for another if you feel like you found a better one for a certain position, but remember to exchange only the 16 year-old players — don't touch the older players; stick with them. Remember that the best players are the ones that arrive at your club with the most amount of balls in important skills (we will talk about this later) and the ones that train faster (according to the youth report tool). Don't forget that the best ones are not necessarily the ones with potential of becoming a really good senior player. And be aware that the only thing that can really "kill" a player is his lowest potential — if he is not compromised there, he could be worth a try. I once had a keeper with 8 keeping and 3 stars high potential in ball control and stamina, for instance. He was more than good enough.
When those players reach the age of 18, your goalkeeper will play as a goalkeeper (duh), your defenders will play in the defense (maybe one of them will be the defensive midfielder), the strikers will play upfront and the midfield will mostly consist of the "filler" 16 y.o./17 y.o. players (wherever they're needed). Finally, if you're training more than eight players, you can replace the "filler" players with them.
Training your players
Well, that's a bit obvious, but you need to train your players and you need to do it very well.
If you want to establish wing play tactics:
- Your goalkeeper needs keeping and stamina. Play intelligence and aerial passing can be trained as secondary skills, but aren't as important. Keeping 7 and Stamina 5 are the minimum for a good youth keeper. Aim for the highest you can achieve.
- Your winger needs aerial passing, stamina and speed. Speed 5~6 is good enough, so aim for the highest aerial passing and stamina you can get.
- Your poacher needs heading, shooting and stamina. Aim for at least 8 balls in shooting and heading and the highest stamina you can get.
- Your other forward needs stamina, shooting and (controversially) speed. Aim for 6~7 balls in speed and stamina and for the highest amount of balls in shooting (at least 7, 8 is recommended). Train other skills like passing and ball control as secondary skills, but prioritize stamina and shooting above all.
- Your defenders and midfielders mainly need stamina, tackling and aerial passing. Aim for 7 balls in each, then you can train other skills like speed, passing and play intelligence. Keep in mind that skills like speed and play intelligence aren't a must! Aerial passing and stamina are way more important (apart from the obvious tackling).
If you want to play short passing tactics, the rules are the same, except for the fact you'll have three forwards instead of a forward, a winger and a poacher. Aerial passing is still important for your defenders and midfielders in some way because they will still clear the ball to someone upfront sometimes, but you can kinda overlook it since they won't be making aerial passes all the time. You can prioritize short passing or even speed training for your defenders and midfielders in this case. It's up to personal preference. Be creative!
Also, it's possible that you won't be able to produce players that meet the requeriments listed above. It happens to me quite a lot to be honest. Nevertheless, do your best to produce the best player you can anyway!
Last but not least, make sure to send your youths to the training camp at the ages of 16 and 17 (choose relevant training camp packs for each position to the extent possible) and hire coaches for the main skills so they can develop faster when not attending training camps (class B coaches are more than enough).
It's advised to send your 17-year-old players to the training camp before day 56 of each season. That secures they will be ready to serve in your team when they are 18 years old from the start the season after. As a rule of thumb, youths don't go to the training camp during the season they are 18 years old (they go towards the end of the season if you think it's worth) because they are needed to carry your team through the season, however there are strategies that differ from that one. You can some of your 18-year-old players to the training camp at the beginning of the season so they come back stronger around day 35 (that would hinder the results at the beginning of the season, maybe), or you can use training camp chips to make sure he develops faster while still being available, for example.
Seeing results
After carefully choosing your 16-year-old players and giving them proper training for two seasons, you'll start seeing results.
For reference, here are Carrapichel - FDFDF (Season 79 U18 Champions Cup Winner) 18-year-old starters at the beginning of Season 79:
https://imgur.com/a/qpy88yJ
This team is wing play oriented of course. This is how your players should look like if you want to do well. By the way, guiabud, the Carrapichel manager, is a very nice person and his players are always open for anyone to see.
Another example of succesful youth team is O-TT-O. He won many trophies in Season 79, including the U18 Autumn Cup using the short passing playstyle. Here are his players at the time:
https://imgur.com/a/XozgBvi
I hope this guide is helpful. Credit goes for all the managers that shared their knowledge. If you have anything to add, feel free to…
I know youth competitions are not the main part of this game, but I encourage everyone to at least try. It's fun.