Market Trends - how profitable can you be?

Updated: Feb 3

As Premium Members will have come to discover, many of my premium blog posts are focusing on upcoming market trends and identifying key players which fit the trend.


Just 8 days ago (11/09/2019) I highlighted some of the best under 23's in the Champions League from non-pb leagues. The price changes in these players are below:


The average player has increased 19% in just over a week.


I also highlighted Bernede (at 69p), Daka (at 60p) and Moro (at 60P) as additional options and all have increased at least 10% in price since.


This shows how much profit can be made from simply anticipating market trends early enough and identifying key players. In this case, it was of course fortunate that Haland scored a hat-trick.


Erling Braut Haland Hat-trick

However, when anticipating market trends, often it is important to consider if player X has a good performance - how much will they increase by? Consider if the upside is greater than the downside and vice versa.


I had specifically identified quality, young players from non-pb leagues as I knew that if they performed well - their would be a lot of demand from traders for these players due to future transfer speculation among other factors.


Points to consider when trading due to market trends


Age - (Under 23)


Very high quality youth players have just kept on increasing in price in alignment with the growth of Football Index. If they do not increase in the short term due to a market trend, but are still young, often they will increase further another time. In terms of buying for market trends, this can make them less risky than older players.


The exception here is when they rise significant amounts for the wrong reasons. Some young players may have very high prices and can be extremely risky trades if their is little evidence of how likely there are to return dividends. More on this here.


Rhian Brewster

Brewster, for example, rose to a peak price of £3.79 due to scoring in pre-season and Klopp suggesting he could feature this season. However, goals in pre-season against weaker teams does not help very much when we are considering a player's future dividend return.


Age - (Over 23)


The same is true with older players that rise due to a market trend, but, have risen too much that they become massively overpriced in relation to their dividend yield. Two examples that spring to mind from recent weeks are Maximilian Arnold and Romelu Lukaku.


Romelu Lukaku

Both players rose due to the trend of buying for fixtures. Arnold mostly due to single days for Wolfsburg and Lukaku because he had many fixtures for both Inter Milan and Belgium. However, both player's prices were built up for the wrong, short-term reasons and it is no surprise they have both decreased in price significantly from their peak prices.


Risk


It can be more risky trading in and out of market trends and it can take up more time. However, if you get in early enough - which premium members should often be able to do - then the potential rewards are massive as demonstrated above.


The main risk is that you buy too late. Players will often be pumped due to market trends and if you buy at the wrong time, you could see a big loss. I highlighted Umar Sadiq at just 19p last week as one of my low priced Europa League options. At the time he looked reasonably good value for a short-term In-Play Dividends punt. He has since increased over 50% in price and once Partizan are knocked out of the Europa League - I suspect his price will drop and those who got on too late will be left with a loss. Timing is key.


Sadiq has flown up in price this week

I would say the hardest part is knowing when to sell. There is more on this here.The players suggested above were suggested because they had upcoming games in a European Tournament, potential transfer speculation and many are likely to play in EURO 2020. Therefore, they could be strong long term holds. However, many players will not have so many positive factors going for them and so often if a player has risen due to a short-term market trend - it can be wise to take the profit by selling.


Commission

If you trade too often your profits will be cut slightly by commission. If you buy players which are not being traded often then you will pay even more commission if you have to instant sell. It can be hard not to over-trade and it can also be hard to sell once you hold a player you suspect will rise further.


Finding a balance is key and so if you are interested in trading upcoming market trends it may be best to have a section of your portfolio available to trade this way.









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