Updated: Sep 13, 2020
As mentioned in previous blogs, knowing when to sell is often the most difficult aspect of trading on Football Index. It can also be difficult to know when to buy a player and and what can help with these two core aspects of trading is being able to distinguish between temporary and continual price rises.
There are often times when a player will rise in price and it can be relatively easy to spot that is is just a temporary rise and you can predict that their price will drop again shortly. When this happens, it is often best to sell and in many cases, it can be best to instant sell if there is a small spread (particularly on lower priced players).
Below are some of the key factors to consider to help you judge if the rise is likely to be temporary or if the player could continually rise in price.
Key Considerations - Temporary Price Rises
Transfer Speculation breaks down
Often players will increase in price due to transfer speculation and so when this speculation ends, traders will cash out and the player's price will drop.
This price drop is often greater when the player is currently playing in a Non-PB league and there is speculation that the player will move to a PB league.
The key consideration here is to consider how likely the transfer is and the extent to which the player may drop will depend if the player has other outlets to earn dividends from such as European / International Tournaments.
Older players that increase due to high PB scores in the short term
Recently there have been a few older players which have increased in price considerably due to posting very high PB scores. However, some have increased in price so much that they no longer offer value and so traders start to cash out leading to a drop in price.
One example over recent months is Angel Di Maria. At the age of 31, his increase in price this season from £0.86 to £1.99 was unlikely to be sustainable. He has since dropped back down to £1.41.
Players that increase dramatically after / during 1 game
One strong performance can sometimes lead to a massive increase in price which is unjustified as one strong game may not result in similar strong performances in future games and can consequently lead to a large drop in price.
We see this in particular with players who have high price ceilings, but, play very infrequently. Patrik Schick temporarily increased from £0.70 to £0.90 after scoring last Saturday. This was a great opportunity to sell as this price increase was unlikely to continue. If Schick does continue to start for RB Leipzig then he may continue to increase, but, given this 28% price increase came from just 1 game - it would have been wise to sell after this dramatic rise in price.
Rabbi Matondo rose from £0.90 to £1.67 in less than two weeks as he started for Schalke and scored 1 goal. Again, this price rise was irrational given it was based off one strong performance and offered a great opportunity for holders to sell. Matondo has now dropped to £1.09.
It is worth pointing out that Matondo's drop coincided with him having less game time and youth players dropping in price in general.
Young players that gain media attention through strong performances
Many youth player's price graphs follow the same cycle. They start to increase in price as they get closer to the first team, they then start to gain more media attention leading to a further increase. Then they make a start for their club and when they perform well they increase significantly further as they gain further media attention and possibly earn media or match day dividends.
Once this excitement wears off their price will often drop as often their price will hit a peak which becomes irrational based on the % dividend yield they are likely to offer.
I would be weary of holding players who's attention from the media due to being young and performing well at first has worn off.
Instead it can be profitable to hold players who are yet to break through, but, are very likely to do so and have the characteristics to earn media dividends in the future because of their break through. By filtering the Youth Player Database by PB League 'Yes', Country 'England' and PB Scores 'Unproven' you will find some of the players which fit such a description and could break through in the future leading to a considerable increase in price.
Short term market trends
The 17 players highlighted on Football Index Club in September 2019 due to market trends increased to an average peak price of over 50% what they were originally highlighted at by the start of November.
Some of these players have dropped in price since as the market trend became less concerned about Champions League / Europa League Non PB league players and more concerned about strong performance players in PB leagues.
The 30 players highlighted in October due to having strong PB scores rose to an average peak price of over 30% in just 31 days again showing how prevalent market trends can be. Again, some of these players who have not continued to hit high PB scores have dropped in price since.
It is important to be aware of why the player has risen and if this is due to a short term market trend, it can often be wise to sell whilst they are massively up in price.
Further considerations for why a player could rise temporarily
Have they been pumped on social media?
How likely is their strong form likely to continue - look at fixtures, previous form, age etc
Are potential IPD already built into the player's current price - look at fixtures
Will they continue to start for their team?