The introduction of the Matching Engine and what will become Order Books is creating many opportunities throughout the market to buy what could be valuable holds at discounted prices via matched bids.
Market Trends under The Matching Engine
What the market predominantly focuses on often shifts and trends come and go. Prices fluctuate and players become more and also less valuable depending on their price fluctuations. The higher the price, the less valuable the player becomes and vice versa.
As the attention of the market concentrates on one particular area of the market and we see players in that particular area of the market rise, there will also be other players being widely neglected. Such players may consequently have wider spreads and traders may accept lower bids. What has changed in such a situation? Not the player's value, but the market's focus.
Buying in and out of players based on speculation and market trends can be extremely profitable in the short term. We have already seen this with Anthony Gordon rising 30% since being highlighted on the site just 9 days ago on 2nd June.
As mentioned in the How to Profit from Market Trends blog, staying ahead of the curve is the first step in being profitable when taking this strategy. Timing is also even more important if buying into speculative players when there is a market trend as if demand dries up, there will not be the option of a reasonable instant sell price and you could be left with a wide spread.
In addition to the option of buying players due to an upcoming trend, we can also focus on off-trend players and take advantage of hugely discounted prices on possibly valuable players. If we then wait until the market's focus shifts, such players may rise and spreads might tighten creating the opportunity to sell players for a profit.
Liquidity & Risk in the lower end of the market
Excluding IPD's, only 12% of all players on Football Index have earned any match day or media dividends this season. Part of the reason for this is that there are still many players on the platform with no access to earning dividends that are completely worthless, but also because it is fairly difficult to earn dividends.
Due to the difficulty of earning dividends, some of the lower priced players in the lower end of the market who are unlikely to earn dividends fairly frequently could remain relatively stagnant compared to higher priced players. Only 2 of the top 54 dividend earners this season are under £1 (Wayne Rooney & Gaston Ramirez).
Due to many of the lower priced players being unlikely to earn dividends fairly regularly, some are arguably more risky as traders do not want to hold players with little intrinsic value who now can not be quickly instant sold at a tight spread in the future.
However, with this being said, there are still some lower priced players who's chances of earning dividends in the future are likely to improve considerably and are currently at low prices with wide spreads suggesting they could be purchased at very favourable, discounted prices.
Opportunities to exploit
Off-trend players who have much a greater chance of earning dividends in the future and are currently not being focused upon by the market could be strong medium to long term holds.
I have identified 3 areas of the market where we could find value given the lack of current market sentiment in these areas. This has led to all of these players below having 11%+ spreads and many could certainly be bought at huge discounts and increase in price in the future.
The three areas of the market which are currently being widely neglected are: Bundesliga, Ligue 1 and Non-PB, possible transfer players (Who have not gained transfer links recently).
It is worth pointing out that many of the below players being mentioned may not rise for a few months due to the lack of sentiment in the market towards such players, but could be strong holds longer term if purchased at discounted, favourable prices.
The Bundesliga market trend last month was very strong and many players had become temporarily over-priced, but with the season ending later this month, many Bundesliga players are no longer in demand. Due to this current lack of demand, some value Bundesliga players can currently be bought at well below their market price with matched bids.
It appears the drop in Bundesliga players has already taken place and at some point over the next 2/3 months or even sooner, it is likely many players will start rising again in anticipation for the start of next season.
Below are a few Bundesliga players who appear reasonably priced and have large spreads (15%+) suggesting successful matched bids at considerable discounts are likely:
Buy £1.66/Sell £1.35 Spread 18.67%
Buy £1.62/Sell £1.36 Spread 16%
Buy £1.17/Sell £0.91 Spread 22.22%
Buy £1.12 Sell £0.84 Spread 25%
Buy £1.11 Sell £0.86 Spread 22.52%
Buy £0.98/Sell £0.69 Spread 29.59%
Buy £0.97 Sell £0.68 Spread 29.80%
Buy £0.95/Sell £0.75 Spread 21.05%
Buy £0.88 Sell £0.66 Spread 25%
Although we have seen a few Ligue 1 players rise over the last week or two, the vast majority remain relatively untouched by the market with large spreads. With the Spanish, English and Italian first divisions returning this month, it is unlikely Ligue 1 will gain as much attention over the upcoming weeks.
However, there are two main reasons to possibly start considering value Ligue 1 players:
Ligue 1 relegation being overruled has led to 4 more fixtures next season
Ligue 1 players are yet to rise like the other top 4 PB leagues have in recent weeks
Wide spreads suggest we could currently buy players at significant discounts
Below are a few Ligue 1 players who appear reasonably priced and have large spreads (11%+) suggesting successful matched bids at considerable discounts are likely:
Alexis Claude Maurice
Buy £1.30/Sell £1.00 Spread 23%
Buy £1.12/Sell £0.99 Spread 11.6%
Buy £1.12/Sell £0.96 Spread 14.28%
Buy £1.07/Sell £0.91 Spread 14.95%
Buy £0.93/Sell £0.80 Spread 13.97%
Buy £0.89/Sell £0.76 Spread 14.6%
Buy £0.84/Sell £0.58 Spread 30.95%
Buy £0.64/Sell £0.41 Spread 35.9%
Non-PB league possible transfers
What stands out about Non-PB league transfer targets is that many that have not been linked to a PB league in recent weeks have wide spreads, where-as those who have been linked to a PB league recently have increased considerably.
Recency bias is partly at play here as many of the Non-PB league transfer targets who have wide spreads have a strong chance of gaining transfer links again in the future.
Once they do, it is likely spreads will decrease and their price may increase - creating the opportunity to sell for a profit.
Therefore, buying these out of favour, possible transfer targets now at considerable discounts could be very profitable. Patience with the below holds will be even more crucial and some are fairly risky and could remain stagnant if transfer links do not develop, but many also have very considerable spreads and could be value at discounted prices:
Buy £1.57/Sell £1.18 Spread 24.84%
Buy £1.23/Sell £1.01 Spread 17.88%
Buy £1.01/Sell £0.80 Spread 20.79%
Buy £0.95/Sell £0.65 Spread 31.57%
Buy £0.94/Sell £0.76 Spread 19.14%
Buy £0.88/Sell £0.68 Spread 22.72%
Buy £0.93/Sell £0.78 Spread 16.12%
Buy £0.84/Sell £0.52 Spread 38.09%