Updated: Sep 13, 2020
Over the last 100 days, I have been posting podcasts daily, providing a brief summary of what is going on in the Football Index stock market; covering which players are rising and which are dropping in price.
Analysing price movements in greater detail each day has reinforced my view, which I am sure is shared by many reading this, that the timing of both buying and selling is key to huge success on Football Index. Many price movements are highly speculative and psychology plays a large part in the wide swings in price that are often only temporary. By taking advantage of this, we can be more profitable.
This is a difficult skill to master (One I am far from perfect at myself) and it can be particularly difficult as unforeseen, external, circumstances can temporarily shift a player's price regardless of that player's value in relation to their longer term dividend potential. For example, the lack of fixtures due to Covid-19 or a particular Football Index promotion can lead to changes in prices that can be very difficult to predict before these events occur.
Furthermore, many players will continue to rise in price in alignment with the platform's growth and so making relative price comparisons between players fails to help very much when making longer term price predictions on specific players. For example, many young players with huge potential 1 year ago may have appeared over-priced at the time relative to other players. However, due to the growth in Football Index and the increase in dividends - many would now look great value at these previous prices.
To overcome this, it can be useful to consider the total amount invested in a player as a percentage of the total market cap and compare this to what percentage of the total market cap this player could account for in the future, rather than considering what their price is today versus what it could be in the future based on price comparisons.
When focusing on making short term trades, timing is of a huge importance and price graphs can help us choose when is the best time to buy and sell.
In recent weeks, I have been taking extra care in analysing player's price graphs to seek potentially valuable players who are unlikely to drop further, but could rise in price in the following weeks.
The very positive results are below. Part of this success can be explained by the large spreads resulting in a lack of instant selling. However, it is clear to see that by buying potentially valuable players at the right time, you can be very profitable. The average increase in these players is already 5.83% after an average of just 16 days.
Finding players who's price appears to have bottomed out was key to some of the best rises above.
It is impossible to know exactly when a player's price has bottomed out, but usually a price has bottomed out when there is a fairly sharp drop and then a calmer period of time where the player's price remains fairly stagnant. Often once the price stops falling, this is an indication that all traders looking to sell at the current price have already listed or instant sold the player.
One example of this was Nikola Vlasic. Vlasic's price had dropped consistently each day by at least 1p and often much more, from his peak price of £1.58 all the way down to £1.16. At which point, his price started to hover between £1.16 - £1.17 for 4 days (Remaining reasonably stagnant) before I highlighted him on the site at £1.16 - as at this point it had become likely his price had bottomed out.
Many other players that have been highlighted on the site recently appear to have bottomed out in price and can offer a good opportunity for a fairly low risk bet with a favourable reward-to-risk ratio following the 'soft' money coming out of these players making it unlikely they will drop further. This is evident in how only 1 player out of the 35 players in the table above have dropped (By only 1p) in price since being highlighted on the site.
When a player is dropping in price and shows no sign of stopping, it can be risky to buy into the player. Understanding why a player has risen or dropped in price can often paint a clearer picture of what is likely to happen next. For example, many players will become temporarily over-valued due to either a strong market trend or due to recency bias.
It is easy to use hindsight to suggest a player was once over-priced and the main flaw in doing so is that the player's performances could have taken a different path.
However, the example below of Stefano Sensi shows the risk of buying a player when they are surging up in price when the strong force of market trends or recency bias is at play.
Last summer, Stefano Sensi's price was rising from a mere 60p up towards £1 as he was finding his way into the Inter Milan side. Following strong performances at the start of the season, contributing towards goals and hitting high PB scores, recency bias fuelled by speculation and the excitement of a new 'PB monster' took place - sending Sensi's price rocketing up to £2.30 by the end of September.
Then, the dividend increase announcement came along in October and by the end of this month, Sensi had hit over £3. By this point in the season, Sensi had played just 7 games for Inter Milan, averaging 65 minutes per game. Sensi was then unlucky with injury troubles, but there is no doubt he had become temporarily over-priced and when his price subsequently dropped, it still would not have been a good time to purchase him. This is because he was still much higher in price after dropping down, to say £2.50, than he perhaps should have been due to the influence of the market trend and his recent performances sending his price flying up from 60p to over £3 in such a short space of time based on a small sample size of strong performances.
*Prices reflect what the market is willing to pay. Sometimes the market pays too much emphasis to recent performances and the market can also pay too much for a player when they have been sucked into a market trend. This should be evaluated when considering players who are dropping in price.
Some player's prices rarely fluctuate. In such players, it is especially important to consider what action is needed to drive the demand and when is this action likely to happen? The opportunity cost of sitting on a stagnant player for too long can be costly. Although, the player is not dropping in price, you may be missing out on very profitable opportunities elsewhere.
Players in Non-PB leagues with next to no access to earning dividends in the short term can remain fairly stagnant. Therefore, before buying into stagnant holds, possibly for a longer term hold, asking the below questions may be useful:
Does the player suit a current or potential upcoming market trend?
Why would anyone else buy this player in the upcoming weeks / months?
When will this player have an opportunity to earn dividends?
Is there a chance of this player gaining transfer links to a PB league?
Why has this player's price remained so stagnant for?
Some players may be great longer term holds and appear great value. However, that does not mean they are a good player to purchase, if the timing is wrong.
For example, someone like Sofiane Diop is probably going to rise in price at some point in around 3-4 months time, especially if he gains any game time in preseason. Diop is currently 66p at a 6 month low and as a France Youth International, on loan from Monaco, who has previously shown great potential - he is likely to attract demand if there are short term reasons to buy him (Potential game time in preseason)
However, for now and over the last 3 months - his price has been very stagnant, hovering between 66-69p as he fails to play regularly on loan for FC Sochaux-Montbeliard in Ligue 2.
Currently, money could perhaps be used better elsewhere as his price remains stagnant. However, a month or two before the 'youth players in preseason market trend' kicks off - he is a player who may well be highlighted on the site, if it does appear likely he will get game time for Monaco in preseason.
It can be very difficult to judge if a player is likely to continue to rise in price. You may be right in your judgement of a shares short term, positive prospects and still not fare particularly well if you overpay for the expected prosperity.
What is most important to acknowledge when buying players following an initial rise is if the money going into the player is likely to be temporary or kept in the player longer term.
If a player rises due to favourable, temporary, circumstances, the money going into the player is also likely to be temporary too (And so come back out again). For example, huge amounts flooded into Paul Pogba and Bruno Fernandes recently during the double dividends promotion. However, this promotion was only temporary and both players have dropped considerably from their peak prices since.
The more enthusiastic traders grow about a player and the faster the player rises in price without a substantial change in their chances of earning dividends longer term, the riskier a player often becomes.
Furthermore, as a share increases in size, repetition of this achievement becomes more difficult and often the growth curve will flatten out and, in many cases, – turn downwards.
For a slightly older player like Paul Pogba, the the risk of buying following a substantial rise will often outweigh possible future rewards because the player's new price already fully reflects what is being anticipated by other traders. Therefore, if what is being anticipated does not develop - a drop is almost inevitable.
However, of course it would be unwise to ignore rising players completely as many do continue to rise in price. What is useful to consider is how sustainable the rise is, what factors are driving the demand and therefore rise and whether these factors are likely to persist.
If there are still speculative reasons to buy a player despite the player already rising and if they do still look good value at their current price, of course it would still be wise to buy. Ferran Torres, for example, was highlighted on the site at the following prices: £1.27, £1.38, £1.81, £2.10 and £2.43. Each time he has been highlighted on the site, there have been further speculative factors at play that have been likely to drive further, future demand. Subsequently, his price has continued to rise.
Now that transfer speculation has arrived, already leading to a price increase, Torres is perhaps less likely to rise so sharply (He is likely to continue to rise longer term as young, quality talents grow with the platform) as his price has now become built up on this transfer speculation.
Overall, analysing price graphs to spot recent price movement can be very useful in determining whether to buy or sell a player at any given time. Below are a few final, additional points on this matter:
Most players on Football Index have risen considerably over the last 12 months, so a comparison to average market growth is necessary to evaluate price increases over any given period of time
Buying what appears to be a value player at any given time is likely to lead to profits longer term, however, analysing price graphs is important to building profits from shorter term trades
Relatively unpopular shares may settle at low prices where they appear to have bottomed out and then explode in price when circumstances improve
Recent performances and temporary market trends will often lead to huge price swings in either direction, both can be taken advantage of - usually by selling when players become temporarily over-priced or buying when they become temporarily under-priced
We can not get timing of buying and selling perfect, but following the above advice may help in avoiding making irrational decisions which can be naturally driven by our emotions