Thoughts on “when to sell” on Football Index

I was asked a question on Twitter yesterday about how I determine when is the right time to sell a player on Football Index. Tough one! But I thought it was worthy of sketching out a few thoughts and things I’ve learned along the way. I’m not a guru and these thoughts may not be applicable to your strategy so, as always, don’t rely on any of this as gospel, but I hope it helps!
Over the 15 months I’ve been on the Index I’ve tried all sorts of different trading patterns as I sought to educate myself about the market. I’ve held premium players for entire seasons, I’ve flipped players on transfer rumours and I’ve tested out in-play trading as the rules around Performance Buzz and dividend cut-off times have been tweaked since it’s been introduced.
As the player pool has become ever larger and trader numbers have grown, trading volumes have undoubtedly increased. Just the other day we saw an 80p in-play rise for Lucas Moura, I can’t recall seeing anything like that for a non-premium player on the Index before, that size of rapid gain has previously been restricted to people like Gareth Bale.
We can’t really have this discussion without touching on the eternal subject of “holders vs flippers”. I’ll come clean, I’m a flipper. The reason is because I don’t have a huge investment so I can’t buy the likes of Neymar or Salah in sufficient numbers to make safe long-term holds in them very appealing. What I do have is time to keep an eye on the Index quite a lot. I’d be wasting that advantage if I didn’t use it, so I operate in the £1.50 — £6 section of the market and trade in/out of players fairly frequently. As I write this my current longest hold is just over 2 months.
The danger of being a flipper is “missing a Salah”. Last season Mo Salah held a continuous upward curve all year, reaping constant divs. I was one of many who held for a shortish period, sold and came to regret it! And it’s also true to say that the Index is in a period of continual overall growth, we’re nowhere near the potential market cap yet so there really isn’t a need to be in a hurry to sell. In the long-term the market should continue to “raise all boats” for a fair while yet.
But having said that, I do also believe there is more money to be made by active trading rather than just treating the Index as a passive investment. Most players do have price movement that needs trading around to optimise profit.
It’s only after 12 months + on the Index that I feel I have started to acquire a better feel for the ebb and flow of player prices. I still get caught out, if you’d asked me at the beginning of July whether Paul Pogba, who was then £6 could be £9.70 by the end of August I would have said you were crazy. Yet here we are! So let’s get to the detail of the original question, when should you sell? I take a risk calculation of my current position in 2 ways.
First, what has the rate of appreciation been? For sure, players who go up quick can come down quick. Those who have risen slow and steady tend not to crash (barring injury). This helps me calculate potential downside and I’ll tend towards selling a fast riser and locking in profit more than a slow one.
Secondly, what is the remaining future upside of that player. At the time of purchase I will have considered an exit point. This is absolutely crucial! So where is that trade now at in terms of that exit point? Is there data to support a re-evaluation? We all sometimes hold “over the top of the curve” where our greed made us ignore our exit point without good reason. That’s always a crappy place to be, if for no other reason than it sometimes forces an instant sell and loss of profit to the spread when we could have market sold and kept that profit with better timing.
One metric I have been paying more attention to lately is “% profit per day”. I’ve found that my very best trades have been ones where I have identified a portion of the season where certain players have chance of steady rises over a defined period of a few weeks (i.e. an international break or the group stages CL/EL). So I tend to use these periods to look for value in advance and set an exit point to sell.
Personally I found the most frustrating part of my first year on the Index to be holding stubbornly to players earning nothing. So I do believe in the maxim of “perform or be sold”. For example, I’ve just sold Presnel Kimpembe. Good young player at a top club. I’m sure there is profit in him at some point. But I’d held for 30 days in a period where many other defenders soared and he’s done nothing. Maybe I’ll regret that, but he didn’t get it done and I can see others who could be earning me profit!
Likewise If I’ve made a reasonable profit I’ll most likely move on. If I miss on a Salah, so be it. So for me that might be 30% ROI for a 30 day hold. 1% per day is a target I try to hit. Sometimes I get lucky, I managed 110% ROI from a 60 day hold of Naby Keita recently. Sometimes I might have to wait for a sudden spike to get my ROI (Lucas Moura being a prime example). But once I’ve hit a decent return I won’t hold in blind faith, I’ll likely take my profit and move on unless there is a very good reason that they will continue to return. The players in my section of the market don’t tend to continually yield divs, if they did they’d be much more expensive, so that’s the reason I tend to take profits and constantly look for the next under-valued player on my watchlist.
This approach, together with being firm on using stop-loss has transformed my profitability in the last few months. I now “let my winners run” just enough more often than not and I keep my losses minimal. I don’t expect this to necessarily be my strategy forever, I have a huge belief in keeping my focus on honing process, being adaptable and always prioritising learning over £ signs. If I do that, the money will come!
Trade Zen, folks! You can find more of my thoughts about how to improve trading performance on Football Index by searching the hashtag #TradeZen on Twitter.
