Issue 010 | Transfer Trading

We’re finally back in action! This week, Liam, FI Trader and Buzzing Paul are back — and I’m very sorry we couldn’t supply you with some slightly above average writing a fortnight ago. I was pretty sickly with the flu, and Liam had some exam preparation to get on with.

Before we get into it, I’m fresh off the back of winning the Judge’s best gambling content creator at the Football Blogging Awards! (see very cheesy photo below)

I put on a suit for the first time since I graduated almost 2 years back now, so excuse the not very fresh garments. I want to say a massive, massive thank you to everyone who voted for me and got me to the final shortlist, and I’m just chuffed that the judges decided to award me this prize. I can’t really put it into words how happy I was, so I guess I won’t try and I’ll just get on with the blog.

Transfer Trading

FI Trader

Transfer speculation trading is hard.

It’s hard because we are essentially betting on outcomes that are impossible for us to predict with respectable accuracy. Players are linked with clubs all the time and most of it ends up being nonsense.

We can increase our odds with good research, reputable sources, ferreting out contract information and such and I certainly spend a lot of time doing that on the site.

But at the end of the day, none of us know exactly what will happen and we are just speculating.

So transfer trading is not the most comfortable place to be for me. I don’t like the idea that if I switch off my PC and come back in a few hours my player could have tanked because a news story broke. I don’t feel in control.

Purely performance based trades in early/mid season are much less all or nothing. One bad game is usually no big deal. It’s only a few days until his next match. If the poor performance becomes a pattern, well we can deal with that.

But I don’t get behind the scenes stats on what is going on in the transfer rumour mill. So where’s my real advantage?

I don’t have one here. I can do good research but I can’t predict the transfers any better than most football enthusiasts.

I don’t like not having an advantage very much. So I do something different.

Instead of buying in the hope that a transfer happens, I read the market trends and try to predict where other traders will need to be in the months ahead. It’s much easier for me to predict trader behaviour than it is to predict transfer rumours.

So, I buy the likely targets just a bit ahead of the majority. And then sell these players at high prices to traders willing to pay too much for them in the hype for the media and transfer season ahead. I did a public review of my site members area End of Season Strategy recently. It worked really well and profited hugely from the shift towards media. You can read more about how I did this there.

When I get these trades right, I’ll have locked in most of the profit from the potential transfer, and protected myself from any drop. I don’t actually need to wait for the transfer to happen. I only need other traders to get interested in it.

I do still keep some transfer punts through the Summer. But they tend to be away from the glare of social media pumps where the players remain at good value but have great links that will get market attention when people realise they are going to good clubs.

This can often be where the best profit is as well as the least risk particularly where you can hold the player whether the transfer happens or not because the price is good value.

Even though the FI market is still really kind/forgiving and let’s people get away with a lot of sloppy mistakes and still come out with profit, it is still possible to take big hits particularly at this time of year. And we have seen a lot of that in the last month.

On social media I often see people blaming bad luck for the drop in their player. You can get bad luck but more often than not, it is poor risk management that is the cause of these big losses. It’s our responsibility as traders to actively manage our risk when carrying highly priced players.

It’s pretty easy to make some money on FI right now. Average or poor traders can still make decent money. Good traders can make a lot more. But it will get harder for everyone over time.

Establishing good risk management practices now not only massively increases your current returns but it sets you up to continue profiting when FI gets more developed and the market toughens up in future.

There is no better time to think about that then now when transfers are driving the market.

Liam

The season came to a dramatic close at the weekend and now the focus has fully begun to shift onto the summer, although many traders have already had at least one eye on transfer targets over the past few weeks, even months. Personally, I started transitioning into many of the potential targets at the end of March because that is the so-called “easy” time to make a profit on transfers. This is down to others continuing to buy them for transfers afterwards and in general no one is looking to sell so prices often steadily increase as we’ve seen with lots of the potential targets.

Once the games stop and all that newspapers have to write about it transfer rumours, that’s when the real roller coaster starts. The risks are increased and so are the potential rewards with so much more new information coming out regularly for traders to react to. One key thing to consider is the source of the headline. Sometimes articles from The S*n are still able to cause prices to move and you might be able to profit off it but take a lot of what they say with a pinch of salt, this applies for many sources , and reacting rashly to them (for example instant selling a player they say isn’t moving) can often be costly. Having a good list of sources on your timeline that you trust can be useful. The likes of Di Marzio and Ornstein are always a good place to start. Another thing to always consider is the potential upside vs the potential downside. Often when a player is highly priced already and has a wide spread, it can be difficult, unless you’re certain, to make a quick buck so it’s always worth thinking about. That’s not to say high priced players can’t be profitable in the market. I think Pogba will show us that over summer, but if you are trying to flip be careful.

The difference this summer compared to last is definitely the introduction of paying five places. The average number of buzz points needed to win the media dividends during last summer (July and August) was 1243.5. That’s pretty high, and in summer you’re going to need some seriously strong links or to be a very big name to pick up those points. But, to come third you only need 584 which, of course, is easier to attain. In previous summers those who have won the top dividend in the previous days often have the stories dragged out to help pick up these lower places, which are nice added extras. Now we’ve lowered the bar even more down to fifth place only 418 points on average would be needed to pick up a dividend. That is more than attainable for anyone in the top 200, but certainly for the big name players and I think this will lead to two impacts, firstly, the premium big name players will pick up a hell of a lot of places, Pogba, Hazard (if it’s not over quickly), Possibly Neymar will all continue to tick over, at least picking up those 1p’s in 3rd/4th/5th at least a few times a week. These amounts will easily accumulate over the summer and help maintain prices (until/unless a deal is actually complete, then it’s a whole new ball game). Secondly, I think we’ll see a lot of other “players of the moment” picking up dividends as well. For example, if the Harry Maguire story from this week had broken during the summer his buzz scores would have placed him in the dividend positions at least twice, and look at the rise he got without the dividends. These lower priced players picking up dividends from a breaking rumour could really provide some big chances to profit, but they could also be quite volatile, offering a rinse-and-repeat situation. Another positive overall is the amount being paid out will be hugely inflated compared to this time last year from the dividend increase and now the promotion of paying five places, plus the fact prices are at An all-time (relative) highs, the amount of money being paid back to traders will be huge, resulting in huge amounts of money coming back into the market over the summer.

Finally, I’d like to use a few past transfer stories to demonstrate a few good lessons on trading transfers. The first comes from the start of summer 2017, the sun was shining, many of us were enjoying a nice beer or a BBQ and all of a sudden Griezmann wreaked havoc upon the index with his “now more than ever” tweet, indicating his commitment to Athletico when a United move was almost certain. He dropped from almost £6 to £1-something at his lowest. Absolute bloodbath. Now that was a time before Performance dividends and in a market much less stable than the one we have today but it really highlights the benefit of cutting your losses on a bad transfer trade. There will definitely be some that end up going down like a lead balloon and if you’re on them and you see the news quick then cut that chord fast.

My second lesson comes from the same summer. The striker merry-go-round that was Lukaku, Morata and Belotti, all of which were rumoured with a Manchester United move and fluctuated ridiculously as media outlets “confirmed” and “denied” the rumours. The graph below shows the movements of the three prices.

We can conclude two important lessons from this. Firstly, trading in and out is very possible in some cases and can be very rewarding if you time it right and secondly, hedging your holds with other possible substitute transfers can be invaluable to help reduce the risk of a deal you’re banking on falling through.

FIG

I really do like the transfer window. I even quite weirdly enjoy seeing some bloodshed in the market during the window, but — it’s the worst it ever gets. From a user retention standpoint, FI know that if a trader signs up at the beggining of the summer, and stays on after — that’s a loyal customer that now knows what they’re doing. The actual football season will be a piece of cake for them.

I do think we’ll get a big surge of users over the summer. It’s an opportune moment for FI to strike and use some of their big marketing budget, with not that many games on and dwindeling interest in said games, it’s wise for FI to attract bored gamblers. I think we’ll see huge growth over the summer, particularly in late July-August time!

Now on with trading during this summer, I want to outline what actually makes a player more valuable during this period.

Transfer Saga

The most obvious one, and with 5 places being paid out over summer these types of holds may return some serious dividends. Pogba and Hazard are the names on everyone’s lips, and they’re definitely going to garner some interest. If there’s a drawn out transfer saga, and a player is consistently returning dividends-people just can’t help themsleves! Take Higuain in January….he hit almost £4.50 in old money (£1.50) now but has depreciated to almost a 1/3rd of that price, currently sitting at £0.65. He went up that high because he was returning lots of media dividends, but those who held would have been burnt. But now I bet you’re asking, why would you have held at that crazy price? Well — if he’d gone on a great scoring streak I suppose the prospect of great MB and PB was at the front of trader’s minds, but it wasn’t to be. Transfer sagas are great, for me — I’ll try to exit at a point where I believe the media appeal is drying up, however this time around with 5 spots on offer — I believe players will have a longer ‘tail’ of value as confirmed signings continue to place in the top 5. It’s going to be really interesting, and perhaps it’ll be a case of ‘who blinks first’ I.e ‘who sells first’, and with that in mind-be aware of the risks but also the opportunities at large!

Greater PB threat

Now, there are some players who might move teams but fail to even register a media buzz point, yet they fly in price. Why? It’s the speculation that a player may become far better at PB at his new club, or that he’s joining a PB friendly team. Some people will hold all the way through and see how they perform at said new club, however there will be those who are happy with the profits — and will reassess that players situation when they actually see some returns dividend wise, or some decent scoring that showcases potential dividend returns.

Greater MB threat

And behold, supposedly the reason why players fly whenever they’re linked to premier league clubs, and particularly the top 6! Take Mo Salah for example. His transfer to Liverpool was never drawn out, but his MB appeal rocketed and when he started returning, people obviously brought in pretty quickly. A less extreme example is maybe the likes of Van Dijk as well have shown that moving to that bigger stage where the limelight is a little brighter, alongside good perfomances can also create great MB appeal. So this is the other factor I’d weigh up, is the transferred player in question increasing their MB appeal?

The best bit of advice I can give on these windows it to be really brutal, and really objective. Don’t fall in love with holds, love on Football Index tends to hurt your pockets.

Back to the Future(s)

The Star Player

Villarreal midfielder Santi Cazorla has been deprived of 668 days of his career during an agonising two years in which he had 11 operations.

The former Spain international has been ravaged by an Achilles injury since October 2016 — one that not only threatened his career, but also his ability to walk.

Now Cazorla is fit and he has had a phenomenal season at Villareal. With an average score of 83 and a peak score 191 he is representing his age group very well. With this in mind, I thought it would be worth winding back the clock, and calculating one of his peak scores during his time at Arsenal.

As it turns out, when we take a look Back to the Future(s) he was pretty outstanding prior to his injuries.

The Match

Reading v. Arsenal Monday 17th December 2012

• 202/322 points were earned for goals scored
• 3 Goals @ 40 = 120
• 1 GWG @ 40 = 40
• 1 Win @ 18 = 18
• 3 Shots @ 3 = 9
• 3 Shots on Target @ 5 = 15
• A further 11 points were earned for additional shots
• 2 Shots @ 3 = 6
• 1 Shot on Target @ 5 = 5

His defensive output was also impressive for someone renowned for his ability to move the ball upfield and produce attacking output

• 47/325 points were earned for defensive actions
• 7 Tackles @ 3 = 21
• 1 Tackles Won @ 5 = 5
• 2 Interceptions @ 5 = 10
• 7 Recoveries @ 3 = 21
• 2 Goals Conceded @ -5 = -10

In a break with tradition for Back to the Future(s) Santi’s passing output was also very strong

• 62/325 points were awarded for passes
• 88 Passes @ 1 = 88
• 12 Unsuccessful Passes @ -3 = -36
• 1 Assist @10 = 10

The Conclusion

A matchday score of 325 would have win midfielder dividends in every treble matchday this season. In fact, it has only been bettered twice this season.

Cazorla’s really impressive underlying base scoring was backed up on this occasion with game-winning goal scoring. Every available data point indicates that prime Cazorla would have been a must have in any matchday portfolio. Infact, there is a strong argument to say he still is.

Research, Resources, Tools & Tips:

Audio Content:

• FigCast Ep 79: I was the guest on my own show…..it was quite strange! Props to Liam for taking the host seat, and doing an awesome job of it.
• FigCast Ep 80: I was joined by Football Index veteran Mel, only the second lady to ever join the FigCast! She was awesome.
• FigCast Ep 81: I was joined by the Football Index Investor, for another great show
• FigCast Ep 82: I was rejoined by the infamous £100k portfolio man SG. Main topic was youth players, and his take on the subject was great.

Video Content

• Trading in the trasnfer window: Back in January I made a video all about trading during the transfer window….I think it’s a good time to re-plug this!

Written Content & Other

• Really interesting article on how scouts actually scout players
• This Thread is a MUST. It’s really, really good. It basically lists loads of journalists and tiers them on reliability!
• Some interesting stuff on penalties in the premier league next season when VAR comes into play. Statistically, there should be fewer!
• Another great thread, this time by our very own Paul

Have a great couple weeks trading!