The notion of a players’ value is often banded around in different models. Let us classify that as their long-term price and keep that particular can of worms closed for now… We can focus on short-term price changes and the mechanics behind it and subsequently, the art of selling.
There are a number of events that occur in Football Index that can lead to a short-term surge in price of an asset; scoring a goal, taking over set pieces, a high PB score, a transfer saga or other media frenzy etc.
The key pieces of information to consider when a player is rising;
How long will the rise last? Is it a one off PB score because another player isn’t playing, or they’ve won 8-0? Or can they maintain that form because a new manager has come in with a new style and formation? Is the transfer story reliable and likely to continue? Or is the source a spurious low key news outlet with a quote from a friend of a friend?
What is the commission? If the player is £10, you know just to break even you need to make 20p through cap ap/divs, if the player is just 50p then a 3p rise will see you in the green. This is important to understand because it ties into how high and how long you think a rise can last, but more importantly, you can work out other traders’ margins and when a likely sell off can occur.
What is the spread? The spread will likely dictate the type of sells you should look out for. A large spread will make savvy traders begin to drip feed their shares back to market once they’ve made a reasonable margin. A small spread will make traders more willing to see how high a player can go and the signal to sell will be IS beginning to outweigh buys on the ‘ticker’.
Some basics about selling.
Market sell on the rise – while there are active buyers but you decide to cash in, it is the perfect time to list to market.
Instant sell (IS) – if there are no active buyers but you want to cash in (either you need some money out, or have spotted a better opportunity) you should instant sell. Using market sell will further devalue your shares, and if there aren’t active buyers it’s a pointless act. There are some schools of thought that if you drop a players value enough, he will appeal to buyers. However, you also need to factor in the psychological element that ‘green breeds green… whilst red breeds fear’!
The art of selling;
At a basic level you should look to market sell on the rise, but there is a fine art within this. Market listing too many too soon will have a tangible effect on the speed of the rise. It can be an early signal to other buyers that the tide is changing or the ceiling has been hit, when in fact it hadn’t!
It’s wise to monitor the ticker and see the volume and frequency of buys. If it is rampant, you may be selling too early, but if you do want to sell this is a good time to do it in volume (100s rather than 10s). If the buys are slowing down, try listing smaller batches and wait for each batch to start selling before adding more.
Add too many shares to the queue and you can decrease the price which could trigger others to sell and before long you’ve got an active buying frenzy turning into an active sell off.
When your shares are top of the queue you get a really good insight into how quickly and in what kind of ‘chunks’ they are selling. Keep an eye on the price changes! If you’ve dropped the player a penny, you should consider cancelling your sale and listing a smaller batch.
This is all considering the rate of the rise. You must also factor in the spread. The market signals will be completely different between high spread and low spread. When the spread is particularly low, people won’t be concerned with judging when to market sell or drip feeding. They can sit back, enjoy the FOMO, then when it slows they can decide to instant sell.
This is often more optimal. If a £1 player has a 3-4p spread, it’s going to be easier to wait and lose 4p from the ceiling price, than it would be to predict correctly where the ceiling will be.
IS too soon and you can kill the buying frenzy. Wait too long and you aren’t in the first group to IS… you can see your margins disappear and the spread widen, leaving you with a loss.
Again, it is key to monitor the price changes as to when those signals are prevalent. I often don’t try to be first as you can hit a false ceiling. But alarm bells ring when multiple user names have instant sold batches of 300 within a matter of seconds.
When NOT to market sell
I speak a lot about calculating how many shares are in the queue, a lot of it is guesswork, some of it is educated guesswork. Times like now, with such severe spreads, it leans more to the educated side.
Let’s take Bruno… a recent peak of £10.53 just days ago. With instant sell around £5 and now £7. He now trades at £10.01 with a 52p drop from peak. With such spreads, and observations I’m going to throw an arbitrary value out that only 2-5p of that is from instant sell. Roughly 50p is in the queue… and at his price it takes 600 shares to move 1p. 50*600 = 30,000 shares!!
The fact people were still market listing after a 5p drop alarmed me… but now with a 50p drop and he had gone down to £9.99? What is the thought process? Is there one? For the person who listed at that price.
To get top of the queue now, 29,000 or so shares have to be sold. Something quite drastic has to happen for people to buy that quantity. i.e. win MB 2-3 days in a row. If that happens, do you really want to be in the queue with no control over what price you sell for in the madness as other people cancel their sells? He could be on a rise to £11-12 in those circumstances and you’ve ended up selling for £10.20??
Listing during a dip tells me you are panicking about the drop – but market listing only further increases the drop – so what is the end goal?
The same can be said for the people who listed at £10.50, he has dropped another 50p since listing, do you still want to sell at £10, as you are the ones going to be top of the queue when he does something appealing and attracts buyers?
The sensible thing to do, if shares aren’t selling quickly is to hold or IS. With the spreads as they are no one should be ISing – you’ll pay less interest on a bank loan than paying FI the current spreads!!
Monitor the ticker, understand where you are in the queue by calculating the difference in peak price to current price with a best guess at the IS to MS ratio… and really think about the mechanics of how & when your sell is likely to go through.
MARKET SELL when you are near the peak of a player and there are still active buys. Drip feeding is wise so you don’t slow the rate of rise too much or drop the price too much… both of which can be a market signal to other holders to sell, or potential buyers to wait.
INSTANT SELL when the spreads aren’t ridiculous and there are no active buyers… and only if you need the money, or see a better opportunity to use your money, or simply you are sure the player is going to drop below their current IS+commission price.
HOLD – when there are no active buyers, or you are not near the peak price of a player and you don’t desperately need the money.
There is a lot of psychology at play when a buying surge can turn into a selling frenzy. I can only capture some of the tangible basics in an article. A lot more of the art is to do with ‘feel’ of the market, unique to the player in question and the timing of their rise. My DMs (@FI_Emperor) are open to discuss further about specific individuals or occasions.
Hopefully this article (which admittedly is a rush job in reaction to some of the drops in the last 24 hours) can get people thinking more logically about the mechanics of a market sell and when to bother listing a player to market.