Big week for FI and I’ll be talking about my first experiences with the Matching Engine, reviewing the market and then hitting up some Members Q+A.
The Matching Engine
Following the Live Blog on Friday and all the excitement we’re now readjusting to life with the matching engine and finally, the ability to sell things! This is a huge change and the long and short term impacts will be massive.
My key observations:
1) The Matching Engine made FI fun again!
For me, having done this for years by now I can’t remember the last time match day trading was a genuine thrill.
I can remember specific examples of breakout players and big profits sure. And it was a thrill when a player I bought a few weeks/months ago put up a big score on a match day and I enjoyed that.
But when was the last time I actually enjoyed match day trading itself?
Quite some time ago. This is because buying on a match day itself was generally a bad idea. Main reason being that by the time a big score appears or a breakout occurs – it is too late for my taste.
My whole thing is that I try to work out who is going to win before it happens rather than piling in afterwards.
Which meant that match day trading itself wasn’t necessary or even profitable.
But this weekend I had genuine fun experimenting with bids and it opens up a form of match day trading that I think is worth my time.
This is good for the product in general long term because money aside, FI is also entertainment and it does need to be fun to keep people engaged and attract new traders.
2) Big Discounts are Available. Sometimes.
I had fun on Saturday and there is now another way to turn good player/trend knowledge into an advantage.
Buying high performing players on match days is still a bad idea in my view.
We should have them already when they have a big moment. Or we are doing it wrong.
The only time I consider it acceptable to buy a player on a match day is when I have my eye on a player and I am waiting for that one last piece of evidence to convince me.
So if I’ve seen a player move position at his club and I like what I see, then by 20-30 minutes into the next game he’s performing as I’d hoped – yep – that’s a good bet to make.
But piling in after the dividend win or a big score or a goal? That is for the mugs.
However.
Now on a match day there is something profitable I can now do more often.
When a player I rate doesn’t play, underperforms, or generally disappoints I can be pretty sure someone out there will want to dump them fast.
In truth, one bad game tells us next to nothing on FI. So if a player was good before the game they are probably just as good after.
But lots of people do not think that way – they still think primarily about the next fixture and what games are coming up next week like it’s normal betting or Fantasy Football. This is a minor factor on FI.
Lots of people also seem to get very impatient and easily frustrated – so desperate to jump on a goal scorer they sell the player who blanked to do it.
This lack of knowledge and impatience can be exploited by making borderline insulting offers on good players who have a bad day.
For example with Alcantara injured I was able to pick him up for a bid of £2.30 – a price he hasn’t been since January. Given I’d have been happy to pay the Buy Price anyway (£2.58 at the time) this is a steal.
And with him out of the game tonight with it too he can probably be picked up for even less. But it’s a muscle injury and just one more game – it doesn’t make him less valuable.
This madness begs to be exploited and it’s a real way to turn a negative event into a profitable opportunity.
It’s not a total free for all though. Plenty of my bids went unmatched if I tried to take the mick. I thought I might get away with a £2.01 for Eriksen at a blue button £2.24. No dice even though he’s not exactly in hot demand.
People don’t want to feel like a mug though and will generally only give players away if they are unpopular or hit some kind of misfortune.
Getting a player 5-10p cheaper than we would on a bid is still well worth it though – at least whilst 0% commission on bids lasts.
3) Matching Engine raises the bar for how good you can be (and gives you more rope with which to hang yourself).
As touched on the Live Blog, I expected the Matching Engine to open up opportunities for good traders to make more money. But it should also make it easier for traders to make a mistake.
Having more freedom works both ways – it can go well for you or badly for you.
What I’ve seen so far fits with that.
The majority of FI traders tend to have a very knee jerk, short term mentality. And some very ropey ideas of who has real value and who does not.
The market has taught them that’s ok – as a young market grows the rising tide lifts all boats and glosses over a multitude of mistakes. Obviously, you can make more money now by avoiding those mistakes.
But lots of people are still making some money even with consistently poor decisions – and this means there is little incentive to get any better for many people.
If anyone recalls the online poker boom when it first became a thing – it was flooded with new players making easy money. The standard of play was very low but that didn’t matter so much – there were plenty of new players to fleece even for a fairly poor player.
But over time, some players got better and better and all the money started gradually flowing towards an elite of really good players who got very rich. The average or worse players would get cleaned out and quit, coming to a sickening realisation that they were never actually that good.
Or if they had too much money and not enough sense, would become the “fish” – the bad player at the table that everyone wants to sit next to.
I think FI will follow a similar path over the years to come. And it’s why we should try to establish good habits early.
Things like the Matching Engine and the fuller Order Books when they come will speed up this process – the more tools there are the more good traders will be able to turn the market to their advantage.
4. Liquidity is Back
We can all breathe a sigh of relief just to see liquidity back and finally be able to start shifting some of the deadwood and buy some long standing targets we want.
One man’s trash really is another man’s treasure. It is literally incredible that the spreads are so tight and the majority of players can get a reasonable price.
This amazes me. And my little theory is that it isn’t entirely natural. I think Adam Cole and the “market maker” stepped in early and helped provide some of the prices here.
That’s not a bad thing and it is what I would have done in Mr Cole’s shoes. It maybe that as traders get more and more confident providing the Instant Sell function FI’s support for it tapers off.
Not something we can or need to do anything about – just an aside.
Having more liquidity might open up more strategy options – particularly if we also get certainty about football being back full time in multiple leagues.
I still think the Key Strategy approach will be a great basis going forward. Chiefly because the next major event will be (hopefully) a summer dividend review probably in July or August.
This is one reason why I think having that strong “core performance” part of the portfolio and possibly 1-3 premium players will matter in the coming months.
But there was plenty in the corona virus key strategy that was about protecting ourselves in an uncertain time – I’ll have a think about how we might usefully open up a bit in the coming weeks.
What I really want to see to bring greater confidence is the Bundesliga going by another week or two without problems.
In the mean time though there is a lot we can do to start shaping our portfolios up again, ditching deadwood and signing up the promising targets.
It’s a good time to be quite active in our trading after a long lull.
Market Review
Time for the weekly look at the market risers and fallers.
1) Winners get rewards. But not always.
Clearly, performance winners or promising prospects are getting their rises. Havertz. Werner. Demirbay.
But not all performance winners – as I noted in scouting yesterday – it isn’t enough to just win – you also need to have a sexy trend fit. Or if you are a more random player you’ll need to win big and convince people you are going to do it again.
Klostermann limping over the line didn’t cut it.
Someone like Bensebaini did and he’s not exactly sexy but he had penalties – a reason why people think he will win again and they aren’t wrong in this case as covered in Scouting.
This is why we must put the Scouting in context of the trends and why these spreadsheets of “the best performance players” don’t work.
Primarily because they tend to use things like historic performance scores which don’t mean a lot. And secondly because of the lesson I learned on FI early on – is you can’t solve FI entirely in a spreadsheet.
It’s not enough just to win we also need that strong trend fit.
Something to bear in mind when trying to pick our performance winners.
2) There is much less Bundesliga focus than this time last week.
In last’s weeks State of the Market one of my main points was that there was too much focus on the Bundesliga.
I think this was right and we are seeing the benefit of not getting too much tunnel vision on the German league now.
La Liga, Serie A and the EPL are hoping for a return in June and could enjoy a near automatic bounce back for that alone.
With more leagues back though we will have to raise performance standards again. It’s much harder to win with more leagues in play. We may currently have some Bundesliga punts who can win now but are unlikely to win with more leagues in play – we shouldn’t keep these punts beyond another week or two maximum in my view.
In fact, we can already see Bundesliga players dropping particularly if they have disappointed. This can apply to some good players and bad players – even good players do not win every week!
I expect money to keep shifting out of the Bundesliga and towards the EPL, Serie A and La Liga.
But strong Bundesliga players should still get interest – we should tighten up and make sure our Bundesliga players are real quality.
3) Hype is still alive and kicking
Whilst we have some football we really don’t have a lot of it.
The absence of football tends to push trading in hype and speculation and allows pumping/over estimation to go unchallenged by facts.
If there is no football, there is no way for a poor player to get outed! Or for a good player to prove he is better than the rest.
This can be a frustrating time if you hold actually good players for obvious reasons.
But the more matches get played, the more real quality shines through. Not over just one or two match days, but over weeks and months for sure.
At the moment I think it is a good idea to be holding known quality players, ideally with good trend fits, from Serie A, La Liga and the EPL. They don’t even need to be particularly performance suitable as long as people seem to think they are.
But as we get closer to actual matches and the routine week in week out grind of matchdays we will want to ditch any weak players whilst we can and focus on the real quality.
Not just because the real quality is likely to win and get rises that way, whilst the poor quality players will tend to disappoint and lose value the more games go past.
But also with things like the dividend review on the way – we want to be on the right side of this already – not chasing it when and if it is announced.
With something like Odegaard the temptation to chase it is too much for many.
But this is bad trading.
A few months ago as covered in March scouting, you could start getting tempted by Odegaard again as he fell to around £3.
That was it. That was your chance to buy if you were going to. The Real Madrid link was anticipated and waiting for it to actually happen before buying is silly.
Buying now you just missed the big rise and are shouldering all of the risk of him being a Real Madrid bench warmer or generally not living up to the hype. Or just better traders who did buy at £3 cashing out on you, frankly.
The next thing people do with something like this is to go “Who is the next Odegaard?”. This can work but I think it is the wrong question.
We’re much better served by focusing on the real trends ahead which is the expected return of performance which naturally brings with it the softening of the aversion to age. IPD players coming back into fashion. The dividend review. The media review. Who will actually win performance when it is back across all the leagues?
This is the stuff that matters – chasing around overpriced youngsters who aren’t all that good and look a bit like Odegaard might feel like the thing to do this week. But it’s a trap.
If we find one that we would buy anyway because they fit the longer term trends that’s all good.
Picking up a Kulusevski or Barranetxea as similar players – all good because we’ve done our research (reviews of them here). And they may profit nicely from the return of their leagues anyway.
Buying an Oscar Rodriguez because he is also a Real Madrid loanee? If you are a quick thinker who sees Odegaard rise then immediately jumps on Rodriguez correctly guessing that people would do this – good trading.
Buy Rodriguez further after the rise already happened? Really poor trading. And if the early buyer has any sense he will dump on the late buyer because Rodriguez really isn’t that good.
In a week like this where people are splashing money around excitedely it is easy for these mini trends to kick up – but we must keep our eyes on the real trends ahead and not get sidetracked.
Q+A
Some questions from my postbag this morning:
Question: When you’re fairly certain you’ve found a good FI player would you take into consideration how big the spread is. I hold Mario Gotze, and his spread tightened up massively yesterday due to a bit of media.
Which made me think, the larger the spread is, the more likely of a bargain it is, as when that hold shoots up, the get out will be a lot easier. Hope you understand this 😂
Answer: Haha, I think so! I would take the size of the spread into account yes – it’s now probably our best tool for judging how people are feeling about a player now. We used to do this with a glance at social media or a chat group – now we can really see what people are willing to pay right now and when you have to put real money down it is harder to BS.
Prices better reflect how people are feeling than ever – rather than the price being reflective of how people may have felt a few weeks or months ago.
However I would also stress that it is our own opinion that matters most. If we believe that we have a bargain and the spread is huge we should not let that put us off. In fact, it is these situations where we correctly disagree with the general view of a players value that we will make the most profit. (And, we can also get ourselves into trouble if we get that wrong, which is where the skill of trading is).
If there is a large spread I don’t agree that it makes it more likely to be a bargain neccessarily, though it might!. It might be that there is a good reason for that large spread and the player is ropey.
Over a very long period (a season or two?) the crowd is quite good at judging the value of a player in my experience. But in the short term (around half a season or less) they are truly abysmal and this is why I can make money.
Question: To trial the new system, I just insta sold Van Dijk , the spread was 19p. I had 100 shares in him but I just had minus £80 from my profit and loss. I didn’t realise it would be so much, have i done something wrong here?
I’ve got some bids out for some players like Plea, Waldssmit, Muller & Hofmann. Is there a way of telling if they will get a match soon ?
Answer: On Van Dijk I suspect you are just seeing the profit and loss disappear, this is just paper money and means that now you have sold Van Dijk the profit you made on him doesn’t appear in Profit/Loss anymore.
It is also often buggy. My FI profit and loss calculations are a total mess and have been for months – I don’t think this effects everyone but it does me. For example it currently says I grew my portfolio by 3.7% in the last 24 hours. I wish! This is just wrong.
But no you haven’t really lost £80 for using the Matching Engine! Top of the head, it is more like £20 plus change for commission.
On matching – there is no way of telling if your bids will get a match soon.
Obviously the higher your bid the more chance you will tempt someone in.
Hopefully with Order Books FI role out some more details that will help us judge things like this. For now – we’ll have to develop a sense of what we are likely to get matched through experience.
Question: Hi, long time member here. What’s your opinion on the following:
- Money can enter but not leave the market
- The blue market sell price can go up when people buy new shares but will hardly come down (essentially can only fall as long as the market sell queue is
- how do you value your portfolio now?
Answer: Money can enter but not leave the market… this was true but after the Matching Engine it’s fairly easy to shift most players and as far as I know FI are paying out when we withdraw. Am I missing something!? 🙂
Prices will hardly come down. Interesting to think about – we’ll see. We can see prices dropping this week, so it will happen!
I guess my main thought is that it will be traders who decide the Sell Price by paying as much as they are willing to pay.
But previously, prices would go down if people burned things on Instant Sell – that’s no longer the case because there is a match – if someone is buying then someone is selling and the price no longer moves.
As people list players for a sale through the sell queue though prices will go down.
This is interesting to think about and in theory it should mean that it is harder for prices to fall on the blue button.
But will anyone pay the blue button price anymore unless there is a surge in demand? Sometimes yes when they do something that warrants immediate buying. But I would probably expect most transactions to occur through the matching engine in future.
It may mean that the price people are willing to accept becomes more important than the blue button price (i.e the buy price will be what people are willing to pay).
We also currently have zero commission on bids – when there is commission people will probably use the blue button a bit more than they are doing now.
We’re also missing the function to make an “offer” to sell our players which should come in time. This may give us control over the blue button price in future as the blue button may represent the maximum offer out there rather than an FI set price. This would move it more towards a real market and that is probably the other half of this equation we are currently missing.
Lots of questions then spring to mind about how you would create new shares or whether the number of shares in a player become finite (i.e only so many shares in a player might exist to make them genuinely valuable).
That is probably unlikely – what we might see is 2 buy prices – a market buy where you buy for the lowest offer another trader is willing to make and then if you are really desperate to buy you might pay a premium to FI to create new shares.
On how to value our portfolio. I think the Matching Engine does blow apart the fiction that your portfolio value is the current buy price of all your players. Of course it isn’t! And it never was.
It was never possible to sell all your players for the blue button buy price because of commission and because listing shares would drop the price and because old Instant Sell would cost you money.
Really, your portfolio value should be the current Instant Sell price which would be substantially lower and look disappointing to many. But it is more accurate.
This doesn’t really change anything but it does change perception. FI have chosen to display it in the way that makes people feel good and looks most generous for obvious reasons.
I would think about my portfolio value as what I felt I could sell it for! Which might be a combination of current red button price plus those currently popular players I thought I might move through the sell queue.
But I wouldn’t spend too much time worrying about that – it has always been true that the profit is not real until it is cashed out.