This week I want to share my thoughts on how the Matching Engine is playing out – after the initial euphoria of finally being able to sell players – some harsh truths are dawning on a lot of traders.

I’ll analyse the risers and fallers on the market as usual, and then finish with some Q+A. 

If there is a theme of questions this week it is the difficulty in selling cheaper or unpopular players. There are some tough messages here.

Created by potrace 1.16, written by Peter Selinger 2001-2019

Matching Engine Impact

Early on, the matching engine breathed new life into FI and was really popular. 

Perhaps surprisingly so.

As I covered in the live blog at the time – FI had pulled off a genius move. The ME had no right to be that popular! 

They took advantage of the circumstances to take something important away and somehow turned it around so that people were happy about it.

I’m not annoyed about that – it had to happen eventually. I’m a little bit impressed by the business sense if anything.

But sweeping away FI bail outs of bad decisions (or in some cases unlucky decisions) is a huge deal. There is no more Uncle Cole to step in when your trade goes wrong.

It is that support that has allowed FI to grow to this point and enabled the wreckless trading habits that many have come to view as “normal” or even “good”.

I think traders are just starting to get their heads around what that means. But some of the conclusions I see being drawn on social media are in my opinion wide of the mark.

By and large, the top 200 players have decent spreads – we can pretty reliably get a reasonable red button price at the top end of the market. They fluctuate sure depending on the latest news but so far a recognisable/popular player hasn’t had too much trouble.

Dip into the squad list though and it can be a blood bath. Certainly as you get to the £1 and under price range. You may get offered -30% or -50%, sometimes even no price at all. That’s a huge hit and having an undesirable player is far more punishing than ever. 

People are realising that now and it’s quite frightening for many.

We’ve lived in a kid gloves world up to now where it was only possible to screw up so much. FI provided a generous Instant Sell price even for the most awful of players (and people used to howl with anguish and complain even at that!). 

That made punting on real garbage quite viable. Far from optimal and you’d still lose often – but you could get away with it and still make a profit as long as the market overall kept rising.

That is not going to be the case anymore.

Those mistakes are going to get heavily, heavily punished. 

So far, traders response to this uncertainty seems to have been “Ok, if I can’t be assured of a good red button price at the cheaper end, I should buy the more expensive and popular players”.

This funnels people into the top 200 and into the 50 and top 10, and usually at the younger end in recent weeks in the mistaken belief that youth = low risk. This is what I am calling “comfort blanket syndrome”. 

There is some good logic to this but it isn’t quite right because what is popular changes all the time. And so will the red button price.

We have the blue button price – which takes a lot to push up and is what shows in people’s portfolio as the “value”. It’s what most traders think the player is worth and the price they expect. They are used to that way of thinking. And that’s the way FI presents it to them.

But the blue button price is an illusion

The red button bid price is now much more reflective of what a player is worth today – it being what people are currently willing to pay.

In the new world, it is now possible for prices to shift very very quickly. An £8 player can become a £4 player overnight if that is all people are willing to pay.

That was not practically possible before. If an £8 player went south they might drop to £7 or maybe £6 tops and then maybe slowly bleed from there. And you’d usually have the ability to IS for a relatively modest loss because FI were generous.

So say we have a £4.50 player who is currently all the rage because of a transfer rumour or because people think highly of him as a prospect – he can keep that going as long as people believe it.

But when something happens to make people stop believing it (maybe the transfer collapses, he falls out of favour and is shipped out to a mediocre club, he plays 6-8 games and demonstrates weakness) then that price is shattered. 

He will be worth not £4.50 but whatever people are willing to pay for a flop. Which may be £2.50 or nothing.

The £4.50 blue button price will be irrelevant then – nobody will pay it and it will have to slowly drop to meet the lower red button price over time (probably very slowly until FI introduce the ability for traders to specify blue button prices – then the blue button price can drop much faster than it can now.)

That is 100% going to happen to a lot of players. Including lots of younger players who people seem to believe are low risk – this is another illusion. Most young players are yet to establish and are very high risk. Very few bright prospects make it to being global stars or FI relevant.

This comfort blanket seeking behaviour may feel attractive right now and may be delivering some short term gains – but we must avoid painting ourselves into corners by getting stuck in too many popular but ultimately overpriced players who aren’t all that FI relevant. Because when that event hits that means everyone wants out – you will not be able to sell them for anything close to the blue button price.

So what is the answer?

Chasing popular players is the wrong thing to do but it’s quite close to being right (which often makes it an easy trap to fall into for many).

We should concentrate in high quality players but “who people are buying right now” and high quality is absolutely not the same thing.

High quality means relevant to the FI scoring system, either now or potentially. That means real, credible potential not just gossip or an appearance in some wonderkid article. 

It is absolutely fine to punt on speculative players who may live on hype but it has to be done from the bottom now more than ever – not joining at the top when the price is already overheating. (For example, in yesterday’s scouting I highlighted the difference between buying Locatelli vs Tonali). 

High quality also does not mean they have to be expensive. We can and should shop in the £1.50 and under range of the market without fearing the lack of a good Instant Sell price – but only when we think we know something nobody else does. Most bargain bucket players are in the bargain bucket for a very good reason (More on this in the Q+A below).

Fundamentally, this all comes back to what really gives players true value on FI. Dividends and nothing else. When all the hype and speculation is done that is what you are left with and we do not want to stray too far from rational values. A player who wins dividends or has credible dividend prospects will always have some value. Those that demontrate over time they can’t deliver dividends will have no value or very little value

Over the next 12 months of using the Matching Engine I expect that traders and the market are going to mature at a faster rate than it has. FI will become a tougher place. 

And it’s going to take a few high profile players falling over and wiping people out for those harsh lessons to be learned by many who are stuck in old habits. That could happen next week or in three months but it will start to happen.

These losing traders will pass that money on to the traders who don’t need to be taught why holding highly speculative and overvalued players is a bad thing in the new world of the Matching Engine.


Market Review

My main observations on the market this week.

1) The Bundesliga is still taking a kicking

Bundesliga players are still by and large dropping on the market – this demonstrates epic levels of shortsightedness from some traders that just deserves to be punished.

Not always, some players just aren’t that great and were overbought in the pre-Bundesliga return frenzy. So they are deservedly dropping. 

But there are many real quality Bundesliga players that can be had for insultingly low bids at the moment. The next few weeks will be the ideal time to stock up on them. 

The narrative is “but the Bundesliga will end in 3 weeks traders won’t buy them!”. Garbage. Since when have traders needed football to buy players? What have we spent the last 3 months doing?

For a start, some teams including Bayern, Leipzig, Leverkusen and Eintracht have the CL/Europa to come over the Summer (with lucrative Gold Days).

And the break between seasons is expected to be short – probably 8 weeks for the Bundesliga and back in September.

Traders will not wait for the season to start before preparing their portfolios in advance of a new season – especially if prices are cheap. We may see that bounce back by July or certainly by August. 

This short termism should be abused over the coming weeks and we should look for bargains in this area. 

2) The EPL is still doing well, but La Liga and Serie A are starting to catch up as predicted. Ligue 1 should follow in time. 

Much as we saw pre-Bundesliga return prices in the EPL are really heating up. As mentioned last week – this was a good thing to take advantage of but we need to be careful how far we push this.

I’ll be doing an EPL preview this week sorting the credible winners from the garbage. The thing to bear in mind is that we’ll be missing Ligue 1 and for a good while the Bundesliga too. 

So with just 3 leagues in contention, average winning scores will be lower and we can be a bit more leniant – some previously average players may now be in with a shot and we might be a bit more generous to popular players who are ok but aren’t that great.

Again we don’t want to push that too far – by now I think people have a better grasp on what a real winning score looks like – a soft win with a 150-210 score might not budge the price too much.

Where we know the player is overrated selling before the league returns or after a game or two is probably going to be the best bet.

We are also seeing traction for La Liga and Serie A as predicted. I’ve already done my previews of these leagues. I would expect money to continue flowing towards these leagues in the build up.

And, we’ll generally find that on the big match days the winners are more likely to come from Serie A and La Liga than they are from the EPL. The big winners will gain traction.

I don’t think we are desperate to head to Ligue 1 yet but it’s worth having in the back of our minds. It won’t be too long before thoughts start turning to next season and Ligue 1 players could enjoy renewed interest, certainly by the end of July I’d expect.

3) Qualification for the CL/Europa

A quick point to bear in mind right now is that as seasons get concluded who qualifies for the Europa/CL will have a big bearing on player value in preparation for next season. 

A club like Napoli who were in good form and may secure a Europa spot would carry much greater optimism into next season if they had European competition. And rightly so it’s a lucrative dividend pot up for grabs in Europe. 


Some questions from my postbag this week:

500+ Player Agony

Q: Can you give me some advice on what to do with the sub 50p market?
I know they are not the players you necessarily advocate, but I was happy, for example moving: 
  • Kenan Karaman from 36p -> 49p.(say 48p if MS), but now he is only worth 23p (22p with commission). Less than half the price. or Umar Sadiq from 43p -> 50p (now 21p).

Is the lower priced market something you think Mr Cole – will look to help?

It is still attractive for new buyers but in real terms, but with FI moving the IS goalposts, the current ‘owners’ of these players, have taken a big hit? Should I wait? Should I just leave the players as they are until, they come back into fashion / a ‘market maker’ comes to the rescue / the selling side of the matching engine comes along (which may or may not close the gap).

A: This is going to be a tough answer.

As a starting point, most of these bargain bucket players are just bad. They are in the bargain bucket for a reason. You can, very occasionally, find a diamond in that rough. But only when you know something 99% of people don’t and when you are cherry picking.

When you have a 577 player portfolio as I know you do (!) you can’t possibly be cherry picking – you are unfortunately holding a lot of garbage to be brutally honest.
This was always a pretty bad thing to do as per my recent Portfolio Clinic article but with the Matching Engine it just got worse.

It used to be that FI would obligingly take the rubbish off your hands, even if it was for a bit of a hit.

And, you’d also be under the illusion that they were “worth” the blue button price in your portfolio screen. But this was very much an illusion.

The blue button price was a sort of general idea of what people have been willing to pay, nudged up and down by individuals buying and selling shares. But weeks or months go by since people made those decisions – the blue button price is sort of lagging behind whilst opinion might have moved on. This is complicated but it comes down to this:
The blue button price is a fairly good reflection of how people were feeling over the last few months. The current red button price tells you how people are feeling NOW. 
People will be much more adverse to holding bargain bucket players when Uncle Adam Cole won’t step in and buy them automatically.
So unfortunately, you will be stuck with those bargain bucket players until a) you get rid of them for a big discount to a trader who is probably going to try to mug you or b) that bargain bucket player does something to increase confidence in them which is unlikely because they are mostly bad.
So, as to what I would do if I had got myself into that situation? Hypothetically. Because there is a greater chance of Beckham returning to score the winner for us in the 2030 world cup final.
After I was done hitting my head on the wall I would have to look at each player individually. 
If there really is nothing to that player, no reason at all they will bounce back, then there is nothing to that player. A player who has no realistic chance of returning a dividend really is worth nothing. I would not expect FI to help with that – they will be punching the air at the thought of no longer having to buy unwanted players.

You *might* want to wait a month or two – it’s possible that when the grind of football is back and people don’t have clear priorities of chasing the EPL as they do in recent weeks for example, some more people might try to find some value in the bargain basement. 

But, I expect you will be stuck finding the best price you can which will be nothing like the profit the blue button used to show.

If there really is a good reason why the player will bounce back then it’s no stress – we can just hold and wait for that event whether that is a performance win or a transfer. 

Sorry I can’t give more positive news – I think this is a really difficult position to be in and it’s exactly why I think portfolios of over 100 players are a bad idea.

In those numbers we can’t have a tight, focused or highly selective portfolio – we are going to have a ton of rubbish. I could not pick over 100 players for a season I was really confident in. I might be able to pick 50 and that’s all I need in one year. 
FI is in the process of growing up and bad holds are starting to get punished, we’ve really got to adapt to that and not take the wild risks many are used to.

Stagnant Portfolio, help!


Been on your website for a while now and think it is brilliant. I see everyone on Twitter make huge % profits including your challenges earlier in the season. I’ve been on FI properly since October and on around 12% all time profit with my commission being over double my trading profit.
I have made stupid mistakes along the way but even recently I just don’t seem to be getting anywhere even following your advice and doing significant research with Indexedge, indexgain, spreadsheets
If you could give me any advice, even just a few sentence or a portfolio clinic! I would be eternally grateful!

A: I think the first thing to say is don’t judge your performance by what people are saying on social media! It’s mostly bullsh*t and people highlight the successes but hide the losses as gamblers always have. Or window dress their portfolios by getting rid of the losses to show fields of profits. Or just straight up fake it.

That difficulty in seeing what is real and not is why I blogged my “New Trader Challenge” each week and all the advice on this site is left up for anyone to poke holes in if they want!

That said, we could have done better than 12% over that period and if your commission is higher it suggests you are buying/selling too frequently.
I can see some decent players in this portfolio but there is also a fair bit of rubbish – this is going to end up with mediocre results. Every single player in there should be a strong choice so maybe we need to raise the selection standards. We can have some good players but if we are dragged back elsewhere it doesn’t end up counting for much.

That doesn’t mean we will get every trade right but there is a difference between a good pick that gets unlucky and a bad pick that was never likely to do well.
If anyone asks me the secret to success in things like the New Trader Challenge – it’s not just the big gains – it’s the fact that because of good risk management I tend to take very few losses that drag me back. That’s the difference between great returns and average returns. Anyone can pick a player that rises but how consistent are you?
Something like Xhaka, Dean Henderson, Callejon in your portfolio – it’s pretty much bang average or worse and should be shipped out.
You have some strong performers like Kroos/Bruno/Theo H/Gnabry/Carvajal/potentially Ziyech,Thiago/Brozovic etc. All good picks and a bit of patience here is required – they are good but until there is a week in week out grind of football games they can’t prove it. But in all probability they will.
I’m not sure what mistakes you refer to but to have done 12% you must have made a few – at a guess – this is usually caused by following too much of what we read on social media or chat groups. So if this feels like a problem I would just stop using it so it doesn’t influence you.
And to have spent so much in commission it suggests you may be chasing stuff around too much – trying a bit too hard even!
Just focus on the real trends ahead and play your own game would be my advice here.
Hope that helps!
Created by potrace 1.16, written by Peter Selinger 2001-2019
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