Probably worth a quick look at the FI product update we saw on Tuesday. I didn’t do one immediately because the measures in there are fairly modest and pretty much as expected in State of the Market on Monday.
I focused on the Champions League yesterday instead! (If only all we had to think about was the football!).
But I’ve had a few questions about the update and the subsequent market drops so let’s run through it.
FI Product Update
On Monday I said I was expecting a reasonably useful but also fairly dull update – and that is what we got.
Unfortunately, as could clearly be seen on social media, there were plenty of people expecting some kind of game changer that was pretty much never coming.
This leads to disappointment, anger, bitterness. And listing of players follows that – notably at the premium end of the market.
Actually in percentage terms some of these drops aren’t too bad – 1-4%. But expressed as pennies as the FI site/app does by default a 36p drop on Neymar looks and feels really significant and adds further gloom to the mood.
We traders can be our own worst enemy sometimes.
This need/desperation for FI to fix things (and to do it right now) manifests in social media hype for big changes.
Whether people really believe they are coming, or whether they think they are applying pressure on FI to give more when they do that I don’t know.
Is the mindset that if I kick up enough dust FI will be forced into action? Seems that way for some. But I just don’t think that works, and even if it did, it’s not good for anyone.
FI will do what’s financially sustainable for the business at the end of the day. Adam Cole is no mug. He won’t be pushed into offering something he can’t afford in my experience.
And if people succeeded in pressuring them into doing something they can’t really afford, is that good for us over the long term? I don’t think so. We need a stable product more than anything.
Actually the “offer” FI are giving us overall is a very generous one. Prices are low. Dividends are high. They are giving us plenty.
And by beating the drum for big changes in a routine product announcement it just adds to the disappointment when they don’t come – causing further listings and poisoning our own well.
Offering players in itself is also pointless and almost certainly detrimental to the trader listing that player. You can list popular players and they might get bought. But listing someone everyone is clearly trying to sell is going to achieve absolutely nothing except a further crash in that players price.
You are more likely to spook people out of buying your player than you are to get them to buy on an Offer.
Anyone who is going to buy is going to take that cheap bid. They are not going to be buying our offers at 25-50% more out of the goodness of their heart.
It’s futile behaviour driven by frustration and worry. It’s self defeating and not in our own interest to behave this way.
It’s quite frustrating to watch traders eating each other, and themselves, on social media. And it’s one reason I largely keep away from it. I only read just enough to get a feel for the general mood.
FI genuinely do have a lot of work to do on the Matching Engine though – let’s have a quick look at these latest measures.
Two new methods of estimating portfolio values are coming in. This can have an impact – certainly psychologically. But it looks far from any kind of game changer.
“90 Day total VWAP” – average of executed trade prices over the last 90 days. I mean. Fine? I suppose this tells a little about the average value and smooths out those peaks and troughs. But I cannot see myself using this at all.
Why do I really care what a player or my portfolio was worth 3 months ago? It’s today’s price that matters as well as a judgement about where it might go.
If I use this the danger is I lazily assume that my player will, on average, return to some kind of “support level” in traditional market lingo. A price that we never expect a player to dip below.
Believing in things like “support levels” feels like really strange behaviour on FI. It’s not a market that is all that mature or thinks about this sort of thing.
Support levels only work because people believe in them. If a stock reaches a certain level that can be an automatic buy signal that a lot of people just understand – sort of like an unspoken agreement.
On FI we’re not real traders and most people aren’t that sophisticated. Maybe they will be one day but not anytime soon. We’re playing a football betting game with aspects of trading and I think it’s important to stay aware of that.
In short a 90 day average is a flop for me and I can’t see how it will be genuinely useful.
“All Offers” is potentially much more useful. Instead of the Blue Button price representing the one trader willing to sell for cheapest – it will show the combined offer from all those willing to sell.
The weakness is that it can paint an overly rosy picture. But the current situation paints an overly negative one. Given there is no problem with genuine value but there is a problem with confidence – I think it’s in the interest of both FI and traders right now to take the more optimistic view.
I probably will use this.
Depth of Market
As expected – nothing on this now. I think this would be a bit of a car crash because right now adding depth of market would just expose how shallow the market really is.
This is supposed to be a way of showing confidence in a player and in most cases this would probably do the opposite.
If that’s coming in December as hinted… maybe that’s enough time for things to settle. But I suspect FI may drag their heels on this and that may be a good thing.
This is cool and FI has long cried out for an accessible data tool.
It’s slick. Responsive. Easy to use. Has lots of good information in there of genuine relevance and they have added more since the beta.
A good start – there are still some notable and obvious gaps – why on earth can we not see the match day scores from this week for example?
But this is a good thing that I’ll see myself using as part and parcel of day to day research.
However for someone seriously trying to analyse players it is well short of what you need in terms of real match data and the ability to sort it etc. So it won’t really change my methods or the tools I use but it does make some information easier to access.
And for a casual trader it may well be better than nothing. Things like this can, over time, have a notable impact on trader behaviour. Most people aren’t stupid and the more information you give them the better decisions they will tend to make.
This is what people want to see more than anything. Which is not surprising – since what we are asking for is for FI to give someone a lot of money to come in and buy all our players.
As discussed in State of the Market – I didn’t expect much here. In terms of bringing in more liquidity providers – that’s always going to take time and it is not something you can just magic up from nowhere.
You can legitimately blame FI for pushing ahead with the Matching Engine before this was in place.
That reflects the decision to bring forward the Matching Engine due to coronavirus when Instant Sell was turned off anyway. There are pros and cons of either decision – and we’ll never know which would have been best.
It may be that if they hadn’t have brought in the ME earlier in 2020 they’d just be doing it now, causing more disruption in the middle of a season. And 2020 would likely have sucked anyway, because 2020 has just sucked.
They have promised more “before the end of the year” which is really not far away. If we can get more liquidity providers in inside 2 months that’s good enough for me.
In the mean time.. this stop gap “2% Rebate“… Hm. Nice try to fill the gap but this isn’t going to make a difference.
People are keen to spend money – the value is undeniable – but they lack confidence. 2% rebates are not pushing people to buy if they weren’t going to anyway. What they want is reassurance that prices aren’t dropping and that stability is back.
For that you need a liquidity provider who is going to back up quality assets – i.e never letting a genuinely good player fall under X because that liquidity provider is confident in the real value.
A 2% rebate can only help but I would rather FI kept their money and saved it for things that would actually make a difference.
In many ways things like this can make it worse because they are an easy target for people to pick holes in on social media.
Bids and Offers concurrently – this is potentially more useful and I tend to welcome more freedom for traders rather than less. I’m honestly not sure how this will get used in practice and I’m a little tentative though.
If you are FI, or just a trader in general, what you don’t want at the moment is people listing players. The individual listing them may (or may not!) be doing the right thing for them.
Does this encourage me just to speculatively list my player on an Offer and have a low bid in play at the same time? I might not really want to sell them but if I can AND have a chance of buying them back 25% cheaper why would I not?
I mean you could do this anyway but it’s just a bit more effort.
This is probably intended to produce more trading and more liquidity and it might work.
This might raise red button prices, but it may drop blue button prices at the same time. Which could in theory smush them closer together – closing spreads but at a lower blue button price.
Overall tight spreads are healthy but if that comes at the cost of lower blue button prices because of an increase in the number of Offers? I’m not sure people will welcome that.
Really hard to call how this will actually get used, I’ll look at it more later once implemented and I’ve played around with it.
Commission on Bids
Once you have to pay 2% on bids it mildly reduces the benefit of a trader trying for a bid rather than hitting that blue button.
But very mildly.
This was whipped up as a huge issue a while ago but it never was in this market.
Fact is – when big spreads exist and bids this low are available this is going to make no notable difference.
It’s only when the spread is very tight (under 5%) and a player is popular where this is going to come into play and a trader will probably be tipped into using the Blue Button more.
This is good longer term though. And I am supportive of FI raking in some money as we need them to be a sustainable business. All these dividends have to come from somewhere and someone has to pay for Adam Cole’s bunga bunga parties.
This update is basically as expected – a list of mostly useful changes that are not turning this currently glum situation around immediately.
In fact, it has seemed to make it slightly worse which is partly the fault of traders whose expectations were always too high to be met this time.
But – it’s clear that FI are aware of the issues and are working on them, which we can take reassurance from.
I’m ok to stay patient simply because the value available is real. Nor do we entirely have to sit on our hands – there are huge dividends available that are there to be won and are frequently being won by quality players (although the weekend just gone was a bit of a washout).
Not just performance – but the IPD rotation picks as well who are just hauling it in right now.
Yet it’s clearly still frustrating and nobody likes to see price drops.
It’s going to take time, big consistent dividends, and some FI changes to turn this around. What we aren’t going to see is some grand FI announcement that immediately makes everything ok again. Certainly not in a routine product update.
In the mean time the best thing we can do is avoid getting into a negative mindset, or even hitting fatigue with it. It’s hard to stay enthusiastic for trading right now and it can feel a bit futile at times this year.
But we have to keep spotting those little tweaks we can make. That player who is languishing might have a big day and give us chance to do something with them, or take a dividend (Plea?). We may have difficult choices to make – cutting some no hoper players so that we can strengthen our holds in quality ones.
There is usually something we can do each week, even if it’s just some small changes.
What motivates me is to see this period as a bit of a test – if we come through a tough period in the market without too much damage, or even make a bit of progress, we’re probably going to have little issue making money in the better times.