Quite the week! And this time it was interesting for the right reasons.
Things feel much brighter than they did a week ago when I was previewing the announcement.
In my closing thoughts last week I shared an analogy. After the difficult but entirely right decision to drop IPD I likened new CEO Mike Bohan to a striker through on goal with the keeper out of position. You know he’ll probably score. But in those moments before the ball is struck… your heart is still in your mouth wondering if they might slip up.
In the end, the ball was calmly passed into the net and we can be very happy with the result of Friday’s announcement, as I covered in Friday’s somewhat epic Live Blog.
The match isn’t over, and there is still a job to do before this difficult period is behind us. But it does feel like things are going in the right direction. There have been positive signs up to now as covered here, but nothing that really cut through to most casual observers until this.
And because FI are making good decisions on the platform, traders are responding and we can see a more positive market coming through too.
Let’s do a quick recap on what I felt was needed before the announcement and what we actually got.
Then I’ll take a brief look at the Market movements – but as these are fairly straight forward I’m going to focus on optimal trading strategy – how do we make the most of any market recovery?
And I have some excellent member questions to cover too, thank you for those.
Announcement: What did we get? What was missing?
A story that makes sense
Regardless of the details of the new mechanic, what I was really looking for was a clear signal from FI about the direction of the product.
FI had correctly identified that IPD and it’s incentive for short term trading was a problem.
They really needed to follow through with incentives that encouraged healthier trading. We needed them to tell us in effect who the product was for and to boldly pick a customer base rather than trying to please everyone.
They definitely did this, and it’s the most important thing to me. It gives me great confidence to see that they’ve correctly identified one of the major problems and taken steps that make sense to fix it.
If this hadn’t happened, and they’d replaced IPD with a mechanic that broadened out the pool of viable players again I’d have been very concerned because it would suggest they didn’t understand what was going wrong.
But they got this right.
And we can see the market responding to that. FI don’t dictate trading directly but all traders can now see where things are heading after a very clear signal.
With FI having set a direction, the majority of traders simply have to converge on the real stars of European football which is essential for liquidity and a healthy market. How exactly each trader does that has limitless combinations. But unlike the chaos of recent months, it will now feel like all traders are at least playing the same sport.
Match Day Extra
This is essentially tiered performance which we had considered but with a weekly twist. It ticks all the boxes and even gets some style points for creativity. It’s fun. Simple as it uses the existing scoring system.
The weekly nature of it I prefer to daily as it ensures that the best performances of the week, at least as far as the adequate but imperfect FI scoring system knows, will get rewarded. This helps the better players and removes a random element of who plays on which day.
Spot on. You can criticise the 1p payouts. But anyone making an argument that FI is not generous enough in terms of dividends can frankly get in the sea.
Those arguments will not hold up.
I am relieved to see a little financial prudence really, and this is something I mentioned last week before the announcement too. They’ve got away with an effective dividend decrease and yet most people recognise why this is a good thing.
I’d have preferred 3 places paying out 3p, 2p and 1p rather than 6 places paying 1p each. It’s closer to the existing jackpot model and gives more exciting wins. But 6 places does give hope to some of the minnows that may be languishing in portfolios so you can see the thinking there.
But not much hope. Once we get into the detail with questions from members below – it starts to become apparent why MDE on it’s own is actually quite a weak force with just 1p payouts. I think this will become apparent to people over time.
But overall, 8/10 for MDE from me, it’s a good addition.
Share Issuance and Scarcity
This is stuff we didn’t ask for, but is a move towards addressing some of the criticism FI have been getting recently.
It has minimal real world impact on our trading, at least until players regularly start hitting the share cap which will likely be a while for all but the most popular.
I think overall these reassurance measures are helpful. It’s easier to explain why something has value if there can only be so many of them. In reality – scarcity is not needed on FI. But to average Joe looking into the product, the ability to print endless fun tokens in football players always looks a bit odd. It will look slightly less odd now.
Surprisingly, FI have pledged to take a responsible role in managing share numbers – trying to ensure that players are strong enough to support the numbers of shares in existance. Which is actually a big deal.
I hope FI realise how difficult it is to value players and that they are resourced to do this properly. I have thousands of hours of experience in this and whilst I know it is possible, I do not think it is possible to do it without the ability to change your mind.
After years of experience and refining my methods, I can look at a player and with a high degree of confidence say what the likely output of that player will be in the months or even season ahead. And I can look at the future circumstances i.e first team status, transfer possibilities to see how sustainable that level of performance may be.
But, should they decline in performance, or get injured seriously, or the coach decides they don’t like them anymore or just wants to use them differently that can change.
For us as traders that is ok, since that is the whole point of Scouting – we’re monitoring for those changes and usually we can take action (in a well functioning market anyway, in 2020 often we could spot problems and yet not be able to do much about it with no sell price).
But once FI have printed those shares that is it. You can’t take them back. You can’t change your mind. So this pledge is a little hollow, unless FI can introduce some way of burning shares. Which they probably cannot without buying unwanted bets which is also known as a return to FI backed Instant Sell which is almost certainly never going to happen.
So, with all these reassurance measures on limiting shares and scarcity… they are actually full of logic holes that even a semi-informed critic of middling IQ can poke holes at. And I am sure they will.
But FI have taken the view that some reassurance is better than nothing and they are probably right.
My view on this overall is that if a trader really wants or needs this 100% level of certainty or reassurance they are never going to get it.
We’ll never see FI’s full accounts. We’ll probably never be able to sell unwanted shares back to FI.
It will always be possible to lose our bet if our player cannot support the number of shares in existance due to their performance not meeting expectations. There is nothing actually wrong with that.
If someone is trying to trade whilst seriously worrying about all that it’s going to cause stress and possibly force bad decisions. If all this remains a constant worry for someone and the existing reassurances aren’t enough, perhaps they should not join FI, or remain on FI.
At some point we have to decide whether we are comfortable with the risks versus the potential rewards on offer. And then either get on with trading, or don’t.
Next on the hitlist should be addressing the volatility of the Blue Button, or at least coming up with a way of making the Blue Button less important to day to day sentiment.
Average Offer Price was an attempt that didn’t work. Ironically, AOP is by now doing a reasonable job of reflecting True Value in a lot of cases. But nobody trusts it because it can be gamed so easily. It’s also not very visible. Tighten that up and it may help.
As long as a medium sized trader can crash a price, this market is going to have wild swings.
But as we may be about to see looking at the market, those wild swings can go up as well as down.
We also saw nothing on a beefed up Team of the Month which could have been something of an easy win. It is a bit soft in terms of payouts compared to outright wins and doesn’t have a huge pull on trading activity.
But overall, as I said, payouts are already more than generous enough so it might have been a bit of a reckless splurge to pump these up as well as introduce MDE.
It would actually have made more practical sense to boost TOTM and not do MDE at all for simplification. But presentationally, if the exciting replacement for IPD was a slightly better TOTM… that probably doesn’t cut it.
Correct decision overall, and the slightly weak TOTM and MDE could be addressed later, probably in preference to any future increase in the outright win payouts as things stand.
Unusually Compact Market Analysis
The announcement didn’t bring a wave of hype on the market, it was quite muted initially.
But in the past couple of days we’ve seen very strong gains for a lot of players, often the popular and Core/Premium type that I’ve been advocating as the correct strategy call.
This wasn’t exactly rocket science. These players were always likely to lead a recovery. There will be times for more complicated strategies but this simple approach is also the best right now.
I am actually going to focus on strategy today as the market movements are pretty straight forward.
The Core and Premium players are winning as expected.
Those who hit short term negativity may not be, and whether this is fair or not is judged on an individual basis through Scouting. Where it is irrational, that might be an opportunity.
Trading Strategy in a Recovering Market
So, with Core and Premium players winning, the strategy on the surface is quite simple. Ideally, we are holding lots of them already. And have been topping up and tweaking as much as we can in recent weeks.
I hope for example that many members are not left chasing Werner or Havertz yesterday. Rather we should have bought them already if we wanted them. As covered in the recent Core player article and in Scouting – it was always likely that players like this rebounded. And the price was low enough for it to be worth the risk that they didn’t.
It is not optimal to be chasing this sort of thing after the “good news” event. It doesn’t matter whether that good news is the new coach, the transfer or the performance win we thought was coming.
Whilst a Core/Premium strategy has been my suggestion for months – FI just fired a starting gun that now tells everyone they need to do exactly that. Which is good for us if already holding such players.
But we still want to keep giving ourselves an advantage.
Even within a “simple” Core player strategy, we can still optimise within that. Not all Core/Premium players are created equal.
Using detailed Scouting knowledge, we can pick out players who are at rock bottom prices yet likely to win and return a huge percentage very swiftly. In Scouting yesterday I contrasted the Muller/Kimmich trade off.
Both win, in fact Kimmich wins Star. Yet it was the Muller pick that was the vastly more optimal choice and it wasn’t even close. The irony is that I would consider a rock bottom Muller actually lower risk than a highly priced Kimmich.
At the moment, we can actually get higher percentage gains out of some very low risk choices.
Muller is probably one of the more risky ones at 31, but not outrageously so. We can also find players in the 25 and under range who are very close to wins in a similar price bracket.
So, whilst many players will get a nice rise and be top of that “Highest Price” or “Price Inc by £” list and therefore be the most discussed on social media – that is often not where the optimal profits are. Those default settings are just an illusion that the FI interface creates, possibly deliberately, to fuel hype. And it sure as hell works.
If we want to get close to optimal profits, we’ll have to make decisions that are based more on evidence rather than what other people are talking about.
During a major market bounce back which might be underway – almost everyone will be making some money most likely, even bad traders.
But the better traders will be making a lot of money. And we want to use the Scouting and wider analysis we have (including not just ability but career path and knowledge of future events ahead etc) to get ourselves into that select group.
This feels like a very novel thing to say given the last year or so. But if this recovery sustains – do not be lulled into being satisfied with just matching the market for an acceptable profit. We want to be beating it very, very comfortably.
Therefore, for optimal results we want plenty of players who have a gulf between their current price and their likely True Value. This likely means someone who is not exactly popular right now but is actually performing very well in Scouting and looking close to wins.
In the event of a sustained recovery we want to consider price ceilings carefully. A price ceiling is a realistic assessment of how high a player can really go.
For example, Kimmich as an exceptionally good raw performance player at £7 is probably not far off his True Value price already.
Yet a performance/media hybrid like Bruno (or a Sancho) currently have a similar price yet with much higher credible ceilings. Bruno is £7.99 right now and his media gives him a higher ceiling than Kimmich can ever realistically reach in this dividend structure at around £12 minimum.
And with a level player under 25 comfortably commanding £3.75 – we can work out that many players in that £1.50 range have a long way to go should they maintain existing performance levels. The Members Dashboard has more details on this. I recommend referring to the latest Scouting for ability levels, Star Ratings are broadly right but tend to fall a bit behind the latest. They need a refresh soon.
So, as a very simple guide for optimal results in a recovering market:
– Find real quality players that hit those to levels as consistent challengers, that have a good career path ahead and lots of positive events like CL/Europa/Euro 2020/positive transfers. Scouting is the best guide.
– Find the above at strong value or even rock bottom prices with a massive gap between current price and estimated True Value (you don’t need hugely detailed calculations right now because there is a lot of slack in there, if we are buying an under 25 at £1.50 to £1.75 and he only makes it to £3 not £3.75 this isn’t something that will leave us unhappy).
– Younger is obviously better (provided they are actually first team players – 21-24 is often optimal) but not a requirement. The older we go, the more of a bargain we want as per the True Value sheet on the dashboard.
– Ignore the chatter. If a player is strong value and coming out of Scouting well and hits those Core player attributes in the reference Key Strategy (available from the Dashboard) then that can be enough. It is bad traders who need reassurance from social media and recent price rises, good traders get their reassurance from the evidence.
– Sell things that are near their True Value already. (There are not actually many of these around).
– Sell things that are weak for performance scoring or that lack a good prospect like a big transfer. If they are unlikely to make a recovery in an acceptable time frame (6 months?) then we may want to be ruthless and drop them.
– If you want to sell a player, forget what price you paid – think of it like this – if we can sell a player we have lost confidence in for 50p and replace them with a player we are confident in for a similar price, we have likely improved our portfolio.
This strategy is similar to what I have been suggesting in recent weeks and months. And will likely continue to be optimal for the first weeks of a recovery.
The complexity and difficulty from here is not in knowing what to do – everyone now knows they need to converge on the real quality.
But there will be disagreement on which players actually have that real quality. And since most people are not very good at judging quality and/or value since it is hard and takes a lot of time, we can get a significant advantage here.
Once we reach a point where many popular players have bounced significantly, it is likely some of the more “up and coming players” who benefit next. They will start to look cheap the more the prices of more popular players stretch upwards.
Once value in the “here and now” players starts to come down, we’ll have some wonderkids on the bench currently getting limited minutes, or some with big expected transfers for Summer perhaps in ineligible leagues starting to look attractive.
At the moment – there is little reason to grub around in the bargain bin for up and coming talent whilst the current stars of world football are going begging at rock bottom prices.
But those players who genuinely have a shot at being a major CL/Europa League club level player in the next 2-3 seasons will be relevant and will likely have their time in the sun.
For now though, I recommend prioritising the “here and now” crowd.
We also want to stay on our guard too and not get carried away after only a few days of positivity. Things can change.
One of the key reasons for holding players of genuine quality is the same as I’ve always said throughout this difficult period. In downturns like we have experienced it is these players who have still returned dividends and been the amongst the first to rebound when the market is more positive.
Nobody using site strategy or similar will have been caught out betting heavily on IPD players or short termism. Lots of people have and lost very badly as a result. That’s not luck – it is a deliberate risk management technique.
Many traders who are holding quality will reap the benefits of a recovery without having to change much.
And if things do take a turn for the worse again, they will be the ones who can be the most confident of riding out a storm.
One final point – we should not assume that FI once put back together will be exactly like it used to be.
I think hard lessons have been learned about the risks of chasing garbage. A lot of traders who did this will either have been wiped out and been left angry, never to return. Or they will have adapted to the changing situation.
We will always see some of that wild speculation on extreme youth etc but I do not think it will be taken to quite the same level in future.
Interesting question which prompts two thoughts.
I would actually say do not try too hard to winkle out “MDE value” in the bargain basement at the moment.
MDE, nice as it is, is actually quite low and even the best players may only benefit a dozen or fewer times per season. On it’s own, it is a poor incentive to trade.
I would say MDE is best viewed as a little compensation for strong players who are in contention for outright wins anyway, but might just miss out due to bad luck or just being beaten by a better score on the day.
It is these players, who are already likely to win performance dividends, who are most likely to benefit from MDE. It’s the same scoring system.
The best players may win MDE around 6-12 times a season as an average, so even for them, this isn’t huge but it’s nice.
For players who are poor for performance scoring and not in regular contention, getting 2-3 1p wins per season might be a struggle. And there are very few people hanging around for 2-3% dividends even if paying 50p.
You’d have to be really grubbing in the 25p end to get a significant return from an MDE. And a player that poor is unlikely to be able to do it reliably, although a few gems could be found with significant effort.
We may reach a point where such niche effort is necessary for the best results, but we are a long way from there.
For the players you mention like Vardy, André Silva or Benzema – they do benefit from MDE but only because they aren’t a million miles away from outright wins. All can explode and get themselves up there to win Bronze, Silver and even Gold Days. Not to mention they will be in contention if in European competition or Euro 2020.
So quality big club players like this as I have been saying will always get in the mix eventually, even if they have to brute force their way in with 2-3 goals.
The second point is in response to “is there anywhere you can see who would finish in top 6?”. (I’ll cover scoring threshholds below as another member asked a question on this).
There are charts circulating on social media that show who would have got them in the last 12 months etc. These are fun and interesting and can give a general idea. But always treat historic data with scepticism especially when it is based on FI performance scores.
As we know, what makes up an FI performance score is wild with big slices of luck baked into it. So averaging all that out doesn’t always help – a player can show 5 over 225+ scores and come out very well on such a chart and actually be really damn lucky. A player can appear to have no 225+ scores at all and have been really unlucky.
Not to mention that what a player was doing in a game 6-12 months ago is often very different to what they might be doing now.
So, beware of following such charts, it’s real, recent match analysis that wins the day not historic data tables. There is no easy shortcut for that hard work.
Historic FI scoring data can be a useful secondary source but should not be the deal breaker when deciding on a trade.
Yes it is good for goalkeepers, particularly in European knockouts when there really aren’t going to be many playing at all and they get a scoring bonus.
I haven’t done or seen any detailed math on this specifically but from knowledge and experience I would be confident to say that keepers on average will benefit slightly more than the other positions. Whilst there are only 2 payout places for keepers rather than 6 for others, there are obviously vastly fewer keepers in action.
The other big beneficiary will be the forwards, as again there are significantly fewer forwards than there are midfielders and defenders.
However, will this be enough to spark a massive increase in the true value of Goalkeepers? Unlikely. The big payouts (and excitement) will remain with the goal scorers rather than those stopping them. The platform is just built that way for obvious entertainment reasons and I do not expect that to change.
As per my original Goalkeepers analysis when they were first introduced, the best goalkeepers can cover a £1 to £1.50 price tag at absolute tops and I would not really want to pay much more than £1.25.
MDE might bump that up a little eventually.
But with prices so low elsewhere, I would really not get distracted by niche fetishes like Goalkeepers. It’s fine if you enjoy it.
But when focusing on profits, we simply do not have to grub around too hard trying to find value in niche areas at the moment whilst such value remains in mainstream players that are more likely to be desirable to more people sooner.
I would include Neuer as a Core pick and as I said from the moment keepers were introduced, Neuer was very clearly a cut above any other keeper and it wasn’t even close. I think given his record since, he’s proven that to be true. He’s great value and despite what I said above about not trying too hard, having 1-3 quality keepers in the portfolio is no bad thing.
Ospina at Napoli, ter Stegen at Barcelona and Navas are also decent choices. My Goalkeeper ratings table is serving pretty well as a Guide.
I’d say Donnarumma is surprisingly over performing and probably shouldn’t get quite as many good scores as he has had. And Alisson and Ederson are underperforming because of the relatively poor season both teams have had, but could improve if the teams do.
With keepers, the primary thing we are looking for is consistent wins and clean sheets in the team – the keeper himself is almost a secondary factor and the most important thing we want to see individually is strong distribution in passes etc.
I should probably devote more Scouting time to keepers but the thing is they tend to be pretty consistent so reporting on them is a little dry. It’s as much about the team’s clean sheet form as anything.
In terms of scoring ranges that might now squeak in the door for MDE, I think it is in the area I’ve been expecting in the build up to a new announcement. We knew that FI needed to tighten the range of winners to a manageable pool of hundreds rather than thousands of players.
So that was always likely to be in that 175+ scoring range and in this mechanic that number is going to be a good ball park guide.
Not including European night bonus scoring in a “normal” week, a defender would want to be hitting that 190 mark to be in with a realistic shot of winning an MDE dividend. Midfielders need more, at least 200 most likely. And forwards have the easiest time, with 175 probably getting them in contention depending on the week.
Occasionally, a player will win with much lower if they get lucky and it’s a quiet week. But that will be fairly rare.
Obviously, in European nights that bar will be higher and those players who do have European/CL involvement yet again get that unfair advantage that we know and love them for. There is a reason I favour these players, particularly since that introduction of the enhanced scoring modifier in Europe.
That stitches up Team of the Month in their favour almost without exception. And it will do the same for MDE for the most part too.
So again, these scoring threshholds obviously benefit those players who were already good and in contention for outright wins – which is why preparing ahead was the play rather than chasing players who might make it over this new lower winning bar.
Does MDE change the real value of players? Yes. But it’s complicated, when balanced with the fact that IPD was removed. This is a de facto dividend decrease lest we forget!
Again bear in mind that MDE is actually very modest and I think best viewed as a small compensation for players who could win outright, we don’t want to try too hard to chase “MDE players”. MDE players are mainly just good performance players.
Even good performance players were almost always “IPD players” too. Almost all good performance players score and assist regularly.
If in that 30 day window they scored just 3 goals then that is probably equal to what a good player can expect in MDE over an entire season.
And we would often benefit from that 30 day window a few times over the season if we traded in and out of them.
Therefore, I would judge it likely that yields will actually be lower in practice for reasonably active traders and I would be very surprised were this not true.
However. We need not stress about this.
When I constructed my True Value’s on the dashboard I did so on the basis of a rational return based on outright performance wins and media wins only.
I did not factor in IPD at all because a) this is very dependant on the timing of purchase and b) When I am wrong on a price I prefer to be pleasantly surprised rather than disappointed, so I built in some slack.
So, given that MDE is a bit more reliable and permanent, MDE will likely push up my True Value’s slightly once they are recalculated in future.
But in reality, a good economist would probably tell us that the removal of IPD and the introduction of MDE makes players slightly less valuable to a reasonably active trader.
Yet we shouldn’t care about this. We are still getting exceptional value from a very generous dividend structure that gives prices significant room to grow. And FI showing a little financial prudence at a tough time gives me more confidence, not less.
It’s nice to see some cheer on the market.
We’ve had a good announcement and FI have set that clear direction of travel. And traders now know what to do. Poisonous trading strategies have been closed down and everyone has been incentivised to rally around the best players in European football. And you can see the results of that on the market today.
We also got a second small announcement yesterday on the increase of market depth (a good thing except where it exposes significant lack of depth in some players). And a little poll on market timings.
I believe the current state where there is a break from 11pm to 7am is good and I’ll be voting that way.
I think it better supports the majority of traders – I see the target market as reasonably productive members of society who have a bit of cash to spare and therefore probably have jobs, friends and families too. They don’t want to be grubbing around at 4am trying to get an advantage from early sight of a news article from a corner of their parents basement.
And it promotes their “better than the bookmaker” claim as it is a nod towards responsible gambling. Not to mention it promotes peace of mind whilst sleeping etc. But this is all just preference and we’ll see where it comes out, it doesn’t matter a great deal.
On the market overall, we should still expect volatility for good or ill.
Those same volatile factors like the Blue Button price being dictated by the most panic stricken person out there helped push prices down and keep them there. But with confidence back it can also lead to very rapid rebounds.
All a price really needs to bounce is for that most pessimistic person to think “Hey the market is going up. Better remove my sell order”. That’s it. And no doubt that is happening.
As things stand today it looks much brighter and we should enjoy that. But at the same time, whilst I advocate staying calm when things are bleak, we want to try to do the same when things look good.
In terms of our trading, what we have to do today is not very different from what we had to do last week. But a healthier market might start giving us more options, particularly when the recovery reaches beyond the most obvious players and starts trickling down to some of the quality picks still hanging out in the £1.50 and under range.