Profiting on the Index
By now you should have a decent idea of how the Index works now but that is still only the beginning. It is one thing to know what pedals are in a car and anther to know how to drive the damn thing you know? So the next parts of the guide look to give you an insight into do’s and don’ts of the index. What is likely to make you money and what is likely to be a bad move. Of course, there is no specific guidelines for this and we have to move away from the rule book for this stuff. And while I must warn that most of this section will be based on my own opinions, these are opinions moulded by my two-plus years’ experience on the platform and backed up by statistics where possible.
Before we get into specifics of strategies and common ways of profiting, lets first look at some general DOs and corresponding DON’Ts when trading on the platform.
- Do use historical data and trends to help develop your knowledge of what type of actions or players win dividends. However, don’t obsess over this data as times changed and figures out of context can become very misleading. For example, Sanchez won over £1 in media dividends in January during his move, this makes him one of the highest yielders on the Index but doesn’t mean it will continue nor does it mean his price will go up.
- Do speak to other traders via social media, asked questions and opinions. Don’t take any one traders advice as the gospel truth or follow their advice blindly. Check on how their previous “tips” have turned out and always do your own research.
- Do keep a track on your portfolio, knowing who you own and having a valid reason for them to still be taking up a chunk of your capital. Don’t get overrun by player and end up not knowing who you own. This will result in missed opportunities and value leaking from your portfolio without you really knowing where from if you can’t control it.
- Don’t be fooled by standalone statistics such as someone scoring a high Match Day score in one game, or even worse, in a certain number of minutes.
- Do keep your emotions under control when trading. Don’t buy when someone is already trending or has increased significantly in a short period, unless there is a very good reason (it’s not often there is!). This is usually done due to a concept know as FOMO (fear of missing out) and can result in buying high and selling low. Similarly, don’t be put off by the “red” and feel that you can’t sell because of your buy price.
- Do make sure you know the rules and understand what factors are currently causing prices to move.
- Do understand the risks related to your trade sizes and evaluate potential upside vs downside should certain things happen. Don’t be put off by a couple of bad trades. Come to terms with the possibility of losing money, and when it happens, use it as a learning tool rather than a deterrent.
- Do buy players back should it appear a tactful and profitable thing to do. Don’t be stubborn and ignore the blinding obvious trend in order to support your ego (this happens more than you would think. Many make a couple hundred pound and think they’re warren buffet after a month)
Finally, understand that circumstance change, and with that your plans may have to as well. Cutting a loss is sometimes the smart thing to do. Your buy price is not an important factor. What the price is going to do next is. Continue to learn and adapt to the changing market conditions and enjoy the ride!