Today we're taking a look at a few potential mistakes that beginners on the Football Index might easily to fall into. The idea for this feature was suggested to us via Mannny67 on Twitter and we aim to please! If you have any other ideas for future features, let us know and we'll keep them in mind.
Whilst using the Index itself is fairly straight forward, we know that there are a few things likely to trip up any new Traders.
Perhaps the most obvious is that the prices shown as your sell price - both for the Market and Instant Sell - are the price before commission is taken away. Football Index help themselves to 2% commission on all sales, so tip number one is to always keep in mind the price you are offered will be higher than what you actually receive.
When looking at the profit showing in your portfolio, it's easy to get carried away seeing as it's calculated using the current market value. Try to instead look at the instant sell price and use that number as your real potential profit because in most cases, it will be the option you choose to go with.
Buying a tracker may seem like a good idea when first starting out on the Index - especially if you are not overly familiar with the footballers themselves. Whilst the value has steadily risen, we think you would be much better off doing a little research and putting your money into a few specific players instead. The returns should be much better, plus it's easier to keep track of in your portfolio!
When it comes to making decisions, one of the biggest mistakes new Investors make is to buy players who are excellent in real life. The rationale is perfectly understandable - players like Aguero, Bale, Hazard are players you would pay good money to watch play in real life, but for various reasons, they don't make great Buzz buys. Sure, there is of course value to be had in trading these players if you got in cheap enough, but when it comes to seeing a return on buzz dividends on those higher priced players, it's better to steer towards those who know how to top the charts.
In a similar vein of thought, it's easy to let your heart rule your head in buying lower priced players from your favourite team just to have them in your portfolio. In most cases, you're probably safe but you run the double edged sword of those players dropping in value - or even getting relegated. And on the flip side, if they shoot up in value, you may be too attached to sell!
Another trap that even experienced traders can fall in to is chasing players who leap up quickly in price on the trending list. The temptation is to worry about missing out on a player who may soon be out of reach. But as we've seen recently with Dmitri Payet, there does come a point where the price stops rising and begins to drop... fast.
You see Payet trending at £2.11 and on course for a buzz win. Think "I will jump on that 'train', there may be a few buzz wins in this for me". On 12 January you buy 100 futures at £2.11 which equals a £211 outlay. Payet wins the buzz that night but as you didn't buy him 24 hours before, you miss out. Still, he looks like being on for a win today so hold out for the buzz anyway even though his price is dropping. You get a nice fiver to wake up to on 14 January but now see he's old news nowhere near on the buzz. Then Check his price to see it at £1.62 with an instant sell value of £1.58.
In Leaving the Premier League, his price is only going one way so you have to cash out quick to cut your losses. Selling at £1.58 minus your commission leaves you £154.84. Even factoring in your buzz win and that trade is exited with a total of £159.84 return. With your excited initial outlay trying to catch the train of £211, minus selling for £159.84 you've got yourself a £51.16 Loss in just 2 days.
Mark our words on this one, it's sometimes better to stay at the station!
This point also rings true when buying newly promoted players. Prices can be pretty volatile when they first come onto the market, so keep your wits about you. Have a maximum price in mind before they enter the market and if he quickly goes above that, it's best to watch the price for a few minutes before making a fresh judgement call.
Whilst it may seem overkill when first starting out investing on the Index, we find it extremely useful keeping a spreadsheet with various stats and figures to track our progress. Whether it be keeping track of deposits, daily buzz winners, monthly profits - it's all very useful information to know and will help you see which players are perhaps best to sell for a profit and of course helps to make sure you aren't depositing more cash than you can afford.
One final point we'd suggest keeping in mind is not to panic! It's easy to look at other people's portfolios and see large profits being shown, then to compare it with your own. For the most part, player values rise steadily and there will almost certainly be times when some of your players show a negative value. But unless you seriously need to sell a player, or using the example of say Payet again from above, and know the value will just keep dropping, in most cases try to hang tight and trust your instinct.
So there we go, hopefully this has given new investors a few things to think about and also made starting out on the Index less daunting.
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