Football Index Daily: May 11

We’ve been thinking about media for a while already but there is still a a long way to go this Summer before performance returns to the forefront.

Five places of media doesn’t even start until June and that’s going to excite traders particularly for the players who catch the breaking stories around that time.

Risk management is important at all times of year but never more than in the Summer where your fortunes will rise on fall based on a breaking news story you can never really predict or control.

We should be as diligent as we possibly can in monitoring the transfer news, looking into contract end dates, body language, player statements. But, transfers are unpredictable and there is no way two ways about that.

For a month now on the site I’ve been talking about the importance of not holding onto players carrying too high a price. No matter how good they are or how exciting the “but what if he does transfer to X” may be, if the price is too high it is good practice to take profits.

That will have paid off for people in the last month because avoiding these price crashes is one of the most important things in trading. And there has been plenty of them.  

If you make too many long shot bets on high priced players who don’t have much to back them up but the transfer happening, you could be in for a long hard Summer.

Even though the FI market is still really kind/forgiving and let’s people get away with a lot of sloppy mistakes and still come out with profit, it is still possible to take big hits. 

At best, this will reduce your gains even if you also won some of the gambles. At worse, it could result in losses.

It’s pretty easy to make some money on FI right now. Average or poor traders can still make decent money. Good traders can make a lot more. But it will get harder for everyone over time. 

Establishing good risk management practices now not only massively increases your current returns but it sets you up to continue profiting when FI gets more developed and the market toughens up in future.

No better time to think about that then now when transfers are driving the market.

Risers

Alexis Sanchez

Sanchez has hit rock bottom after a disastrous season.

It does look like he will be shipped out for a big loss to Manchester United. Italy the rumoured destination.

I don’t believe he has gone from superstar to terrible player in just a year. So, it is possible that if he lands at a performance suitable club he could rekindle some of his magic.

However, it will be the short term media hit that is interesting traders right now. It is a big story that should get plenty of attention.

Even though United are willing to take a loss, his wages are so high that it could be a really difficult transfer that might drag on.

Sanchez has dominated FI transfer windows in the past. He might not hit those heights again, but his rock bottom price does make it attractive as a media punt.

The difficulty is knowing when to get off, because I think a lot of traders will be willing to take Sanchez out for a few sad cheer up beers in May/June but they aren’t going to want to make him their new best friend for next season.

Isco

Another out of favour superstar.

Opposite to the rest of the market Isco seems to be getting interest because he is not getting a transfer which is the latest questionably reliable gossip.

I like a few things about this trade.

His price has taken a kicking recently.

Whether he stays at Real and plays or gets a move to the EPL (ideally) or another performance suitable club, traders are going to be interested in him whatever.

The only real problem would be if a few games into the new season he was being frozen out again. And if you are on the ball you have time to deal with that later.

A reasonable buy price for a quality player always gives you options and different ways to win, which is something I like.

Fallers

Joao Felix

This former FIT site darling has been taking a bit of a beating.

It was something like a month ago when I said I’d taken Felix as high as I thought was sensible.

When you can buy a potential player like this at under £1, you are in a great spot. But if you miss it and you are trying to chase in late at £3+ it’s just asking for trouble.

It’s fairly standard practice for me to find the talent cheap and then move it on when the price gets out of control. Especially when you are relying on a transfer link happening.

Yes, there is upside risk. What if he does come to the EPL and people get excited? But, what if they get excited and then realise they hold a bench/rotation player at City for £4? 

The road ahead from here can bring profits but is also full of pitfalls.

No matter how good the player or how much you like them because you have been a long term holder, we can’t get attached.

I’m fine if I miss any further price bump because those Felix profits are elsewhere in places I consider to be both higher potential reward and lower risk. 

And I’m certainly relieved I didn’t spend the last month watching his price fall backwards.

Fallers

Jadon Sancho

Speaking of high risk. A lot of motivation for buyers was the prospect of an EPL move which is you believe the latest is fading and he wants another season at Dortmund.

That makes a lot of sense for his development to be honest so I can believe it.

But I can’t call these transfers better than any football enthusiast.

What I can do as a trader is manage risk. The trading issue here is that just like with Felix, a large portion of the value is based on the hope of a transfer. 

And that’s not a comfortable place to be for a trader who wants to avoid big losses.

He’s got many other positives in his favour for sure. But when you are at this price, you need everything going for you and there isn’t much room for bad news.

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