NEW TRADER CHALLENGE – END OF SEASON!

New Traders often ask me the same questions: can I still make a profit starting fresh without bonuses? Can I still find value when other people have been here so much longer? Can I do this if I don’t have a lot of time every day? 

I think the answer is absolutely yes. But rather than talk about it, it’s probably more helpful to show how it can be done.

Starting from scratch with a £1,000 balance on day one of the new season, I am tracking my progress showing not just each trade but my thinking behind them.

The rules: 

1) no direct use of bonus cash, 

2) start with a blank portfolio, 

3) long term and time efficient style, with no constant phone checking or watching every game.

Notes for New Readers

I’ll be trying to show not just the trades but my thought process and reasons behind decisions I make. The specific players I pick are less important.

You can check out the original post where I introduce my overall strategy and explain the opening selections.

As I obviously have an existing portfolio, I will not make these exact trades but they will be tracked realistically.

I will also own every player on this list for real so the selections will get my full attention. Generally, I select players I have talked about positively on the site.

I always say though, don’t blindly follow any picks you see from others including mine. Do your own research and if you see what I see, great, but you have to know why you have bought the player and be happy with it.

The £1k Challenge Portfolio

  • Portfolio Value: £3016.4
  • In the bank: £192.88
  • Value Increase from £1k: 220.9%
  • Value Change from Week 32: +34.45%

Portfolio Performance

A wonderful end to the season as I took the profits from the closing of my last site Key Strategy. A review of my Feb-April strategy can be found here

As others were in peak media hype I was selling these players at a premium having acquired them much earlier whilst others were focused on the Share Split. This paid off very nicely.

Over the last half of April and into May the NTC portfolio got a 34.45% increase, taking the total return since day one of the new season to a whopping 220.9%. Happy. Days.

That’s actually a bit better than my own real portfolio! That’s because with a smaller bank balance I was a bit more aggressive than usual (and I am quite aggressive anyway). 

What I mean by that is in general, this portfolio never went much above 10 players where as with a larger portfolio I tend to go for 25-35 at the moment. Generally, the bigger your portfolio the more people want to spread risk out a bit which is understandable.

That said, I am not a fan of going much beyond 35 or so. In my view, wide diversification is for passive traders and traders who don’t know what they are doing.

If you are confident in your selections you can afford to be aggressive and it paid off here. 

The wider your portfolio, the more average your results are going to be. The smaller it is, you can hit huge gains or potentially huge losses. So, for this approach, you have to be very diligent and confident.

By and large, the selections proved very solid, the highlights being early pick ups of Felix, Fernandes, Thorgan Hazard, Denis Suarez , Ziyech, Brais Mendez. More than any others, aggressive big buys of these players before they became main stream carried this portfolio. Good research pays off.

There were also quite a few other picks that did well too, like Aaron Ramsey, Thauvin (up and down), Alcantara, Plea, Palacios, Man, Aouar, Werner, Dybala, Chiesa and more recently Trossard, Depay, Ruiz, Tait and Terrier all made good contributions.

And it was not without it’s fair share of disappointments. Aguero and Savic didn’t lose a lot but they were dead weights that didn’t do much for us.

Payet looked a good pick in pre-season but in the end did not deliver on his promise and suffered from age. Laporte was just too expensive when I bought him and I shouldn’t have despite his quality.

Tolisso took a big injury which is a bit unlucky but so it goes. None of Dubois, Lopes, Traoré, Kamano, or Alberto really delivered on their promise either.

The key lesson here is this. Even the most diligent researchers will not get every selection right. But you don’t have to. Good player selection gives you a good hand to play but then you still have to play it well through trading.

None of these under performing selections lost me a serious amount of money because the bad trades were cut off relatively swiftly. And, because I stuck to quality players rather than just flimsy hype picks, even when they go off trend or suffer a misfortune, they tend to hold onto their value better.

This is why some pure spreadsheet wizard traders often struggle. Your player can be as FI suitable as you like but if they don’t fit the trends you are going to have a tough time getting other traders to agree with you.

I think the best traders are spreadsheet wizards but they also understand what moves the market too and can fit their selections into the trends.

So, all in all, I couldn’t be happier with the 220% returns. But it’s worth thinking about the other objectives of the challenge too because it wasn’t all about money.

The original goal was to prove that you don’t need bonuses to win, you can start fresh and don’t need to hold 10,000 2017 Neymar’s to succeed. And you don’t have to be a full time trader who checks the news and trades all day every day.

No bonuses were used directly although the market does jump from them. 

The portfolio started blank on day one of the season with no time to prepare in advance (imagine what you can do if you do prepare).

And, the stat I like best (apart from the profits) is that this was achieved via just 40 trades all season. That’s 4.4 trades per month. Personally, I am more active than that in reality. But it shows that you don’t need to be living your life around FI to succeed.

In fact, there is no evidence I have ever seen that suggests more trading = more profits. If anything, I believe it is the opposite. Often people can try too hard and over trade.

Sells and Holds

In terms of holds, Savic, bane of my season, still feels like worth holding onto at the price because of his quality vs price and his potential move to a good club. It’s pretty frustrating because he has had a poor season but always gives me just enough reason to keep him on. Time will tell whether my patience is justified.

Thorgan Hazard, Thauvin, and Dybala are solid choices and really selling them or holding them feels optional, there isn’t really a bad decision to make with them.

Ziyech is a bit pricey now and has transfer risk. But, I really rate him as a performance player and am content to hold.

Chiesa and Depay do carry transfer risk both good and bad but by and large I am happy to hold them. They have substance behind them and even if they don’t get the move they want they should hold up fine.

Trossard I like but you just have to be aware of the big transfer risk given he could stay in an ineligible league and keep an eye on it. 

The biggest sales of the season by far, out go Felix and Fernandes in mid April. In the last NTC update I said I was happy to hold Felix a little bit longer even though I knew he was now over priced (I also said this on the blog in May). But by this point, they became too big a risk.

When picking them up cheaply very early on, both at 66p in post Share Split money, they felt about 90% likely to deliver me a profit. By the time they are £2 or even £3+, they become at best 50/50 gambles.

You cannot win almost every time by making 50/50 bets, it’s that simple.

My “tight aggressive” trading style means I only bet when I am very likely to win. This is why my portfolios tend to take very few serious losses. It’s not an accident, it’s just good risk management. 

Sometimes you can still lose because even 90%+ bets are not sure things. But if you avoid the 50/50’s and focus on the picks you are most confident in, you will win far more often than you lose. Provided of course your judgement of what a 90% bet looks like is sound.

Brandt also goes in mid May once his transfer to Dortmund was confirmed. I actually really like him at Dortmund all be it with some concerns about rotation given the wealth of talent they have. 

But, I felt that given much of his value increase was based on a possible Liverpool move, it was best to be out and then look to sign him up later after any drop.

I also offload Dennis Man who got a decent rise. He could still come good but in the absence of any real transfer gossip I just took the profit.

All up, and with some healthy dividend contributions from Anton, Ruiz, Depay and Thauvin, I had a whopping £1,342 to spend which is my biggest kitty to date.

 

Buys

I make some aggressive big buys and I feel much less constrained by a small budget now the portfolio has reached over £3,000. As always, I stick to buys mentioned on the site at the time.

Fabian Ruiz was sold just last month but I’m happy to be proved wrong on this one and bring him back. I don’t think it was a bad decision to sell, he had no real reason to keep him in the Summer and I had been frustrated by his performances.

However, in my members Scouting I noticed that he had been getting much better quality chances by getting himself into the box, not just having long range speculative efforts. 

He really improved and general optimism for next season has increased, so I bought a big 500 in him again at £1.10 when he started rising. That’s more than I sold him for last month but I don’t care too much about that.

Dithering is generally bad. But if the facts change it is ok to change your mind if you have a good reason.

Flavien Tait is one mentioned a few times in my members area in recent months. I like him a lot and he comes in again for 500 shares at 45p. He’s got performance talent, had a good last half of the season at Angers and has solid transfer links for the price including to Lyon.

And Martin Terrier, covered on the blog on the 13 April was an easy choice again for 500 shares at 75p. He has hit a stunning vein of form towards the end of the season and looks good for more pitch time next season if some Lyon stars move on which is likely. He also has U21 Euro Champions involvement in June and scored 7 for France in qualifying. He looks performance suitable.

What's next?

 

That is almost certainly going to be the final edition of the Challenge, at least in this form. The original goals of it have been met.

I’ve really enjoyed writing it and the feedback and reader numbers have been great.

Since I launched the members area in February though, I’ve found it quite difficult to write. I’ve had to delay the posts a bit too long because it was hard to do properly without giving away too much site Key Strategy which would not be fair to members.

Over the Summer I’ll think about how to accommodate this, perhaps by giving members a weekly update and then a monthly public summary. 

And, it’s probably more helpful if I start it again from scratch because whilst I think 200%+ gains will get harder and harder as FI matures, I think next year is going to be a pretty damn good year too and I should keep showing new traders it is possible to start fresh. 

Thanks for reading and thanks for the emails from the regular readers – I’m glad to hear you made some great profits along the way too.

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