How do we know whether we are really good at trading?

Are we really the footballing equivalent of Gordon Gecko or Warren Buffet? 

Or are we just riding a rising market or getting lucky?

This is important for us all to know if we want to trade confidently.

And for me as a content creator and analysis site owner, my site members (and potential members!) will want to see evidence of results without just posting tacky screenshots of profits made. These things could easily gloss over losses, be manipulated or just outright faked.

In the past I’ve done things like the New Trader Challenge over the 18/19 Season where I regularly blogged my decisions throughout the season in public. This proved a new trader could start from Day 1 with £1,000 and turn that into £3,208 over the season, a 220% profit. 

I liked that better because it’s verifiable – I posted the selections and then people could see for themselves how they did weeks and months later.

Now, I have something even better. All of the hundreds of hours of members area pre-season Scouting analysis is archived on the site and it’s now possible to assess how they got on months after my predictions were made.

Basically, how often have I been right about players this season?

Things to know:

  • The starting price of all trades is taken from mid-June 2019 onwards in pre-season at the first definitive review of the player in my members area scouting. (Definitive means where I made a clear statement rather than something non-committal like “this is a player to monitor”.)

     

  • These numbers do not represent the maximum profit available from June > November. The point is to show how my pre-season predictions fared months later. It assumes there was no trading at all between the day after the opening game in each league and the end of November.

     

  • All players in this study are FI relevant and will be well known to most traders – there are no random fillers! There is a full list of players at the end.

     

Assuming we set up a portfolio only on the basis of my pre-season analysis (June – August) and then left it untouched until the end of November, these were the headline results:

 

Positive Analysis

The 44 players reviewed positively in pre-season had increased in value by an average of +75% by November.

If you owned 100 shares in each you would have returned £278 in dividends on top.

That results in an 81% profit over the period – £817 if starting at £1k or £8,175 if starting with £10k.

When I judged a player to have performance strength, value, and a positive trend fit (as defined by site strategy) the result was a profit 100% of the time. 

61% of these outperformed the market by rising more than 57%. 

NEUTRAL Analysis

The 53 Players I reviewed neutrally had increased in value by an average of +20.6% by November.

If you owned 100 shares in each you would have returned £315 in dividends.

That results in a 26% profit – £238 if starting with £1k or £2,389 if starting with £10k. 

When I was neutral in my review, highlighting clear strengths but significant weaknesses (often good players at high prices) 66% of them made a profit, but on average much less than the players reviewed positively. 

34% of these players made a loss. 

CAUTIOUS Analysis

The 56 Players I reviewed cautiously in pre-season had decreased in value by an average of -5.65% by November.

If you owned 100 shares in each player you would have returned £131 in dividends.

This results in a loss of -2.92%, a -£27 loss if starting with £1k, or -£292 if starting with £10k.

When I judged a player to be overpriced or weak in pre-season, 68% of them were worth less by the end of November! (In a market that has risen by 57%! Ouch.) 

Only 2 of these 58 players had outperformed the market tracker by rising more than 57%. 

A staggering 97% of them did not outperform the market over the period.

On a graph, that looks like this:

For interest, this chart shows the peak potential profit across the 3 categories (if fortunate enough to sell at the high). 

 

This represents my work from June-August 2019 as I analysed pre-season friendlies and the new scoring system to work out which players were most likely to succeed in the 2019 season. All of this was shared with members on a weekly basis throughout this period. 

Thanks to the hundreds of traders who now support the site, it is something I do professionally so it’s important for me (and for members!) to know how accurate my analysis turns out to be.

There is extended analysis of this below including more about how these numbers put together, and full lists of the players that make them up.

The objective with this analysis is to see what happens to players in the months following positive, neutral or cautious analysis in my pre-season scouting. 

What was their value by the end of November? How high did their price get? How many dividends did they win? What was the total profit? 

And most importantly – how often do I get it right? This is crucial to know because it tells me how bullish I should be on my predictions. And it lets me monitor over time whether I am getting better or worse. 

I would like to thank @BuzzingPaul and @FIMarketCap for their help with this article, both are very useful people to follow on Twitter. Paul is known for his excellent stats and double checked my calculations for me. @FIMarketCap provided the measure used for “Beating the Market” as will be explained below.

Key Takeaways

Readers familiar with my guides will know that for a long time I have used a “tight aggressive” trading style which I have brought with me from online poker and adapted to suit FI. You can find that guide series here.

It was used to good effect in my 18/19 season New Trader Challenge series linked above. That resulted in a great 220% profit over the season. I achieved this success by making sure all my money was focused on a relatively small number of high quality, strong value picks. 

One of the hardest things about this approach is having the willpower and confidence to ignore the overpriced players being peddled at high prices on social media and in chat groups. 

But however tempting it is to own the “must have” players  – the Fear of Missing Out is a con. The majority of the time, you aren’t missing out. You are killing your own profits by letting others lure you into their trades.

Reading the “consensus” on social media is useful and generally good at telling you what is happening today. But it offers very little guidance on what is going to happen next

This “tight aggressive” approach has been working for me for a long time. And these numbers from pre-season show exactly why. The three key factors to success are:

  • Diligent and skillful player research;

  • a strong strategy that reads the trends effectively and;

  • the confidence to lead rather than follow the market.

If you ever wonder why some people make 200% or 300% whilst others are struggling to beat the market at all – this is it.

Player Lists and Evaluation

I’ve analysed the number of times my judgements in the members area scouting analysis on players result in a profit or not over June to November.

I’ll now show the spreadsheets of players on which these statistics are based for transparency and interest. And I’ll provide a more detailed commentary on the key take aways.

IMPORTANT NOTE

These tables represent my views from June to early August in pre-season. Much has changed since then!

I may now favour players on the red list after a price drop or improvement.

I may no longer think a player on the green list is good value or they may have declined.

Do not use this for trading or to give me grief about player X or Y 🙂

My latest views on players can only be found in the members area of the site.

Positive Scouting

Outcome

When I think a player is good value, strong on FI and a fit for my members area Key Strategy I have made money 100% of the time.  

Such players have an average profit a few months later of 75% assuming I go on holiday and do absolutely nothing over the period. (Obviously I don’t and I spend hours each week refining site scouting info!). 

Factoring in the strong rate of dividends won, the return rises to 81%.

Commentary

Many of these players are, by now, well established performance players who have gone on to do well. Most traders will recognise them now as obvious, but bear in mind this list was made in pre-season when many were not that well known or well regarded at all.  

This is why for example you could pick up Kroos for £1.56 at this time or Depay at £1.65. Kroos incidentally was the only midfielder on FI given 5 out of 5 stars in my site player rating tables following the performance scoring changes. He’s proved why since.

It’s easy now to find a list of past dividend returns or big performance scores, but historical data is not particularly useful information and often misleads people into thinking they are making evidence-based decisions by using it.

Big performance scores and dividend wins have a huge slice of luck involved. It’s only through regular and competent analysis of the real match statistics that you can work out what will be consistent or not. 

The important thing here is finding them early during pre-season and being able to judge through diligent analysis that they have a high likelihood of success. Waiting for the big scores to appear on FI is generally too late – the best profit has gone.

It’s worth noting that there was plenty of scope for bumping that average profit of 81% much higher with active trading, this is just an average if they were left to run so is obviously lower than it would be (assuming you kept on making good decisions of course!). 

It is also worth noting that some of the biggest price rises were available in older players (Lewandowski, Kroos, Di Maria).

This was at a time when 18 year olds and under were “the only thing worth buying” back in the Summer if you followed the social media / chat group consensus.

This is not to say that exact thing will happen again. But it does show that sometimes, doing exactly the opposite of what everyone else is doing pays off. 

Not all the time. But when you have a good reason to believe the consensus is wrong – go with it. The focus on kids blinded many to the value available in the elite veteran category and spotting this resulted in some huge early season gains.

But, performance strength of players changes all the time whether due to form or a tactical tweak. That’s why in the members scouting area I monitor players every week for signs of improved or declining performance. Again – we need to spot when this is happening early, not assuming a “PB God” will stay that way forever or waiting for 5 poor scores to find out.

 

Neutral Scouting

Outcome

When I am neutral on a player, and highlight some positives but some significant negatives too (usually good players at high prices), I will have made some money 66% of the time. 

But nowhere near as much as the positive group – only 16% of them outperformed the market over the same time period. 

This is the hardest category to judge because they are tempting targets, but this shows I am getting the marginal calls correct far more often than not.

They also perform quite well for dividends, making it a 26% total profit on neutral players overall.

Commentary

This isn’t a bad list at all. These can be the most difficult trades to stay out of because they do have strengths. But they also have significant weaknesses, often an existing high price which limits the potential gains.

They are tempting targets, but on average, staying clear of the 50/50 bets makes me far more than it costs me because focusing on the players I am 100% on is just statistically more profitable.

Interestingly, this list matched the positive list for dividend output (per player on average at 6p).  

This is because they are here mainly because they are decent players at high prices (Also a bit because it contains both Neymar who helps the average!). 

However, the capital appreciation driven by the wins was far less, often because they had less room to grow, having carried high prices in many cases. 

Overall, punting on players when you are feeling 50/50 on them can be done but I would say avoid doing it too often. In general, it is more profitable to put money in my strongest picks.

 

Cautious Scouting

Outcome

Where I made a clear statement in pre-season that I believed a player is overvalued and/or being pumped too heavily on social media an incredible 66% of those players were worth less by the end of November.

Only 2 out of 58 of them outperformed the market i.e most did not make a big profit even when they did rise.

This is a staggering fact. These are popular players being hyped on social media in pre-season yet their performance on the market months later was collectively atrocious.

66% lost money in a market rising by 57%! That blew my mind. 

My cautious predictions were justified 97% of the time.

By avoiding players I believe are overpriced (68% lose money, 97% likely to underperform) in favour of players I think are good value and a strategy fit (100% profit, 73% out performed the market) I clearly maximise my profits. 

Commentary

This will be a controversial list – players I considered to be overpriced in pre-season Scouting in the members area.

I have occasionally been on the receiving end of angry tweets from owners on my public blogs for criticising players. That’s fine and to be expected, happens everywhere on Twitter.

But it’s important to understand that I don’t do it because being negative is fun. It’s because realistic player assessments, often as the antidote to the social media hype, are extremely profitable. 

In fact, they are crucial to huge profits.

As you can see from this table, my success rate of spotting the popular players that are being overhyped and due a fall is very high

If you account for the rise in the market, just 3% of these players out performed the market by rising 57% or more. The only 2 players of the 58 to do so were Sabitzer and Chilwell.

The list overall represents popular players that have almost all been hyped at various times on social media – yet months later most of them resulted in a loss.

Their dividend returns were very weak compared to the other lists, just 2p each on average with only 16 players of the 56 contributing anything. 

This backs up something I say often – players cannot hide from poor performance scores and weak dividend returns for long no matter how hyped they are. They will drop eventually if they do not deliver.

This demonstrates the importance of good quality, realistic analysis. 

If the chances of a player I think is overpriced dropping is this high then I know to trust my judgement with confidence and not worry too much about the occasional player that does succeed.

Imagine the swing on your profits if you can turn even half of those losses into gains?! Losing 5% on one of these overpriced players doesn’t sound too bad.

But when you passed up the opportunity to make a 75% gain on average, that could be an 80% swing in your returns! Or even more.

Finally

Thanks for reading this far! I hope you found it interesting.

When it really comes down to it, for all the fun FI can be, most of us are here for big returns.

Focusing your money in the best possible picks via the “tight aggressive” approach and ignoring the hype is the best way to achieve that. Not to say that it’s easy.

You can’t trade that way without great research and very strong reading of the market trends ahead.

My positive group of players rose more off the back of genuine wins and genuine quality, whilst most of the negative group crashed down because they were built on hype and very rarely competed for dividends. 

Puzzling that out took hundreds of hours of research and even more in considering the season strategy. 

This is important to my members area philosophy. There is a lot of pumping for personal gain on social media, with tipsters promising quick wins etc. My website is different because it relies on long term members who pay me just £3 each per week. I need to give them value over months and years and all my analysis is accountable and there to look back on. 

I cover hundreds of players that are constantly refreshed every week to respond to the matches and events, rather than just handing out a few lazy tips for people to follow.

If my analysis is not standing up to the test of time, my members will simply leave anytime they want and I won’t have an income. It’s a powerful incentive for consistent accuracy!

Fortunately, people tend to stick around after they join and the site keeps growing.

When you consider the profit on my positive scouting list above, a trader following it and starting with £1K would spend just 3.5% of their portfolio value on membership over that period as they turn their £1k into £1,817. 

A trader starting with £10k and ending up with £18,175 would spend just 0.35% on their membership.

And that’s does not account for tweaks made from Pre-Season to November – I spend dozens of hours each week scouting and strategising for members. 

This was a particularly good period for the whole market. But it was also possible to get disappointing results in this good period as we have seen. At minimum, we must make sure we are at least doing better than 57% from June to November. 

Most people might think that is actually quite a high bar. 

But if we aren’t beating that, it’s a sign we aren’t really outperforming the market and could struggle if the tough times ever come. 

If we want to both make more money now AND keep making money from FI for years, we have to kick the bad habits that are holding us back and focus on the very best picks out there.

I hope you enjoyed this article and if you are interested in finding out more about the members area, click the green link below! 

All the best,

FIT.

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