Market Volatility on Football Index

Market Volatility

Table of Contents

Introduction of Order Books & Market Volatility

It’s not difficult to see that there’s been quite the transitional period in the last week, with Order Books being introduced. It’s been quite a difficult time, as everyone’s portfolio seems to have taken a hit, especially their All Time Profit figures & current portfolio value.

I’m going to be discussing the market volatility today, but also explaining the reasons why this is occuring. Note, it’s not half as bad as it looks, traders!

Pre Order Books

Before Order Books came in, The Buy Price was the buy price, and the sell price was the sell price. 

If a trader wanted to sell of all his shares immediately, there was an option for Instant Sell, where Football Index would buy back at a reduced rate.

Trader were able to find some sort of safe haven, in the fact that as long as nobody was instant selling, their players prices would more or less stay stable.

The thing is, just because a player was a certain price, doesn’t mean that he was worth that in the first place.

Ready to Start Trading?

When you register at Football Index, you can claim a special offer. This will enable you to trade risk free, where any losses up to £500 are refunded, as cash. Remember to use code FIA when you sign up.

Implementing Order Books

When Order Books were implemented, Football Index advised traders that all shares for sale would leave the Sell Queue.

This increased the prices of every single player on the platform, as when players are in a sell queue the price drops by a penny.

This gave many traders, myself included, a strange false sense of security. (I’ll be as honest as I can!).

I have never been in a situation like this before, so I had a few thoughts:

  • Could I actually benefit from order books?
  • Would my portfolio value increase?

In the worst case scenario, I was thinking that the value that my portfolio rose, could become the buffer, so I could transition into the order books & I should break even. 

I was wrong!

Order Books are Live

When Order Books officially went live, it initially became a bit of a free for all, for all traders.

Traders were in a rush to put their players back on the market for sale, so they could adjust their portfolios.

Trader A listed Bruno Fernandes for sale at £10.00. In a rush to ensure their sale went through first, Trader B listed Bruno for £9.95.

Trader A was also in a rush, cancelling the order, re-listing at £9.90.

This was happening on the whole of the platform, and it caused a bit of mass panic.

On Twitter the day before, everyone was happy and sharing the fact their portfolio had increased by 10% in an hour… but now it was all being undone.

Prices seem extremely volatile, but this is due to the severe undercutting of prices. Some players are being undercut by much more than £0.05, and there has been some pretty big drops.

Should I Ignore Portfolio Value?

There are lots of traders which have already decided that the Portfolio Value is a very short term measure of their holds.

That’s true to an extent, as your portfolio value can swing massively. If you hold 1,000 shares in a £1 player, another trader could come in and attempt to sell him for £0.70, which would effectively damage your hold value.

Unless Football Index add a weighting mechanism onto the offers, this could be something that we have to get used to.

A Weighting of the offers would offer a true reflection of a player value, as we aren’t sure at the moment if it’s just one player on a fire-sale spree which is affecting the values.

It’s definitely switched to a buyers market, due to the volatility and the fact that traders are going up against eachother to offer the best prices.

It’s important not to sell your players now, as we’ve already seen the market panicking which has caused the drops.

Remember, we’ve already experienced huge volatility when the Buy segment of order books came in, the market will settle and we will get moving again.

Remember, dividends have recently increased by a huge amount, which will only see long term price increases.

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