Welcome to this week’s edition of Tricks of the trade, in which Pierre_FIndex has given us his insight. He was one of the first people to pop into my head when considering features on this series after he discussed his short-term trading on the FIG’s podcast, specifically his use of the strategy of buying on Sunday and selling on Friday.
Here is what he told me:
How long have you been a trader on the Index and how well would you say it has gone?
Pierre: I initially joined the Index in 2016 and I was one of the first 2,000 traders to sign up. I spent a couple of months flipping the Friday player promotions (when only two players were IPO’d each week at specified times). I made a few hundred quid and cashed out. If I knew then what I know now… it doesn’t even bear thinking about! I eventually rejoined around Christmas 2017.
How did you end up in the short-term trading game?
Pierre: After rejoining, I spent a few days watching what was going on and then took the plunge. The first issue I found was that it was the January transfer window, and I did not have a clue what I was doing! I spent a couple of weeks chasing the rises and lost around £200. Abdou Diallo was the worst one – I had about 500 shares in him at about 85p when he was linked to Arsenal. An hour later, he was priced at around 65p and I instant-sold all of my shares for a big loss. A few hours later, he was up 15p and I was close to rage quitting!
Instead I decided to try to build a portfolio (a tactic that a lot of people ignore!). This went much better and before I knew it, I had a load of players that were up over a pound. I had a beautiful portfolio up until after the World Cup and initially I withdrew some of the dividends and reinvested some. After a while, I decided to try short-term trading and built up a small cash pot earned through dividends, about £250 I think.
I have been short-term trading ever since and a few months back I had to dismantle my main portfolio due to real-life circumstances. The hope is to trade my way back to a position where I can have a decent portfolio again… but the prices these days are crazy!
So yeah, overall it has gone well enough. I should really have made a lot more than I have, but I have enjoyed my time on the platform and I see this as a form of entertainment as much as a trading platform.
And how did that turn into trading Sunday to Friday?
Pierre: One of the things that I have learnt from my time trading short term is that there is a natural ebb and flow in player prices. The main driver of this is games. In general, the further away a player is from a chance of winning Performance or In-Play dividends, the lower his price will be. While there has been a shift in the market in recent times, many of us have experienced the dreaded Saturday and Sunday evening sell-off!
When I first started utilising this strategy, there was a clear weekly cycle. For example, let’s say a player plays on a Saturday. Unless they win dividends, get a decent PB score or generally do something that gets people talking, they are likely to drop in price after the game. This is due to traders turning their attention to the next set of games. If this player does not play for 6 days, then there are traders that would consider them to be ‘dead money’. By around Monday night, the player will generally have reached their low point for the week. This is when you would look to buy.
As the following weekend approaches, traders will begin to pick up their shouts for the weekend and a lot of the index will rise sharply by Thursday or Friday. Single gamedays such as Friday have the biggest effect in this regard. But either way, this is when you would look to sell.
All that this strategy does is take advantage of the weekly cycle – the ebb and flow in player prices. You buy at the weekly low point and sell at the weekly high point.
The key to this strategy is to plan your exit and stick to the plan. Do not chase pennies and whatever you do, don’t hold for the game. Yes, every now and then your selection will win dividends and rocket and you’ll get to rant on Twitter or down the pub or maybe even at the dog that you knew this was going to happen. If that is the case and you fancy them to do well, then buy a few for your portfolio. The ones you are buying for this strategy have only one purpose – to be launched into the ether at the exact time that you planned.
Do you have a certain amount of cash or percentage of your portfolio that you dedicate to this strategy?
Pierre: At the minute, not a great deal. Before Christmas, the Saturday/Sunday drop off just sort of stopped and it became more difficult to find decent players to go for. Since then, the market has just been so mental that I have 60% in players that I think will rise in the next three days or so, and 40% put aside for investing in the riser of the day. I also enjoy beating the pump and dumpers! There is nothing more satisfying than seeing a nobody like Tejeda being pumped and picking up 300 at an average of 30p. You can just sit back and watch the pumper have to instant sell players in order to get him to whatever price he had in mind. And then you dump a couple hundred and watch him have to instant sell some more. It is great fun.
Once the market settles into a weekly PB cycle, I will be straight back onto this strategy, as it is the only method I have found that not only guarantees profit over time, but also allows you to switch off and forget about FI for a few days.
What are the best and worst trades you’ve made using this strategy?
Pierre: The most consistent earner is Jamie Vardy. I have flipped him around 30 times using this strategy. He always drops after games, even if he scores. I don’t know why people even bother to buy him as they never do anything with him. So when he hits around the £1 mark, I buy. He gets dumped much earlier than most, so this might be two hours after the game. Once he hits his low point, he will generally rise 5/6p in a few hours and then fluctuate until someone buys a few hundred on the Thursday. You can usually sell for about £1.20 and clear a good £12+ off of around £100 invested.
You can see this trend in his price graph below:
The worst trade I have made is Vinagre. I bought a few hundred when he was guaranteed to start and thanks to a few Twitter pages, he was £1.16 within a few hours and I was sat on a 15p profit x 100 shares. By the following day, he was £1.32 and I had 600 shares, average of maybe £1.18 because I hesitated on the top up. I made the first fatal mistake and gave into FOMO. If you hesitate for so long because you know you shouldn’t buy, that this is not the plan, then the last thing you should do is buy. By the time you do there’s a good chance that you will be that plonker buying 200 just before he drops.
I could have instant sold the lot on the Friday and still made a profit, but instead I made the second fatal mistake. I saw that he was down a few pence and decided that the profit I would make from the instant sell was not worth it. I was annoyed that I was in this situation. So I let it roll over to the game. And my word was he awful! Before I knew it, I was instant selling him for 10p less than I could have the day before. And multiply that by 600. Ouch.