How do Player Prices Increase or Decrease on Football Index?
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Today we are talking strategy, Diversification to be specific.
Portfolio Diversificaton is the foundations of investing and while Football Index is classed as a gambling product, it does feel a lot like an investment platform.
It’s very basic and pretty easy to understand, but it’s something that will completely change your outcomes when trading.
It can give you a real edge.
What is Portfolio Diversification?
The act, or result of achieving a variety. It’s not a specific trading term.
Let’s use a fun example. You’re at the Buffet, and you choose to have a little bit of everything. If something doesn’t taste very nice, at least you’ve got plenty of other nibbles to save the day.
Your brother however, he’s opted for all of the Mini Sausage Rolls.
Disaster, as he’s back at the table and after tucking into his first one, he realises it’s a Cheese & Onion roll!
As he put all of his sausages in one basket, he’s got nothing left to fall back onto.
You diversified by choosing a wider range of Buffet food.
The sensible option.
Why should I diversify my portfolio?
You should diversify purely for Risk Management.
This is essential on Football Index, as you can never be sure when a certain player could pick up a nasty injury, or transfer to a Non Match Day league.
Diversifying will ensure that you have a lower risk of volatility.
Player Prices on Football Index do not move together, so holding a variety of different players will eliminate nearly all risk.
Different players rise and fall every single day, by having a diverse porfolio this means that you can ride through the good and the bad times.
Can I over-diversify?
Over diversification is definitely possible on Football Index.
However, as the platform grows and matures, being spread out across many footballers should bring many more negatives than positives.
It’s almost similar to purchasing trackers, but instead you’re buying the whole platform.
Back to the point, over diversification is possible.
If you add a player to your portfolio, but this doesn’t reduce the risk of your portfolio more than it would cost you (in returns) then you would be classed as being over diverse.
Best Low Risk Strategy on Football Index
On Football Index, you need to protect your portfolio against sudden drops.
This can be from Injuries, Transfer News or just poor form overall.
I work at a 5% maximum percentage.
This means that no single player in my portfolio should be worth more than 5% of my complete portfolio value.
I haven’t always been diverse, at one period I held only Lionel Messi (fortunately while he was going through a fantastic run of form).
As prices increase, the goalposts would change slightly, but 5% is my starting out objective.
Your starting investment in a single player should be how much of your portfolio you are prepared to lose.
I’m not saying that you will lose it.
It’s simply to stop you from being too deep in one single player.
If I lost 5% of my portfolio, I wouldn’t be happy, but I would be happier than if 30% of my portfolio had been smashed due to having no risk management.
If your figure is 10% per player (meaning you only hold 10 players), this can cause you trouble long term.
I think it’s a necessity to hold between 20 and 25 players, with the holdings around 3-5%.
Obviously, you’ll have to further manage your portfolio in terms of proven Media Buzz Winners, Match Day Stars & Potential wonderkids.
Keeping Spare Balance for Trading
If you want to remain active on the platform, you’ll need to also keep a portion of your balance for trading.
I use 3% for trading around Transfer Windows, or stick to 1% elsewhere.
If don’t have a set balance for injury trading, it all depends on the amount of time the player will be out for.
Does Low Risk mean Low Fun?
Although it’s true, when I see a player that I hold leading the Match Day Rankings, I think to myself “imagine if I put all my money on him” and so on.
Hindsight is a wonderful thing.
I’ve also been on the receiving end of the exact opposite recently.
I woke up to see £1 shaved off Memphis Depay’s price, due to him suffering an ACL Injury.
They always tend to be bad news, but this one confirmed he would miss around 8 months of Football.
“Imagine if I put all my money on him”. It saved me that time I suppose.
Whilst Low risk is probably less exhilarating, putting all of your money on a single player can be devastating.
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Football Index Low Risk Strategy: Diversify your Portfolio
How do Player Prices Increase or Decrease on Football Index? Table of Contents Today we are talking strategy, Diversification to be specific. Portfolio Div