Mid Price or Buy Price:
Table of Contents
Mid Price or Buy Price on Football Index?
Since yesterday’s Sell side of the order books have been implemented, we’ve seen a few changes (which I’ll be discussing below).
It’s going to be based around the psychology of trading figures, but also be a little bit of a tutorial for the new order book system.
Have I Lost Money?
If you haven’t been upto date with the recent changes on Football Index, such as the Order Books going Live on the 10th September 2020, we are here to help. We are going to discuss everything from the initial process, including the deployment of the Order Book system.
In order to transition to the Order Book system, Football Index required all shares to leave the sell queue, which they advised traders. If traders didn’t exit manually, they would automatically be removed.
The initial cancelling of the sell queue caused huge price increases, as every single trader soon found out. It was a great time, with my portfolio up 12% alone.
However, in the back of my mind, I realised this was ‘pretend’ money, and traders could well put these players back up for sale ones the order books arrived.
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.
Shortly after 16:00, Order Books went live.
I’ll be honest, Chaos followed. Although I had accepted my portfolio figure was false, it was still a bitter pill to swallow. In the matter of 30 minutes, 12% profit had become a 15% loss.
This is due to the nature of Order Books, with traders undercutting each other to try and get rid of their shares.
Things will settle down, but for now I want to point you towards a new feature of Order Books, which are the Portfolio Value Preferences. These settings are Buy Price, or Mid Price.
I’m going to run down what each of these are, including positives and drawbacks of each one.
Buy or Mid Price Preference
The Buy Price setting will adjust your portfolio value, so that all of your players value is the current market buy price.
In comparison, setting a Mid Price preference, will give you the middle ground between the buy and sell price.
Let’s take a look at how this would work with an example, then we can look into how this can affect you psychologically.
Let’s use some round numbers, as I’m tired! We are going to use Marcus Rashford and £10.00, made up numbers.
If you buy 1000 Marcus Rashfords at £10.00, that’s going to set you back £10,000. Deep pockets!
Let’s say the spread on Marcus Rashford is £0.50, which isn’t out of the ordinary for a £10 player. If the market value of Rashford is £10.00, then you’ll currently be sat at break even if your account is set to buy price.
If your account is set to the Mid Price, your £10,000 investment is now only worth £9,500 (on paper).
That’s the value that you’d get, providing you wanted to sell them immediately.
However, you have to ask yourself the question of whether it’s going to be a short term bet, or if you value him higher. In reality, the mid price won’t matter if you’re not planning to sell.
The advantages of setting your portfolio as Buy Price are:
- Psychological Effect. Although it’s only a figure on paper, for the figure to be higher is generally more positive.
- If you believe in your holds long term, you believe that they should eclipse the buy price. For this reason, there’s no point in setting the mid-price
The Disadvantages of setting a Buy Price Setting:
- The figures that you see are predominantly fiction. You won’t be able to sell your players at the buy price, in a lot of cases.
- With the above in mind, this means that the portfolio value isn’t actually true, so if you were to decide to sell, you wouldn’t get near what the portfolio value was.
Mid Price Settings
Advantages of Mid Price Settings:
- It’s a true reflection of your portfolio value, showing you the prices much closer to what you should achieve if sold.
- Allows for a more patient approach.
Disadvantages of Mid Price Settings:
- It’s hard to select, as it wipes out a percentage of your portfolio.
- Players that are market bought will show as a loss. This is no issue, but can be mentally draining for traders that like to see green.
- We can’t actually see market depth yet, so it’s pretty difficult to work out the true value of your player in the market.
Regarding my last point, it seems that traders can move a player with just 300 shares. I would like this adjusting, to allow 1000 or even 3000 shares to cause movement.
It’s not currently a true reflection as I could decide to list my Rashfords up for £8, dropping your mid price by over £1. (In the example above).
I will be using the Mid Price setting myself, although I value my players as medium to long term holds.
It did have a big effect on me initially, although the portfolio figure is false it seems wrong to wipe more money off that figure.
However, it is the best reflection of the price and ultimately, if I had to sell tomorrow, this is the figure that I’d be likely to receive, minus commission.
What are your thoughts on the Buy Price or Mid Price Settings? Which are you using?