5 things to learn from “Black Sunday”

Last Sunday was without a doubt one of the most historic nights in the history of Football Index. Those who have been on the index for a while have seen some dark times, but the drops last week were unseen on the platform.

The majority of traders are still reeling from the heavy blows their portfolio. Beaten black and blue, portfolio’s all over the world took quite a beating.

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A handful of traders have had enough and decided to leave the platform. However, if you’re part of the majority who’ve stayed on the platform and believe that they can recover, then I am here to deliver good news.

There is light at the end of the tunnel.

Every loss is a lesson. And the black Sunday reality check provides many such lessons. It’s a perfect chance for traders to meditate on their trading habits, long terms goals on Football Index and decision making processes.

Everyone will have (hopefully) learnt their own lessons, but here are a few key takeaways that I have learnt from the crash:

Think long term

Yes I know.

I’m probably the 1000th person this who’s told you this. But rightly so, as it’s one of the most important lessons you can learn from this.

Being able to think long term will not only massively benefit your trading, but will help you in other areas of your life. But for now, lets look at the long term implications of this crash.

This is a screenshot of the FTSE 100 (the 100 companies with the highest market cap on the London exchange).

As you can see there are peaks, and there are dips. What always happens is, the market bounces back. (We’ll ignore the Covid dip as its a lot more complicated)

Now imagine you were a trader who sold everything at this dip. Decided that the game was rigged and that they had lost faith.

Seems stupid right?

Well, that is the equivalent of traders who quit on the back of last week’s dip.

It’s easy for us to look back at the example and say its stupid when we can see the long term graph whereas all they can see is negative numbers in their portfolio.

Losses often make people emotional, making it hard for them to see the bigger picture. All they see is is loss and start to feel defeated.

I would argue however, that market dips are actually a good thing. Which leads me onto my next point.

Buy the dip

Buying the dip is a great trading strategy if you can get it right, and you’ll probably have heard a lot of people vouching for it.

The reason it works so well, is because its the perfect way of keeping with the golden rule: Buy Low, Sell High. You can’t really get lower than during market dips in FI (except if you’re investing in a bad player) so it really is the perfect time to buy more shares.

Not convinced? Take a look at this screenshot from new trader @FISideHustle

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He joined the index at the perfect time, just as the market experienced the dip, and he’s reaping the rewards.

Opportunities don’t come around often, and when they do, you need to be able to see it as one, rather than a tragedy.

More millionaires are made by recessions than lottery winnings and now you can see why.

You can also apply this for when players have dipped, as long as they retain the value that you believe they hold, it could be a perfect opportunity to top up.

Know your holds

I’ve been guilty of impulse buying players in the past.

Someone on Twitter makes a compelling argument for a player. Immediately I run to FI to buy him up before other realise and his price rockets.

This is a lesson to learn the hard way, but once you do, you’ll be a much better trader for it.

Imagine instead of panic selling your players when you saw a drop, you decided you were going to keep them. This happens when you buy the player after doing your own research and valuation. This way you become much more confident in them as you let your research determine what you think they should be selling for rather than the market.

Remember, if there is nothing about the bet that has inherently changed (e.g. position, team etc.) then his value should remember the same.

This is of course one of a thousand reasons as to why you should be valuing your players rather than jumping on other’s recommendations.

understand the index

Last week’s dip is a perfect example of why it’s important to understand the Index for your trading decisions.

Sam (@FiSamF) explains what happened during the drop from a market perspective much better than I ever could so I’ll link his thread here:

He mentions that one of the key reasons for the crash was traders poor understanding of the new pricing mechanism.

Admittedly it wasn’t the easiest system to understand, but traders who didn’t take time to learn it will have undoubtedly been left worse off during the dip, as they were much less likely to understand what was going on and be able to react effectively.

Now is probably also the perfect time to remind traders that you’re not only betting on your player, you’re also betting on Football Index as a company.

For example, Rayan Cherki could go on to be a PB god who wins the Ballon d’or every season, but your £5000 holds in him would become worthless if FI suddenly went bust.

Extreme example, I know.

Knowing Football Index as a company will allow you to react much better in these situations.

Do you believe that they will sort it out and get the market back to normal? Do you think that they can identify and fix what went wrong? Do you think they will be able to communicate it effectively with the customer base?

Questions like these will need to be asked before you should decide whether or not to put money in.

Only bet what you can afford

Finally, it would be pretty irresponsible of me to tell you all to keep putting money in, and that it will all be fine, and we’re all going to be rich.

Yes, I do genuinely believe that there is a lot of money to be made from the platform, but you should always be prepared for the possibility of losing this money.

At the end of the day, it’s a gambling platform for a reason.

Similar to how you would treat your money if you were gambling, only bet what you could live with losing.

I see people encouraging others to put their mortgage on FI and I cannot advise against that taking risks like that enough.

Think for yourself, be responsible with your money only bet what you can afford.

Happy trading. DJ

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