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The perils of day trading

Day to day, the market valuation of a stock can fluctuate up and down like a yo-yo. Take Bitcoin right now. Whether the cryptocurrency will be up or down tomorrow is anyone’s guess, such is the sentiment volatility towards the relatively new form of exchange.

For traders, it can be addictive. The emotional rollercoaster of something that’s unpredictable and easy to measure.

And while few in football will be trading in the conventional sense, we are day trading in something – results.

When we win, we think we’ve cracked it and convince ourselves that it was all within our control. When we lose, it feels like the world is going to implode – we tend to overreact, forgetting that luck often plays a huge role in the outcome of games.

Thankfully we now have objective tools to help us better understand football’s short-term ‘price movements’ (if you haven’t already, you can sign up to our free Matchday SMS service), but even knowing if the last result was ‘fair’ will only appease our post-match emotional state.

We need a longer-term horizon.

Just like a trader will look for evidence and signals to understand a company’s share price (earnings power, net value of their assets, customer satisfaction), similarly a football club must find a mechanism to understand its true underlying long-term performance.

For example, although Bologna lost to SPAL on the weekend in Serie A, they would have won the match 47% of the time ‘on another day’ based on the quality of the performance (SPAL only 18%). And, over the past 4 years, Bologna has improved its on-pitch ‘share price’ by 74 World Super League points, or the equivalent of nearly 12 points over a season.

In football, results are volatile. They’re hard for us to influence and we certainly don’t always get what we deserve. Better therefore to focus on how we can positively impact the long-term future of the club, and measure that instead.

For more information on our long-term performance model, click here.

About Blake Wooster

Blake Wooster has created 66 entries.