My first thoughts…
I haven’t used order books before but I have watched some videos and read the write up. I think I understand the concept and benefits to both buyers and sellers. If we could turn back the clock and relaunch Football Index with order books, then that would be great. BUT we don’t have a time machine so we have to look at what happens from here.
My first BIG concern is as things stand there are far more sellers than buyers. Few of us will have money sat idle in our accounts waiting to buy players at pennies cheaper than they are now. Having big chunks of money set on the side-lines when the Index is expanding probably isn’t a good strategy. So, day 1 of order books will see very few buy orders. None of those orders will be close to the current buy price. Cash will be king, and those buyers will exploit people who have waited weeks to sell some of their big holdings. We’ll see trades taking place at well below current prices. Is that good for our portfolio values? Obviously not. It would be so easy to create a downward spiral of prices. If people see a big gap between current buy prices and offers, they might have less confidence that their holdings will sell in future and think about listing their own holdings for midway between current price and largest ask. That drives down the price further and the spiral begins. This spiral can only really be prevented if there is lots of new money coming into the market. Perhaps Football Index should time order books with a big promotion like the recent 8.25% bonus.
Order books will also favour those who can sit watching the sports news all day. Say you hold player X and you hear he is retiring/transferring to China/involved in crime which could lead to prison/or is involved in a bad road accident. The race to sell is on and you take out all the buy orders. Great. But all the people who had set those buy orders now have something that is worthless. One winner and potentially hundreds of losers. Is that good for the Index? Will that stop those people and others using order books in future?
My main concern is why are we trying to fix something that isn’t that broke? Everybody trading here is doing so because we’ve either had good returns or expect good returns. Are we going to risk this in the hope that things will be OK and suddenly a load of new money will come into the index?
If the site brings in order books it must do so in conjunction with a BIG promotion and it must find a way of protecting bidders from buying junk shares in players that are being sold on major news like car accidents. I’d also like the existing community to have their say. If we are happy with the way things are, then that should be taken into account.