How Can Brokerages Take Advantage of the UEFA to Bolster Revenues

Trader Psychology
May 26, 2024

By Acuity Trading

The UEFA Champions League final between Dortmund and Real Madrid is scheduled for June 1, 2024. 

London’s Wembley Stadium will play host to a UCL final for the 8th time, entertaining 90,000 guests. Following this, the 70th season of Europe’s elite club football competition will commence on July 9, 2024, with a new format. Why should you be bothered about what’s happening in football? Well, its’ one of the most popular sports globally and impacts trader sentiment and, therefore, the markets. Learn why the UCL 2024 matters for brokers and how to optimise your revenue during the football finals.

 

Football and Trader Psychology

People tend to be very attached to their favourite things. The popularity of football means that it is bound to have a massive fan base in the trading community as well. Being the most important soccer tournament for private clubs, UCL has mass appeal in countries whose clubs participate in the competition. Notably, the outcome of a match, especially the finals, has historically affected the financial markets of the participating countries. 

 

The Euphoria Effect

The UEFA Champions League Final euphoria typically drives a 7-day seasonality in the financial markets. The markets start pricing in the outcome of the match from the release of “winning odds,” about 10 days before the date of the finals. However, this is significantly lower than the euphoria that follows a win. The outcome of the finale drives euphoria in the markets for 7 days after the match. Since happiness is associated with a willingness to gain more experience, a happy person takes higher risks. Consequently, investors’ participation in the financial markets increases when the team they support wins.

 

The Impact of a Loss is Stronger Than That of a Win

Research has long proven that there is a time-lag effect of a major match, such as a final, on stock market returns. Although a win or a tie has little impact on stock market performance, a loss has a more pronounced impact. It weighs on market performance more significantly and for longer than a win supports it. Traders may choose to exit their positions, citing chances of declining stock performance, in an attempt to avoid more sadness.

 

Sponsorship Value of Share Prices

Another important aspect of a major tournament is its sponsors. Companies that are fundamentally associated with the sport often deliver higher returns to stockholders. Cornwell’s stocks are a great example, since the company has sponsored products at diverse events, including the NFL, MLB, NHL, NBA and PGA. Ramezani, a UCL sponsor’s stock price reactions followed the teams the company sponsored in the 2009 and 2012 tournaments.

 

Being Where Your Audience Is

Evidently, traders integrate (driven by emotions or analysis) World Cup sponsorships and outcomes in their trading strategies, while the stock markets also respond to match performances. In 2024, the London Stadium will have some nostalgia attached to it since it is hosting a UCL final after over a decade. Moreover, to gain traction from all directions, UEFA is in discussions with crypto exchanges to sponsor the league. The league has been committed to exploring partnerships in emerging financial sectors since 2022. This means greater attention to the match, more investments in playing teams, and potentially an impact on the crypto markets due to match outcomes. All these are going to impact sentiment around the game and the markets.

 

Market sentiment is a key factor in behavioural trading. Empower your traders with reliable sentiment analysis from diverse markets. Social media chatter, news, players’ preparation, and ongoing performance can help you establish analytical dominance. Exceptional analytics, clubbed with the identification of potential investment opportunities, is a great way to encourage your traders to remain active. Support them to participate in the markets with data and not just emotions. Did you know the 90 minutes of the match are usually quieter for brokers, since all fans are focussed on viewing the game? Delivering actionable insights, backed by data and expert-suggested strategies, can give trading activity on your platform a significant boost.

 

Equip your trading platform with an AI-powered sentiment analysis tool to deliver targetted insights in real-time. Add Acuity’s comprehensive Research Terminal, powered by Dow Jones, to your trading technology. With dedicated solutions for institutional and retail investors, the analytics platform is highly customisable to your brand aesthetics. It allows you to deliver insights and signals straight to your users’ inboxes. You can deliver asset-level insights as well as broader data patterns through news analysis with global coverage. These will help your traders discover viable actionable opportunities.

 

The comprehensive trading analysis toolkit integrates alternative data from diverse sources, technical analysis and fundamental analysis to generate an opportunity score. The opportunity score guides traders to act on a signal, based on their risk potential and financial capacity. Informed decision-making enables them to trade more confidently. 


Request a demo now to discover how the NLP-powered behavioural and technical analysis toolkit can enhance your traders’ experience by improving their efficiency.

Trader Psychology, Sport

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