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Dynasty, in Practice: Six Simple Rules for Trading Draft Picks

A look at six easy-to-apply heuristics for how to maximize value in trades involving rookie draft picks.

For those unfamiliar with my weekly Dynasty, in Theory / Dynasty, in Practice columns, the typical idea is that Dynasty, in Theory is reserve for Big, Vague Ideas of Questionable Immediate Relevance(tm), while Dynasty, in Practice is where I dispense thoughts that are more specific and actionable in nature. This week’s Dynasty, in Theory discussed the role of rookie picks as a universal currency in dynasty, so it only makes sense that I’ll now look at some actual useful suggestions for the buying and selling of such picks.

To start off with, my dynasty management style is heavy on rules of thumb, general guidelines, and quick heuristics. My goal is always to simplify the decision-making process as much as possible and to reduce potential entry points for error in the equation.

As a result, none of these suggestions should be taken as gospel. Consider them for what they are: a series of quick guidelines to help you when it comes to trading rookie picks. I have violated every single one of these “rules” at one point or another, and typically been happy with the results. The key is that when I break a “rule”, I do it with a sense of intentionality. I pay attention to why I have the rule in the first place, and I know specifically why this particular trade is different enough to warrant violating it.

With the legal disclaimers out of the way, here are some ironclad rules strong suggestions for how to come out ahead in trades involving rookie draft picks.

Rule #1— buy during the season, sell during the draft.
This one is probably my most violated, just because specific trades will deviate a lot from general market norms. At the same time, this is probably the biggest and most important rule.

Draft pick values go through a lifecycle. They peak in value when they’re actually on the clock, as owners who desperately want an available talent get tunnel-vision and are willing to overpay to get their guy. They reach their nadir during the season, as owners see them offering little immediate value and consider them expendable to patch up holes in starting lineups.

The key mantra in dynasty leagues is always “buy low and sell high”. The problem is that, in dynasty as in the stock market, timing is extremely hard. Many owner thought they had reached a peak, selling a player only to see his value continue to rise. Others have thought they were just at the base of the mountain, holding on to a player as the bottom fell out of his value.

In this one case, though, timing the market is very, very easy. We know that draft picks are going to fluctuate in value in a very predictable manner. They have done so every year since dynasty leagues first started. They will probably continue to do so every year until football is no longer played.

Buying low and selling high is hard to pull off with anything except for draft picks. For draft picks, it’s as simple as buying during the season and selling during the draft.

Rule #2— Your own picks are more valuable to you than they are to someone else.
I’m generally not a fan of handcuffing in dynasty— I’d rather roster someone else’s talented backup than my own untalented one— but I understand the logic to it. Imagine your star is going to miss four games this year. On the one hand, his backup might only have four startable games all year. Another back might have six startable games.

The advantage of handcuffing is one of timing. You know that the four good games from your handcuff will come in the four weeks that you actually need them. The other back might have more good games, but if those games come when your starter is healthy and playing, you’ll never benefit from them.

Think of your own future picks like a handcuff running back. If your team is bad, they will be good. If your team is good, they will be bad. Their value is the highest precisely when you need them the most.

If I have my team rated as equal with another owner’s team, I will prefer my own first round pick to his, simply because my pick serves as a parachute, ready to open and catch me if I’ve dramatically misjudged the quality of my squad. (Also: we tend to be irrationally exuberant about our own team, overestimating its quality.)

This isn’t to say that I wouldn’t trade my first round pick. If I really thought I had a great team, I would rather have the first round pick from someone else’s team, instead. This is merely an “all else being equal” consideration. Just like with handcuffing, if faced with two backs of similar quality, it’s wise to prefer the handcuff. But you should never take an untalented handcuff over a much more talented backup somewhere else.

Rule #3— We overestimate how “durable” actual players’ value is compared to draft picks.
Another way of phrasing this rule is “we should always be willing to trade non-core assets for quality draft picks”. How we define “core assets” could be an entire column unto itself, but as a quick guideline, if you don’t feel confident a guy will still be starting for you in 2017, he’s not a core asset.

Trading productive non-core assets for future picks is one of the hardest things to do, simply because it appears to blow holes in your starting lineup. Chris Ivory looks to be productive this year, and at just 27 years old, he should have several years left. But again, historically, we dramatically underrate the chances of players like Ivory fading into obscurity.

In the past, I’ve traded James Jones for a first-round draft pick. In his 8-year career, his career-best is 817 yards. I traded Lee Evans, Ben Tate, and Stevie Johnson for two first-round draft picks. After he moved to the Jets, I traded LaDainian Tomlinson with BenJarvus Green-Ellis for a first round draft pick. In 2009, I traded Donald Driver for a future 2nd; he never topped 600 yards again.

At the time, these trades were difficult. The players I was giving were promising guys who expected to provide an immediate impact. But in hindsight, all of those players tailed off much more quickly than expected, leaving the trades looking lopsided.

That’s the nature of the NFL. Things change extremely fast. Only the tiniest, most elite handful of players can maintain fantasy relevance for more than a few seasons. Don’t make the mistake of assuming that how things are today is how things will remain going forward. Draft picks are a much safer place to store your value than mid-level players.

Rule #4— Not all draft picks are created equal.
We’ve been spoiled recently with a couple of very deep drafts in 2014 and 2015, but historically, rookie picks operate in a certain pattern. There’s usually a small top tier of talent composed of 2-3 players. Then there’s a dropoff to a generous second tier that spans 3-5 more players. Then there’s a broad, flat third-tier that will include another 10-12 players. And then there’s a huge value cliff.

The difference in value between the tiers is pronounced. The goal should always be to get into the highest tier possible. Trading for future firsts is essentially a lottery where you’re trying to crack into that top tier. Trading for future seconds is an exercise in hoping that you wind up in the top half of the round, before the value cliff strikes. Trading for future 3rds is generally not worth the time investment.

Those are always my breakpoints that I consider when selling a player for picks. What are the chances that this future first winds up in the top 3? What are the chances that this future second winds up in the top half of the round? Some drafts will stretch or shrink these ranges a bit, but as a general rule of thumb, that’s going to be what you’re shooting for.

Rule #5— Future production is underpriced.
Again, this isn’t true 100% of the time, but the way we estimate value is buggy and prone to underrating the future. I wrote last year about how we tend to use a hyperbolic discounting scheme rather than a more rational exponential one, which means we used a too-steep immediate discount and a too-shallow future discount.

This means that, nine times out of ten, the market is overrating short-term production relative to long-term value. This gets back into rule #3 a bit, too. If you reach a trade that feels relatively fair, there’s a good chance that whoever is backloading his or her payoff is going to be coming out the winner in the long run.

Rule #6- Break the rules if you want. But understand them, first.
Again, these rules are all eminently bendable and breakable. I break them several times a year. But I never ignore them: I always make sure when I’m going against them that I have given it careful consideration and I feel like I have a good reason to be doing so.

These rules are based on years of dynasty experience and decades of scientific research into human cognition. I feel that there is a very sound reason why they work the way they do. They will not be true every time, but the goal in dynasty is not to be right every time. The goal is to be right more often than you are wrong.

Hopefully, with these simple heuristics, you’ll be better equipped to achieve that goal going forward.