Effective bankroll management is a critical component of winning at sports betting. It entails assigning a certain amount of money purely for the purpose of placing bets, establishing the proper size of each bet, and closely tracking your winnings and losses.
In this essay, I’ll talk about the necessity of bankroll management and give you some pointers on how to do it efficiently. I’ll also go over alternative staking plans to assist you decide which one is best for your strategy.
WHAT IS BANKROLL MANAGEMENT?
Bankroll management refers to the process of managing your money when you bet on sports. It entails putting money away, determining the quantity of your bets, and keeping track of your wins and losses.
The primary goal of bankroll management is to protect and preserve your betting bank, allowing you to continue placing bets with confidence and discipline. You can reduce the risk of catastrophic losses and boost your prospects of long-term profitability in the sports betting sector by applying effective bankroll management tactics.
WHY IS BANKROLL MANAGEMENT IMPORTANT?
For various reasons, bankroll management is critical in sports betting.
- It keeps you from losing all of your money in a single wager or in a short period of time.
- It enables you to maintain discipline and avoid chasing losses, which is a common mistake among sports bettors.
- It enables you to make sensible and informed betting decisions rather of betting primarily on emotions or gut sensations.
Aside from the reasons stated above, there are several other elements that contribute to bankroll management being a vital component of successful sports betting. The concept of variance is one of the most significant.
Variance in sports betting refers to the volatility and unpredictability of athletic occurrences. Even the most skilled and seasoned sports bettors can never guarantee the outcome of a game. This means that even if you make informed and sensible bets, you may still suffer protracted periods of loss owing to variation.
However, by managing your bankroll properly, you may reduce the impact of variance on your betting strategy. You may ensure that your bankroll lasts longer and that you can ride out any losing streaks without entirely emptying your funds by setting aside a specified amount of money for betting and defining the size of your bets.
BASIC TIPS FOR BANKROLL MANAGEMENT
Effective bankroll management is essential for successful sports betting since it reduces financial risk. Here are some important pointers to help you handle your money wisely:
- Create a budget: The first step in managing your sports betting bankroll is to create a budget. Set aside the amount of money you can afford to lose as your bankroll. Never gamble with money you can’t afford to lose.
- Track your bets: Tracking your bets allows you to see how well you’re doing and alter your betting strategy accordingly. Keep track of every wager you place, including the date, sport, event, kind of bet, unit size, and outcome.
- Avoid pursuing losses: Many sports bettors make the mistake of chasing losses. It’s when you try to make up for your losses by wagering more money on the next bet. This can lead to more losses and, finally, the depletion of your bankroll. Instead, stick to your betting strategy and unit size, and realize that losses are a part of sports betting.
- Look for bets with value, which indicates the odds are better than the genuine probability of the event. In the long run, this will boost your chances of winning.
- Be picky: Be selective with your bets and only place wagers when you have a strong view. Overexposure can result from placing too many bets, increasing the risk of losing money.
- Take breaks: Because sports betting can be addictive, it’s critical to take breaks and avoid betting when you’re upset or distracted. This will allow you to make more sensible and informed judgments while lowering your risk of losing money.
Next, I’ll go over the most critical component of managing your betting bankroll: staking strategies.
STAKING PLANS FOR BETTING
A staking plan is a strategy for determining how much money to put on each wager in relation to the size of the betting bank.
This section discusses four different forms of staking plans: level risk, martingale, loss recovery, and percentage of bank.
1. LEVEL RISK (GOOD)
A level risk staking strategy involves betting a fixed stake or ‘unit’ per bet. For example, throughout my Mug Betting Experiment, I placed a £5 level investment.
It is critical to understand that any staking plan will fail if a selection method or strategy fails to provide a profit on a level stake basis. This is due to the fact that a lucrative approach must have a positive “+EV” edge.
There are two kinds of level-risk staking schemes to think about:
- Stakes are the same. This is where you bet the same amount regardless of the odds. So if the chances are 2.5 or 10.0, you’d bet the same amount. Lay bets require calculating the correct risk (the liability) per bet.
- Reduce the danger. This is where you calculate the risk based on the odds. This strategy takes into account the implied possibility of winning. Higher stakes are set at low odds, whereas lesser stakes are placed at high odds. The end result is an even profit from any win, regardless of the odds.
Option (2) is the superior option for managing betting bankrolls since it provides more opportunities to win at greater odds, where the chances of winning are lower. It lessens the impact of losing or winning streaks on the bankroll by lowering variance. As a result, approach (2) produces a smoother and less volatile profit and loss graph with fewer dramatic swings. One key advantage of this strategy is that it simplifies future performance prediction.
Despite the oscillations in the profit and loss graph, the final result of techniques (1) and (2) is nearly identical.
2. PERCENTAGE OF BANK (GOOD)
A popular betting technique is the Percentage of Bank staking plan, in which the amount gambled on each bet is based on a percentage of the total bankroll.
For example, if a bettor has a £1000 bankroll and chose to use a 2% stake, their first bet would be £20. If they win, their bankroll climbs to £1020, and the next wager is 2% of that amount, or £20.40. If they lose, their bankroll is reduced to £980, and the next wager is 2% of that amount, or £19.60.
The rationale behind this staking plan is that it assists bettors in efficiently managing their bankroll and decreases the chance of losing significant sums of money on a single bet. By just risking a little portion of the bankroll on each wager, the bettor may survive a string of losses while still having enough money to keep betting.
As an example, assume your bank is £1,000 and you wish to stake 5% of its size. Here’s an example set of betting results with multiple losses in a row:
- £50 is lost at 2.5 odds (total loss = £50, total bank = £950).
- £47.5 at 3.0 odds (Total loss: £97.5; total bank: £902.5).
- £45.13 is lost at 2.5 odds (total loss = £142.63, total bank = £857.37).
- £42.87 is lost at 4.0 odds (total loss = £185.5, total bank = £814.5).
The following wager would thus necessitate a stake of 5% x 814.5 = £40.73. This stake is already much smaller than the original £50.
Essentially, when the bankroll shrinks, so do the stakes, lowering the chance of further losses. Conversely, as the bankroll expands, so do the stakes, potentially allowing for higher profits on winning bets.
A variation on the percentage of bank staking strategy is to begin with a fixed stake, such as £50, and gradually increase the stake until the bankroll exceeds its initial beginning value. Once you’ve passed this stage, you can use the percentage of bank rule to calculate your stake size. Keep in mind, however, that there is no assurance your bankroll will ever reach this level. It’s critical to be prepared for both success and loss in the volatile world of betting.
Overall, the Percentage of Bank Staking Plan is a safe and systematic approach to betting bankroll management.
3. KELLY CRITERION (GOOD IN THEORY)
The Kelly Criterion staking plan is a bankroll management strategy that recommends a percentage of the bankroll to stake on each wager based on the perceived value of the bet. The goal is to maximize long-term returns while minimizing the danger of ruin.
The Kelly method determines the best percentage of one’s bankroll to put on a bet based on the chance of winning and the odds of the bet. The following is the formula:
The Kelly Criterion formula: (BP – Q) / B
- B = decimal odds -1
- P = success probability
- Q = failure probability (i.e. 1-p)
The formula determines how much of the bankroll to stake based on the perceived advantage over the bookmaker. For instance, if the formula proposes staking 5% of the bankroll and the bankroll is £1,000, the stake is £50.
Assume you’re betting on Team A at odds of 2.0, with an actual likelihood of winning of 52%. Because the payoff indicates just a 50% chance of winning, the odds of 2.0 are a positive value. Learn more about the concept of implied probability.
In this situation:
- P = 0.52
- Q = 1 – 0.52 = 0.48
- B = 2.0 – 1 = 1
This equals (0.52 x 1 – 0.48) / 1 = 0.04
As a result, the Kelly Criterion suggests betting 4% of the bank.
The Kelly Criterion has the advantage of accounting for the risk and reward of each wager, allowing the bettor to alter the stake size accordingly. This prevents overspending on low-probability, high-reward bets and underspending on high-probability, low-reward bets.
The Kelly Criterion, however, has some downsides. It presumes that the winning probability is known and exact, which is not always the case. It can also be difficult to calculate and may necessitate extensive betting and mathematical expertise.
4. LOSS RECOVERY (BAD)
The loss recovery staking plan, also known as the “target profit” or “chasing losses” approach, is a betting method in which the bettor attempts to recover prior losses by summing them up and adding them to a victory target. The basic principle is that whenever you lose a wager, you increase your stake on the next bet until you win, and then you reduce your stake back to your original beginning amount. This helps you to recoup your losses and meet your initial profit goal.
Assume you start with a £10 stake and lose your first bet, leaving you with a £-10 balance. Instead of risking another £10, you decide to bet £20 on your next bet in an attempt to recoup the £10 loss and meet your original profit aim of £10. If you win the following bet, you will have made a £10 profit and can return your stake to the original £10 sum. If you lose again, you’ll need to increase your stake even more to make up for your prior losses and attain your profit goal.
The drawback with this method is that if you go on a losing streak, it can quickly lead to big losses. As an example, suppose you set a profit target of £20 and placed bets at varying odds till you won:
- Lose £13.33 at odds of 2.5 (Total loss = £13.33)
- Lose £16.66 at odds of 3.0 (Total loss = £30)
- Lose £33.33 at odds of 2.5 (Total loss = £63.33)
- Lose £27.77 at odds of 4.0 (Total loss = £91.11)
- Lose£74.07 at odds of 2.5 (Total loss = £165.18)
- Lose £52.91 at odds of 4.5 (Total loss = £218.09)
- Lose £238.09 at odds of 2.0 (Total loss = £456.19)
If the next bet has odds of 3.0, you must risk £238.09 with an existing loss of £456.19 to meet the first profit aim of £20!
It is important to note that increasing the odds on each subsequent bet reduces the stake required to hit the target while also increasing the likelihood of losing each time.
This staking strategy is not recommended for long-term betting success.
5. MARTINGALE (DISASTROUS)
The Martingale staking plan is largely regarded as one of the worst ever devised. It entails doubling the investment after each loss in order to recover prior losses and profit. This approach is often applied to even-money bets with a 50% chance of winning.
Assume a bettor placed a £10 wager on Tottenham to defeat Arsenal. They should double their next bet to £20 on another even money outcome, according to the Martingale strategy. If they lose again, they will double their bet to £40, and so on until they win. They would return to their original stake of £10 if they won.
Martingale may appear simple and effective at first, but it is a risky strategy that demands an endless betting bank and a bookmaker who will allow you to deposit massive wagers.
For example, suppose you bet at odds of 2.0 (even money) with £20 stakes and lose the first seven bets before winning the eighth. Here’s how your losses would have looked before the eighth bet:
- Lose £20 (Total loss = £20)
- Lose £40 (Total loss = £60)
- Lose £80 (Total loss = £140)
- Lose £160 (Total loss = £300)
- Lose £320 (Total loss = £620)
- Lose £640 (Total loss = £1,260)
- Lose £1,280 (Total loss = £2,540)
To make a £20 profit on the eighth bet, you’ll need to bet a stake of £2,560 after losing a total of £2,540.
These kind of losing streaks are prevalent, and the Martingale system can swiftly lead to financial catastrophe. To summarize, the Martingale approach is not worth the risk and should not be used in your sports betting strategy.
LIMITATIONS OF STAKING PLANS
Staking plans are not perfect. In actuality, staking plans might fail for a variety of reasons.
- Stake restrictions are set by bookmakers. If a bookmaker limits your bets or has a low maximum stake for a specific selection, you may be unable to strictly adhere to your staking plan. This can limit your potential winnings and make meeting your betting objectives harder.
- The liquidity of Betfair. While betting exchanges such as Betfair can help you avoid bookmaker stake limits, it is not a guarantee that you will be able to get your stake away at the odds you desire. Betfair’s market liquidity might fluctuate, making it difficult to stick to your staking plan regularly.
- Potential profit is lost. This may appear to be contradictory to the goal of your staking plan. It is crucial to remember, however, that some staking strategies may propose lesser stakes in order to ensure consistent growth and reduce risk. By not maximizing bets on value, this method might potentially result in a loss of potential reward.
- Complexity. The more you have to resort to your spreadsheet to double-check the stakes, the more work and administration you create for yourself. Because speed is often vital in professional betting, you want to avoid wasting valuable time on elaborate staking strategies that may not be feasible in the long term.
Finally, keep in mind that staking plans are only effective when applied to bets that have an advantage or “edge”. Staking preparations will not’save the day’ if you do not have an edge. So, before you start staking, make sure you have a sound betting strategy that offers you an advantage in the markets you’re betting on.
