You have a firm grasp of the idea of betting odds, and you’ve settled on a betting strategy that works on Mr Green sportsbook. Is that the end of it? Well, no, not quite! Finding value is an essential ingredient in formulating a profit, but it’s not the only one. That’s because how you manage your money is just as important. An unsuccessful strategy on managing your betting bankroll could see any profit that you may make whittle away into nothing.
The concept of bankroll management, by its very nature, requires a defensive outlook. Even the most successful of bettors can go on a losing streak, but you can manage the risk while keeping your skin in the game using effective money management. Besides protecting your pocketbook, there is also the argument of the psychological benefit of managing your bankroll. It will protect you from chasing losses when you’re going through a rough patch and avoid being overly cocky after a win. A consistent bankroll management strategy takes the subjectivity out of the stake decision process to eliminate the chances of irresponsible betting.
Are you prepared to lose? It may come as a surprise to you, but many of the most prosperous bettors lose a majority of the time. Their success stems from their ability to identify opportunities that lead to profit over the long term. Since results can and will vary over the short to medium term, it’s essential to set aside a betting bank, separate from the one used to finance your daily financial needs (liquidity). This betting bank will dictate your stake size. First, work out your most likely longest losing run. You can find online calculators that will estimate the number of consecutive losses. Armed with this figure, you can construct both a bank size and bet size that can withstand the longest projected losing streak.
A fixed staking system considered to be the simplest is called level staking. It’s simple because you bet a fixed percentage of your bankroll each time. Your bet size grows as does your bankroll and conversely, your bet size declines as does your bankroll. This strategy effectively ensures a constant ratio of wager to bankroll.
A benefit of this system is it’s neither difficult to understand or to use. Provided that you’ve worked out the longest probable losing streak previously mentioned, you can arrive at your stake percentage. For example, if the size of the longest losing run is twenty, then your maximum stake percentage would be between 1/25th and 1/30th of your bank. The exact amount will depend on the size of the buffer you want to have.
Get started with your betting
While level staking has its advantages, one of its weaknesses is that it cannot be used to maximize profit potential. The solution, at least for some sports bettors, is the Kelly Criterion, which uses variable betting. This program was created in the 1950s and is based on the idea that your stake size should match the value you’ve identified in the bet. Hence, if you believe that your outcome probability at Mr Green is undervalued by 20 percent, then your bet size would be 20% of your bank.
As the value of your outcome probability is subjective, if you get it wrong, then it is easy to deplete your bankroll pretty fast. To hedge (protect) against this risk, many believers in this strategy use what is called the Half Kelly or Quarter Kelly, which halves or quarters the stakes calculated by the Kelly Criterion. While this strategy reduces the inherent risk, it will also limit the maximum potential win.
This betting strategy is named after a 12th-century Italian mathematician. He created what later became known as the Fibonacci sequence: starting with numbers one and two, the two previous numbers are added up to arrive at the next one. Using the Fibonacci Method, the number sequence determines the bet size, moving one step up on a loss and two steps down on a win.
While this method can result in larger profits owing to its dynamic bankroll management strategy, you must be careful of the effect of consecutive losses. This is because your stake size increases with every losing bet.