Online Betting - Bankroll Management

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So you’ve worked out your betting strategies you know all about odds value, and you’re already online betting successfully with a top bookmaker like Mr Green. Is that all you need to know? Not quite. Finding value is undoubtedly the key to unlocking profit, but of equal importance is money management. Without a solid plan to manage your betting bank, you could find that you fail to make a profit despite having a successful betting strategy.

Key principles

The basic principle of bankroll management is defensive. Every successful bettors suffers losing runs, but with strong money management you can weather the storm and stay in the game. There is also a psychological benefit to a good bankroll management strategy. Chasing your losses or betting big through overconfidence after a win are ever-present dangers. With a consistent bankroll management strategy, the decision of how much to stake on any particular bet is taken out of your hands, removing the risk of reckless betting.

bankroll management

A weatherproof bank

Are you ready to lose? It sounds counter-intuitive to many people, but many successful bettors lose most of the time. They profit in the long term because they are finding value, but in the short term, results can fluctuate. To ensure these fluctuations don’t knock you out of the game, you need to have a properly-sized betting bank, set aside from your daily finances.

The size of your betting bank will also determine how much you can stake on any individual bet. To work this out, you need to calculate your longest likely losing run. There are numerous losing run calculators available online, which can tell you how many losing bets you can expect in a row through random chance. By factoring this into your bank and stake size, you can create a bank that will be strong enough to weather even the longest losing run.

money management

Level Staking

Level staking is the simplest form of fixed staking system. Using this strategy, you simply stake a fixed percentage of your bankroll on each bet. As your bankroll grows, the size of your stake increases, and if you encounter a losing run, your stake decreases, ensuring that you are always betting in proportion to the amount of money in your betting bank.

The advantage of level stakes betting is that it is simple to understand and apply. If you have calculated your longest likely losing run as described above, you can derive the precise value of your stake percentage. For instance, if the longest losing run you can reasonably expect is twenty, you can set your level stake percentage at 1/25th or perhaps 1/30th of your betting bank, depending on how much of a safety cushion you feel comfortable with.

level staking

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The Kelly Criterion

The drawback of the level staking system is that it doesn’t maximise your potential profit, which is why some sports bettors prefer to use the Kelly Criterion. This is a variable staking method devised in the 1950s. The essence of the Kelly Criterion is that the size of your stake matches the degree of value that you have found in the bet. So if you feel the odds of the outcome you are betting on with Mr Green underestimate its true probability by 20 per cent, then your stake would be 20 per cent of your betting bank.

The problem with this method is that if you get your assessment of value wrong, you can lose your betting bank fairly quickly. For this reason, many Kelly Criterion supporters use what is known as a Half Kelly or Quarter Kelly, halving or quartering the stakes determined by the Kelly Criterion, and thereby sacrificing some of their potential profit to lessen the inherent risk.

the kelly criterion

The Fibonacci Method

This exotic-sounding bankroll management method is devised from the Fibonacci sequence of numbers created by the 12th century Italian mathematician of that name. A Fibonacci Sequence starts with the numbers 1 and 2 and then adds the two previous numbers to get the next. When you bet using the Fibonacci Method, your stake size is determined by the sequence numbers, moving up one step with a loss and down two steps with a win.

As with the Kelly Criterion, this approach can lead to significant losses, as the size of your stake increases with each losing bet, but providing you are cautious and are aware of the potential damage to your betting bank from a series of losses, the Fibonacci Method is a dynamic bankroll management system that can help you make significant profits.

fibonacci method
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