As mentioned in the previous post, the ability to recognize the value in a given betting market is crucial to achieving long term profits. But that itself will not ensure your profits. There’s another, equally important thing you need to get your head around if you want to be successful. You need to learn to manage your betting bankroll.
What does it mean? In simple words, betting with a smartly calculated amount of money per single bet, allowing you to maximize potential profits and at the same time insuring you against the risk of depleting your betting funds a.k.a. Bankroll.
What exactly is your bankroll?
Your bankroll is the amount you’re willing to both risk and invest in your betting. It’s crucial that you start with a bankroll that you are comfortable to risk and therefore letting you devise “emotionless” strategies to achieve consistent growth. It is really the initial amount you have deposited with your sportsbooks to bet with.
Bankroll management is really your insurance against the risk of a single bet, or a losing streak of bets wiping out your entire betting funds. It is an answer to the following question:
How Much to Bet?
I list several strategies suitable for novice bettors below, but a good rule of thumb is to risk only between 1% to 5% of your bankroll per single bet. For example, if your starting bankroll is $1000, your maximum bet size is $5 per game. In reality, you should stick to something between 1-3% as a standard amount (a unit) for a single bet. If you maintain discipline and apply this strict strategy to all your bets, you’re on your way to profit.
Bankroll Strategies For First Time Bettors
Let’s have a look at the most popular and successful bankroll management strategies, which can be easily adopted by inexperienced, rookie bettors.
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A fixed amount per bet, regardless of the bankroll size. This is by far the easiest one to use, but unfortunately, it will not bring you profits you could achieve using other strategies. On the other hand, it reduces your chance of losing your entire bankroll.
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A fixed percentage of your bankroll per bet. These two strategies, while offering a simple way of managing your bankroll, fails to recognize the value as a key part of a successful management strategy. That’s why you may find some people strongly opposing them, but as shown in these Pinnacle simulations as well as Bettingmetrics ones they have the potential to deliver profits.
The only other strategy I would encourage rookie bettors to consider would be:
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Fractional Kelly Criterion. Please note that this requires an understanding of the concept of expected value, so if you are not familiar with it yet, please go back to the previous post in this series and read it. Kelly method takes into account both the probability of a given team winning and the value of the odds offered in relation to that probability.
The base Kelly method, also known as the full Kelly criterion looks like this:
1 - the stake (or ‘wager’) is an amount you should risk in a single bet expressed as a percentage of your bankroll
b = the decimal odds – 1
p = the probability of winning
q = the probability of losing, which is 1 – pTo convert odds to decimal use the following formulas:
For odds >= +100:
For odds <= -100:
Fractional Kelly means that instead of betting the amount calculated above you stake just a fraction of that amount. I would suggest something between 10% and 20%. Apart from wisely managing your bankroll it also allows you to place bets on sporting events being played at the same time or day.
Having read these three posts you’re pretty much ready to kick off successful betting journey. In the next post, I will tell you about the tools you should arm yourself with if you want your betting to be profitable.
This is the third post in the ‘How to Start Profitable Sports Betting’ series. Below is a list of the remaining posts: