The approach you take to staking and money management is just as important to your chances of being a winning punter as the method you use to select your bets. If you don’t get it right, then it won’t matter how good your selections are, there will come a time when a normally expected losing run will create so much financial pressure that you either give up, change your strategy, or worse still, lose all of your money.
WHAT IS STAKING AND MONEY MANAGEMENT?
In my experience, the difference between professional punters (or simply winning punters) and those that don’t win is around 35% related to the way they analyse races and make selections… and 65% related to their betting habits. There are plenty of punters that can make selections that are profitable in the long-term, but poor decisions in relation to the way they stake and manage their money stops them from ever achieving sustained success. The most common mistake is simply betting too much relative to your total money available and the inability to follow a consistent plan.
If you want to adopt a more professional approach to your staking and money management then following these 6 key tips.
1. ESTABLISH A BETTING BANK
A betting bank is money that you put aside for the purpose of betting and nothing else. It’s your working capital, just like any other business would have.
It doesn’t matter if it’s $500, $1,000, $5,000 or more. The important thing is to have that amount dedicated to betting and nothing else. That doesn’t mean you need to have 100% of that money put aside to start with, but you should at least have half of it and be prepared to make contributions until it builds to the full amount.
Betting success is built on the consistent implementation of effective strategies and sticking with those during the natural ups and downs of the game. Not having a dedicated betting bank prevents you from doing this.
It doesn’t matter how small the amount, put aside a betting bank
2. HAVE REALISTIC EXPECTATIONS
Having realistic expectations is essential to maintaining the mindset needed to make good betting decisions. If you have a betting bank of $1,000 or $2,000 then you can’t approach betting with the idea that you want to win $1,000 or $2,000 in a day, week or even single month.
Unrealistic expectations lead to impatience and poor staking decisions, which you later regret.
3. UNDERSTAND THE NEED TO BALANCE PROFIT AND RISK
BET SIZE EXAMPLES
- Horse is $2.00 in the market: your stake = $200 (400 / 2)
- Horse is $3.50 in the market: your stake =$114 (400 / 3.5)
- Horse is $4.00 in the market: your stake = $100 (400 / 4)
- Horse is $8.00 in the market: your stake = $50 (400 / 8)
- Horse is $20.00 in the market: your stake =$20 (400 / 20)
If you are backing multiple horses in a race then the maths doesn’t change. You simply calculate each bet size as an individual.
This approach is easy to understand, practical to apply and takes away any external influences on your staking decisions. Most importantly it maximises the growth of your bankroll, while keeping a moderate level of risk with individual bet sizes that most punters should be comfortable with.
When a losing run strikes, these bet sizes will still eat into your bank, probably more than you might think, but not so much that you lose all confidence and think that you either need to give up or change your strategy.
Another observation you might have made is that your bet sizes are proportional to your winning chance. A $2.00 chance is twice as likely to win as a $4 chance and your bet size using this method is twice as much. That’s why it’s called proportional betting.
If these bet amounts seem far too small relative to a $10,000 betting bank, then that’s the very first lesson about the correct staking of bets. The right amount to bet is typically smaller than many punters imagine and that’s why they end up falling victim to the financial pressures of unavoidable normal losing runs.
The mathematics of betting to collecting a consistent 4% of your bank works out to an assumed value edge of approximately 10% on each bet, which depending on the price of the horse works out to be 20% to 33% of the Kelly Criterion amount (the accepted range for horse racing.)
If you have 100% confidence in your ability to recognise when you have a bigger value edge on a particular bet then it will be more profitable to calculate your bet using your assessed price, or simply aim to collect more than the standard 4-5%.
Having the intuition to make the most of your very best value opportunities is key part of successful punting. However it does require very good judgement and a clear case in your mind as to why the market is making a much larger mistake than normal. It’s not something you should do without careful consideration. If you don’t have proven expertise in this area then you will be far better off using the market price to work out your bet size.
4. LEVEL STAKING
Level Staking has the benefit of being very easy to calculate and implement. You simply place the same amount on each bet. This does create greater variance in your bank movement over time (i.e. higher peaks and lower lows) because you are having the same amount on longer priced horses as shorter prices. When the longer priced horses win you receive a bigger boost to your bank, but they lose much more often than shorter priced horses so you will have a bigger drawdown on your bank in between winners.
The right amount of your bank to level stake depends on the typical profile of your bets. If you play at the short end of the market, including laying horses then you can afford to bet more, because you variance / losing runs will be lower. The following table can be used as a guide to the right level staking amount as a percentage of your bank, based on your average strike rate.
If your bank was $5,000 and you average a 30% strike rate, then a good level stake bet size is 1.3% of your bank or $65.If that seems far too small, then there’s a very good chance you are over-betting relative to your own bank and the financial pressure of inevitable losing runs will be a huge barrier to your long-term success. Lay Bet Staking When laying horses it’s appropriate to look at staking from the perspective of your liability on each bet, or the amount you are putting at risk to lose. For example, if you lay a horse at $5.00 and accept a total of $100 in bets, you will pay out $500 if the horse wins. You have taken $100 of the punters money, so your net loss or liability is $400. Turning it around, you are risking $400 at odds of $1.25 for any other horse in the race to win for a profit of $100.The right amount to lay horses (to balance profit and risk) changes dramatically depending on what price range in the market you are playing. The higher your strike rate, the more aggressive you can be.However as a rule of thumb, I’d recommend laying horses for a liability (i.e. to lose) 5% to 6% of your bankroll. Examples based on a $10,000 bank and laying to lose $500 (5%)
- If laying a horse at $5.00 you could accept $125 in bets
- If laying a horse at $10 you could accept $55 in bets.
- If laying a horse at $2.50 you could accept $333 in bets
For more information on lay betting click here.
5. MOVE WITH YOUR BANK
As your bank grows or reduces then so should your bet size / target. Technically you can do this after every bet, but a more practical approach is to readjust your bet size or target for every 10% to 20% movement in your bank.
So if your bank goes from $2,000 to $2,200 (a 10% increase) then you can adjust your bet size or target. If betting to collect 5% of your bank then your collect target would increase from $100 to $110. If betting level stakes and you are betting 1.3% of your bank on each selection then your bet size would increase from $26 to $29 (rounded up to nearest dollar).
Conversely if your bank reduces by 10% then you should adjust your amounts down.
The most important thing is that you feel comfortable with the level you are betting at. If you’re bank has grown rapidly but you still don’t feel comfortable betting to collect your new target then scale it down a little. If you continue to enjoy success then your comfort level will increase over time, don’t rush it.
At the same time, if you start going through a losing run and feel uncomfortable with the bet sizes you are making, then reduce your target. The difference is often minor, but enough to make you feel more at ease and that is the single most important thing you can do during losing runs. Once things turn around for the better, that profit comes back much faster than you imagine.
Increasing your bets such a small amount each time may seem hardly worth the effort, but over a large number of bets the principle of compound growth from gradually increasing bet sizes is very powerful and will make a big different to your overall result.
6. STICK TO IT!
I can’t stress how important it is to respect the crucial role that good staking and money management plays in successful betting.
Develop a clear plan and have the patience and discipline to stick to it. A small bank can be turned into a significant amount faster than you might think. They key is sticking to your plan and letting time, volume and your profit edge do the work.
If you are impatient and don’t stick to your plan then it’s guaranteed that the betting game will punish you. Those financial set-backs combined with regret and damage to your confidence will consistently stop you from reaching your goals.
SUMMARY – A CHECKLIST OF GOOD BETTING HABITS
If you follow these DO’S and DON’Ts of betting then you will quickly become far more professional in your approach to staking and establish the right foundation to achieve long-term success.