Here at Bettingmetrics, we work incredibly hard to provide software that will help people who bet on sports events to manage all of their betting activities in an efficient and modern way. Further, we provide the right tracking and analytical tools which maximise their chance of becoming profitable in the online sports betting field. We know the importance of the bankroll management and this is why we have decided to create this article.
As perhaps punters already know there is a big difference between betting and gambling and one of the most important components that divide them into two completely different groups is a strategy. Usually, when a person decides to gamble, he relies only on luck and ‘wishes for the best’. But when he decides to treat sports betting as an alternative investment, this requires a complex of skills and knowledge, various betting software such as tracking and analytical once, preparation, discipline, bankroll management and highly standardised strategies. If any of those components is missing, that can be harmful to the punter’s future bets and financial stability. This is why every person, who decides to become a successful and profitable punter need good money strategy and in particular bankroll management in place.
What is bankroll management?
Bankroll management is a complex process that requires some specific knowledge and experience to be handled correctly. In general, it can be broken down into three main stages – setting the budget, establishing the betting rules and applying these rules. Stage one is setting an amount of money that will be allocated for betting only- this is also known as a betting bank and in fact, is neglected by many novice players. This is the sum that every punter is ready to bet and to risk losing. The amount of money, that is invested in betting, is also referred to as bankroll.
It is very important to allocate an affordable bankroll, with other words allocate the exact amount of money that it can be lost without harming your day to day life. Obviously every novice player is full of enthusiasm when starting to bet on sports. However, we strongly recommend you to be very cautious in the beginning and start with a smaller amount. Take your time and find what is your comfort zone in terms of bet size and adjust your bankroll management and betting strategy accordingly.
A little trick that will surely help to set up your betting bankroll and split your betting money from your other funds is to establish a new bank account that is purely dedicated to sports betting. To take that further and manage your betting portfolio like a professional punter we will also suggest to use various eWalets such as Skrill and Neteller. It will help you to very quickly deposit and withdraw your funds from all the bookmakers used so you are never short of funds. We also know that sometimes may be difficult to keep track of all the transaction and balances but do not worry – Bettingmetrics offers an easy to use bankroll management tools that will help you to stay on the top of your finances.
Tip: If you are following multiple tipsters or strategies you can break down your betting bank to micro bankrolls for every tipster you follow. That helps to keep track of their performance and will give you a better picture of what can be improved.
Stage two and three of bankroll management are highly influenced by the money strategy that every punter is going to choose. Betting strategies vary by the results that every punter wants to achieve, risks he is willing to take and of course the amount of money, he is willing to invest. But we will talk about different strategies later. First, let us add some extra arguments on why bankroll management is so important to every punter.
Why is bankroll management crucial to every punter!?
The answer to this question is very simple – bankroll management helps every punter to gamble responsibly and protect his capital. If applied correctly, bankroll management is a tool that will defend every punter not to lose money that he cannot afford. When a person bets with accordance to his bankroll management, he can handle losing streaks with confidence and will be able not to chase losses which is one of the major reason why punters are not successful with their betting. This is also true the other way around – bankroll management will protect the punter from getting too excited and starting to bet more than usual when on a winning streak.
Bankroll management on a losing streak
Every punter in his career has come to the moment when he is on a losing streak. This happens even to the professionals but they have the set of skills and mindset to overcome the issue and protect their bankroll. Usually losing streaks when they happen too early in the betting career can be very harmful to young and unexperienced punters. This is where discipline and bankroll management comes to the rescue. It will be the sense of mind to every punter that will stop him from betting just to restore his balance.
Bankroll management on a winning streak
The same principle applies when a punter is on a winning streak. The thrill and excitement from winning can often be overwhelming, can affect the judgement, ruin the discipline and vanish the bankroll. When the punter has an established bankroll management method that he keeps by, he will be protected from rushed or raised bets. We have to make clear that raising stake size is not an issue and is a completely normal when it is a process, that is aligned with the growth of the bankroll. If a punter starts to increase his bets when on a winning streak this might lead to a significant decline of the bankroll if the bets turn out as losses.
Bankroll management will be the buffer for every punter that will help overcome a losing streak and will give the fresh mind to make rational and thought-through decisions. The ability to bet responsibly is essential in the long-term and this is why building bankroll management is one of the first skills every punter needs to master.
What are the results of poor bankroll management?
History has many examples of successful gamblers and punters that were on the top of the wave but ended with losing their entire bankroll and nothing in their pocket. They were world-renowned names that in their time wore the title “the best” in their game. No matter if we talk about betting on sports, gambling in the casino or playing in poker tournaments – all these people, losing everything they have earned with skills and patience, in the crucial moment lacked bankroll management and played more than they were ready to lose. Why are we telling you this – to show you that even the very famous and successful punters can become a victim of poor bankroll management. This is why every person in the betting business has to have efficient and highly standardised bankroll management in place which will allow him to tackle with financial peace and confidence in every situation.
Betting strategies and their influence on the bankroll
There are various betting strategies from which every punter has the opportunity to choose. For beginners this is a great plus because every person can establish his bankroll, research strategies, find one that he finds suitable to his ideas and goals and apply it. If the strategy doesn’t have the expected impact on the bankroll, it can easily be changed to another one until the punter finds the best for him. Below we have explained a couple of different money management strategies and underlined the pros and cons of using them
Fixed stake betting strategy
The idea of the fixed betting plan is that the punter bets the same amount of money (usually a fixed percentage of the bankroll) on every bet he makes. What does that mean? For example, if a punter has £1000 bankroll and is following a fixed betting strategy, where he bets 1,5% of the entire bankroll, this means that every bet he is going to make will be 1,5% from £1000 or £15. This is also known as ‘flat betting’. Usually the percent of the bankroll that is placed on every bet varies from 0.5% to 7%, depending on the punter risk preferences, but most people that have a fixed betting strategy keep around 2% or below. The disadvantage of the fixed betting plan can be in the overall sum of the bankroll. If a punter bets £15 on every bet but has lost 10 bets, this means that he will have less money in total, but will continue to bet with the same amount which will increase the percentage staked of his bankroll and therefore he will be taking much larger risk. Our experience shows that for novice bettors is psychologically difficult to deal with the idea that their betting banks is decreasing but they still bet with the same stakes. In many occasions, they will reduce the amount they bet with and a this is when the losing streak will change to a winning one and they will fail to recover the losses on their bankroll due to the smaller wager sizes.
One way to control that risk is to readjust the percent accordingly to the bankroll or use a ‘percentage staking plan’. Here the punter keeps the percent of the bankroll he bets but recalculates the sum accordingly to the bankroll. So for £1000 1,5% will be £15, for £1200 - £18 and for £800 - £12.
Kelly criterion strategy
This is one of the most common betting strategies among punters and is well known in many different variations. Although is one of the popular money management strategies, it creates a dispute between punters whether is ‘the best strategy for the bankroll’ or ‘doesn’t show any effects at all’. This is a decision that every punter has to make for himself and this is why we at Bettingmetrics will talk only about the main ideas and criteria of the strategy.
The punters who choose the Kelly criterion strategy must have very deep knowledge in the basic concepts of expected value in betting or otherwise this staking plan will make no sense at all. This strategy is based on a mathematical formula whose result is the amount of bankroll that is going to be the bet. The main variables in the formula are the b - net odds, received on the wager, p - the probability of winning and q - the probability of losing. For example, in a bet, where the punter has a 55% chance of winning (this means p=0.55 and q=0.45) in 1-to-1 odds of winning (which makes b=1) the punter should then bet 10% of his bankroll. If the formula gives the punter a negative result, this means that the best bet to make is the opposite. This is the base of the Kelly criterion but every punter can find many variations that can be applied to the bankroll – Full Kelly, Fractional Kelly, Constant Kelly and others.
This betting strategy has some issues when it comes to multiple bets. In a situation where a punter wants to bet on 5 different bets but the sum of the overall results from the equation is greater than 100%, this requires readjustment of the percent of the bankroll that is going to be betted on every event. The other disadvantage of the Kelly criterion strategy is that in the situation of multiple betting on 5 different bets this might mean wagering all the bankroll, which can lead to fast bankruptcy. This is why many punters choose the Fractional Kelly where multiple bets usually don’t excel to the whole amount of the bankroll. The main idea of the Fractional Kelly is that every result from the equation is divided to a certain fraction – half, one quarter and so on. Many punters believe that in the long term the Fractional Kelly gives better results for the bankroll than the Full Kelly.
Fibonacci betting strategy
The Fibonacci betting strategy is one of the various strategies that leaves mixed feelings in punters. It is based on betting the bankroll only on draws. If the punter loses his bet, he simply has to bet again and repeat the process until profiting his bankroll. But why is it called Fibonacci betting system? Every person knows or has heard about the Fibonacci sequence of numbers: 1, 1, 2, 3, 5, 8, 13 and so on. It is implied in this strategy and the numbers represent the raise of the betting stake from the bankroll. The betting strategy advises punters to place their bet on a probability higher than 2.618. In the long term and in multiple bets the Fibonacci betting strategy shows its disadvantages – when a punter places multiple bets on draws the chance of him moving to the next Fibonacci number is very low.
Let’s look at an example. If a punter chooses the Fibonacci betting strategy, he must allocate a certain amount that will be one unit. In our case, we will allocate £20. This means that his first bet on a draw will be with £20. If he loses the bet, then he must move to the next number in the Fibonacci sequence and bet £40. The process is repeated until reaching a win. When the punter reaches a winning bet, then the strategy advises him to move 2 numbers down the Fibonacci sequence. This means that if the punter was at 13 units at the time (or in our example £260), he should go back to 5 or £100, or if he is at 3 which is £60, go back to 1 - £20.
Martingale betting strategy
This is a betting system, that dates back from the 18th century. The original idea of this system was for a simple heads-or-tales game where the gambler wins if the coin falls heads and loses if it’s tales. The strategy requires the punter to double his wager after every loss until he wins. This is how he will recover his bankroll from the losses and will win profit that is equal to the original stake. By many punters and professionals, this betting strategy has a positive effect on the bankroll because at some moment the stakes will be in favour of the punter. Overall this betting strategy can be very harmful to the bankroll because at some moment the punter can reach his limit and won’t be able to recover from the losses.
If a punter chooses the martingale betting strategy this means that he has to allocate a sum, that is going to be his unit (similar to the Fibonacci betting strategy). Let’s say that the sum will be £10. When the punter starts to bet, he always starts from 1 unit or £10. If he wins, he simply continues to bet 1 unit. If he loses, he starts to double the unit with every losing bet. This means that if he loses once it will be £10, twice - £20, third time - £40 and so on. The strategy says that EVENTUALLY there will be a win and the punter will profit 1 unit from his bet. But imagine going on a 10 bets lose streak – this will be a bet with £5120. That is an amount that not every punter feels comfortable betting and might lead to withdraw that is actually losing the money. The only thing that punters can wish for with the martingale betting strategy is the odds to ever be in their favour.
Betting strategies using software
If a punter doesn’t like a particular betting strategy, he can always develop his own using specific software. Databases and charts following the performance can always be very helpful in the development of a custom money management strategy. By benefiting from new software the punter can actually simulate different scenarios and see how a certain sets of variables influence the total profit and loss. This software is very detailed and developed to help punters make the most of their data and come up with the most profitable and suitable bankroll management approach.
The main benefit of using software to develop own specific betting strategy is the huge amount of information available. In the beginning, the quantity of available data, charts and tables can be rather intimidating for beginner punters but as soon as they start exploring the software, they will see the benefits from it. We at Bettingmetrics provide beginner and professional punters with well-developed software to track their bets and successfully construct their own betting strategy.
Hedging the bets and bankroll
It doesn’t matter if we’re talking about hedging sports betting events or positions on the financial markets – hedging is a key factor for good money management and bankroll control. The main idea of hedging is the punter to divide his bets and place them on different outcomes which that guarantee him either profit regardless the outcome or huge profit if outcome A happens and very tiny loss if outcome B happens. This is how he manages to create a situation in which no matter the outcome the punter will profit from his bet. This can be understood as some form of insurance that protects existing bets from losses.
One thing that we need to make clear is that there is a significant difference between hedging the bets and arbitrage betting. The main difference is simply the way a punter uses every one of these methods. The arbitrage betting is when a punter decides to place opposite bets on one and the same situation simultaneously. Hedging the bets means placing parts from the bankroll on different outcomes on the same event subsequently after the original bet. Hedging usually is not relater solely with profit but is more a reaction to a certain change in the event.
Building good bankroll management is crucial in the long term for every punter. It gives every person the freedom to choose his strategy, place his bets and profit from their investment. Follow us for additional insides and valuable information for every punter.