Reverse Kelly Concepts

I mentioned about the reverse Kelly concept in a recent webinar that I held and there has been a lot of interest in going into more detail on it. I have to say straight up that this wasn’t my invention. I came across the concept a while ago from an American author, David Schwarz (you may have heard me mention him before as I have gained many good ideas from him), and I have played and investigated with it for many years and it holds true and is very powerful.

The theory is based around your advantage and ROI. Using a percentage of your betting bank on every bet will automatically lower these figures and every bettor wants to raise these numbers not lower them!

Take a minute and think about what you are doing when you bet a Kelly or any percentage of your bankroll. You are placing high stakes on the losing bets and lower stakes on the winning bets.

For example you have a £100 bankroll and you bet £10 on the first bet and win £150 and then you bet £15 and lose and then £14 and lose and then £12 and win. You have placed a smaller bet on the winner and bigger bets on the losers.

This scenario means that you can come out as a loser even if you would have made a profit flat betting. What all this adds up to is that to bet a percentage of your bankroll you need to have a greater advantage to profit than if you were flat betting.

Okay so now for the theory. It is really a very simple principle. If it is decreasing our advantage when we follow a Kelly bet or a percentage of the bank bet then if we play the opposite of it, it should increase our advantage.

Think about that for a little bit and let it sink in.

Now unfortunately when I started writing this article I had all sorts of ideas that I wanted to demonstrate but then I realized I couldn’t because this is published information and if I explain much more then I am going to be breaking the copyright law. Sucks I know.

However if there is some serious interest in this money management method then I can get in touch with Dave and see if I can arrange to get the method printed up over here. If you would like to see this made available in the UK then just post a comment below and if we get enough then I shall see what I can do.

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Leave A Reply (25 comments So Far)


  1. Sheila Stern
    64 days ago

    Always interested in any new idea and wouldn’t mind knowing (even roughly) how Kelly works – never heard of it. I suspect won’t suit me, but would like to hear more. Thanks

    Sheila

    [Reply]

    RA Admin Reply:

    Sheila I have made a note to write an article about the Kelly Criterion. Keep an eye out on the blog for it soon.

    [Reply]


  2. RA Admin
    68 days ago

    I shall see what I can do, because the method is copyrighted I don’t know how much I am allowed to give away. I shall investigate though.

    [Reply]


  3. ronald
    69 days ago

    I would be very interested in seeing the above method.

    [Reply]


  4. Hugh
    69 days ago

    Would like to hear more.
    I compromise using % of bank betting.
    I increase stakes on a winner but hold the latest level of staking when I lose

    [Reply]


  5. Peter Moran
    372 days ago

    could this be the breakthrough we are all looking for ?
    very interesting – ……..cheers ………Peter

    [Reply]


  6. Andy
    373 days ago

    Would be keen on seeing more :o )

    [Reply]


  7. RICHIE
    373 days ago

    sounds like a good idear.

    [Reply]


  8. Ian Foster
    373 days ago

    Correct me if I am wrong, but surely using a % of Bank staking plan is not the same as using Kelly.

    Also the reasons for using a % of bank staking plan rather than flat stakes is two fold:

    1. Over a long series of bets with longer winning sequences than losing sequences, the Bank will grow faster than if using flat stakes at the same initial size. So it is good for many Laying systems – especially when used in a Liability rather than stake manner.

    2. Using a % of Bank staking plan also protects you from being wiped out by an unusually long losing sequence. This is because as you continue to lose, you are progressively making smaller bets. This makes it suitable for Backing Systems where the odds are substantially greater than evens.

    [Reply]

    admin Reply:

    You are right using a % is not the same as using a Kelly. You are exactly right with point 1 and 2. The main thing is that due to the structure of using a % you will need a bigger edge to make a continuous profit than you do with flat betting because long-term for back betting you place more winning bets at smaller stakes and more losing bets at bigger stakes. It is possible to change this around so that you see a much higher ROI.

    [Reply]


  9. Stuart Hazelwood
    373 days ago

    Souinds interesting as only use % of my bank for all my bettting.

    Stu

    [Reply]


  10. sports betting blog
    373 days ago

    My heads a bit frazzled think of it :)

    More complete info on the concept would be good.

    Loss recovery style staking for example you are effectively increasing the % of bankroll used on a bet following a loser or string of losers. The very rough core priciple of that is matched above. The danger there is total blow out at a faster point than would be hit by levels , which in turn is faster than staking which is a proporation of bankroll size. Total blow out is one thing traditional % bank style betting theoretically protects you against. ( in reality of course turning £1000 into £1 is effective blowout. )

    Staking plan optimisation in general..one of those things easier to do if you have a lot of past
    history to examine.

    The choice of shoe must fit the foot etc :)

    Further expansion a good idea however.

    Cheers
    Mick

    [Reply]


  11. John
    373 days ago

    This sounds like an interesting concept. Would like to learn more.

    [Reply]


  12. Jack Hickey
    373 days ago

    I think that would be a good idear

    Jack

    [Reply]


  13. JOHN
    373 days ago

    sounds very intersting

    regards
    john

    [Reply]


  14. Gordon
    373 days ago

    Definately worth a look-see

    [Reply]


  15. ronald charlwood
    373 days ago

    I would certainly be interested in seeing the kelly or percentage money management method.

    [Reply]


  16. Athol
    374 days ago

    Very interested. I am from Australia and this has been always been a concern to me – investing high on losses and low on wins. Bring it on.

    [Reply]


  17. billy McCreadie
    374 days ago

    Hi Michael

    Yes I would like to know more about this method, it would seem that what is being stated makes sense.

    Cheers
    Billy

    [Reply]


  18. jim hodson
    374 days ago

    This is something I would be most interested in.

    [Reply]


  19. Mike
    374 days ago

    Hi,
    Would be very interested to know more, in particular the effect of long losing runs.
    Mike

    [Reply]


  20. chris b
    374 days ago

    I would be interested. Incidently is David Schwartz the same person who is known as the stock market historian and writes in the Times etc?

    [Reply]

    admin Reply:

    Nope he is a different guy Chris (as far as I know he has never written for the Times).

    [Reply]


  21. Acap
    374 days ago

    Hi Michael

    Sounds very interesting,I would be interested in getting hold of this.

    Acap

    [Reply]


  22. David
    374 days ago

    Hi,
    Very interesting, i like to look at staking plans as it is an important part of my betting once i get my selections, punters often overlook the inportance of the correct staking, so this theory has got me thinking which has to be good!, i look forward & welcome any new staking plans.

    [Reply]

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