Saturday , 25 October 2014
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Staking Plans Aren’t The Holy Grail

Staking Plans Aren’t The Holy Grail

It’s been a while since I’ve written about staking plans, but that’s exactly what I’m doing today because I’m seeing a flurry of posts about how you can use them to make “insane profits” around the internet.

First of all let’s set one thing straight…

Staking plans are not the holy grail.

In fact, if they’re used incorrectly they can be the absolute opposite.

So, if you ever been in a position where you’ve got a break-even, or nearly break-even, betting system and you’ve thought to yourself that maybe you could find a staking plan that will bring it into profit. Then…

…stop now.

That will save you hours of time in research. Because quite simply:

There is no staking plan that can take a flat stake losing strategy and make it profitable.

And I’m going to explain why now.

Let’s take a series of ten bets and assume for this example that odds are evens on all of them (it doesn’t matter what the odds are in reality because it will always work out the same in the long-run).

 

W 1
L -1
W 1
W 1
L -1
W 1
W 1
W 1
L -1
L -1

 

We have four winning bets that have made us +6 units profit but six losing bets that have lost us -4 units, leaving us with a profit of +2 units.

Of course we could backfit a staking strategy that makes even more profit in this exact scenario. But, as knowledgeable punters, we’re not interested in backfitted scenarios. We want to understand the real maths behind how things will work for us in the long run.

So…

We have invested ten units and made two units profit for a ROI (Return On Investment) of 20%.

Easy maths.

Now keep an eye on the ROI.

If we had increased our stakes by one after every loss and decreased it by one after every win, which is a popular staking plan, we would have:

 

Win/Lose Profit Stake
W 1 1
L -1 1
W 2 2
W 1 1
L -1 1
L -2 2
L -3 3
W 4 4
L -3 3
L -4 4

 

In fact this has now made a loss of six units. But we’ve staked 22 units, which is 120% more than we staked on flat bets.

What this means is that even if we had made the same profit of two units, because we’ve staked so much more our ROI would only have been 9%. A decrease of 11%!

It’s a fact that staking plans will ALWAYS reduce the ROI made by selections in the long-run.

But let’s look a bit closer at the sequence above to discover why a profitable sequence of selection to flat bets has become a losing sequence.

Before we do that don’t forget that if you’re placing any bet apart from lays, you will always have more losers than winners. A very strong strike rate of 30% would still mean 7 out of every 10 bets will lose.

Now looking at the staking plan above, you can see that problem is we’re increasing the stake after a losing bets. But we’re always going to have more losing bets. So the chance is that we’re going to increase our stake on a losing bet.

The average stake on losing bets was 2.33 while the average stake on winning bets was 2.

And it doesn’t matter what staking plan you use, however complicated, this will always be the case.

Because you are always staking more on losing bets your ROI will always decrease when using a staking plan.

That means that if your selections are making a loss to flat stakes, there is no staking plan in the world that is going to be able to make them profitable in the long-term.

Always start by finding selections that make a flat stake profit. Then you can see if any staking plans increase the profit.

Hang on, didn’t I just say that staking plans always decrease ROI?

I did, and they will. But that doesn’t meant that if your selections are making a flat stake profit it can’t increase them.

The way it does this is because while they reduce the ROI, they massively increase your turnover.

Going back to our example, remember we placed ten units flat betting but twenty two units using the staking plan?

If the staking plan doesn’t reduce your ROI to a point where it’s in a loss then significantly increasing your stakes it can increase your profit.

Let me show you an example…

If we have 100 bets and flat stakes make a profit of 15%. We’ve placed 100 units and made a 15 unit profit.

Now we put in place our staking plan which increases the stakes by 120% so we have now placed 220 units, but the ROI has been reduced to 10%. We have now made a 22 unit profit, which is more than flat staking even though the ROI has reduce.

So, in summary, staking plans are not the holy grail. There is no way a staking plan can make a losing selection process turn a profit as it will always reduce the ROI. However if you have a profitable selection process then it can increase the profit by significantly increasing your stakes. But don’t forget, increase stakes is an increase in risk and your bankroll will need to grow to allow for it.

About Michael Wilding

Michael started the Race Advisor in 2009 to help punters improve their betting profits and think outside the box with their betting strategies. To date he has written over 450 articles on the site and recently started UK Racing News which has become a leading news site for horse racing in the UK and IRE. Check out my personal blog or my Google+

3 comments

  1. Michael, just for the record do you agree with increasing your stake in line with an growing bankroll . For example starting with a 500pt bank = £500 – 1pt = £5 , bank increases to £780 – 1pt = 7.80 and would flutuate in accordence with the bankroll

    • I do but I generally don’t reduce stakes. I will flat bet and then when bankroll increases by 50% adjust the stakes to a new level. I don’t reduce because this results in you placing smaller stakes on your winning bets than your losing bets. Your bankroll should be large enough to cope with downswings without needing to reduce stakes :)

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