Bankrolls in horse racing are often talked about, and commonly miss-understood.
There’s one mistake that is made time and again, and I’m going to share what it is with you in a minute.
WHAT IS A HORSE RACING BANKROLL?
A horse racing bankroll is a set amount of money that you put aside to place your bets with.
Usually we refer to a bankroll in points or units, rather than using the financial amount that’s going into them.
This is because the points can be translated into any size amount of money that suits you personally.
If a bankroll is 100 points, then if you want to place £10 bets you will need £1000, but if you want to place £50 bets then you’ll need £5000.
By using points instead of a financial amount, it makes it very easy to determine the right value for you.
WHY WE HAVE A BANKROLL
Whether you have a 30% strike rate (the percentage of winners to bets) or a 90% strike rate, when you’re betting on horse racing you will eventually hit a losing bet.
It’s impossible to win 100% of your bets.
This means we need a pot of money which we only use to place our bets so that when we hit this inevitable losing bet, we can still continue to place bets.
But it’s not the single losing bets that are the primary concern, it’s the sequences of losing bets.
The lower your strike rate, and the more bets you place, then the more likely you are to hit back-to-back losing bets.
When we hit these we need to know we have enough money in our bankroll to sustain us through them and see us out the other side.
Think of it like cash flow for your horse racing.
Without a bankroll we’d place 100% of our funds available for betting on every selection, and when we lose a bet we are unable to continue betting and re-cover our losses.
HOW BIG DOES OUR BANKROLL NEED TO BE?
There’s always a lot of discussion about how large a horse racing bankroll should be.
If you’re using the ultimate staking plan, then you don’t need to think about this because you’ll always be betting a percentage of your bankroll based on the odds of the selection. You can discover how it works here.
However, almost every other method of staking is going to require you to have a pre-determined bankroll, and here’s a very quick way to decide how big it should be.
STEP #1: What’s Your Expected Losing Streak
To use the above table, go down the left hand column to find your strike rate, then go along to the right until you get to the column that has the average amount of bets you can expect over a year.
If you had a 30% strike rate and had around 2000 bets per year, then you could expect to get losing streaks of up to 21 in a row.
This means you can expect to hit 21 losing bets back-to-back. It wouldn’t mean your strategy had stopped working. It wouldn’t mean you weren’t going to make a profit. It’s just the expected variance of only winning 30% of the time. After all, if you’re only winning 30% of the time, then you’re going to be losing 70% of the time.
Usually when I lay this out it shocks people.
After all, losing twenty one bets back-to-back is quite a lot, particularly when you think it can happen more than once over a year!
If you’re not comfortable with it, then you need to increase the strike rate, or find another approach.
That’s the first core element of the success bridge.
But that’s for another time.
We’re talking about how to quickly determine the size that your horse racing bankroll should be…
STEP #2: 5X Your Expected Losing Streak
To work out your minimum bankroll size, take your expected losing streak and multiply it by five.
With an expected losing streak of twenty one losing bets in a row, we want a minimum of 105 points.
Remember this is the absolute minimum, if you prefer low risk then you should be looking at ten times the longest expected downswing, which in this case would be 210 points.
THE BIGGEST HORSE RACING BANKROLL MISTAKE
What is this mistake that everyone makes.
Time and again in horse racing we always come back to comfort. Again this is why it has to be the first step on your success bridge.
If you’re not comfortable with your approach, if it doesn’t suit you personally, then it’s never going to make you profits.
Let’s assume that you’ve been through the steps above, and you’re comfortable with longest expected losing streak for your strategy.
Most of us are only comfortable for between seven and ten losing bets in a row, which means we need a minimum strike rate of 50%.
That’s going to require a bankroll of at least 50 points, or 100 points if we’re being cautious.
To be safe, let’s go with 100 points.
Assuming £10 stakes, although the stakes don’t matter, that means I’d need to put £1000 into the bankroll for this strategy.
This means I’m prepared to follow the selections from this strategy until that £1000 is gone.
Obviously I’m not intending to lose it all, but I’m prepared to. I’ll take out 30% of any profit high each day so that I’m always earning from it, but whatever is left in the bankroll each day is what I’m prepared to lose.
And here’s the big mistake that everyone makes…
Stopping betting when your bankroll has decreased by a certain amount.
If you have a £1000 bankroll, but aren’t comfortable if it drops below £500, then you actually only have a £500 bankroll and should be staking based on that.
In fact, you should remove £500 from your betting account, and only leave the £500 in there that you are actually prepared to lose.
The amount that I see bettors prepared to lose of their bankroll ranges from 25% to 50%, but you almost never see a bettor who is prepared to lose their entire bankroll.
This means two things:
- The understanding of losing streaks in comparison to strike rates and bets has not been fully understood, or considered.
- The stakes being bet with are too large, purely because a bigger return is wanted, without being able to accept the larger risk.
It also means that there isn’t confidence in the strategy being used, which is something I look at in the success bridge.
If you base your stakes on a £1000 bankroll, but will stop betting if it drops to £500, then you’re never going to find horse racing success because you are hugely over-staking your bankroll.
Eventually you’ll hit a losing streak that will wipe out the amount of the bankroll you’re comfortable losing, and you’ll stop. Even if the strategy is still showing a positive advantage. You’ll stop because you’ve hit your comfort level, and this wouldn’t have happened if you’d been staking correctly.
Has this happened to me? Most definitely. Has it happened to you? Let me know by leaving a comment.