Advice

How To Use Staking To Increase Your Profits And Decrease Your Risk Instantly

The 4 Steps To Being Relaxed When You Bet

(Last Updated On: May 5, 2020)

Today I want to talk about staking. I want to talk about how we can increase your profits. I want to talk about how we can decrease your risk.

This can be done whether or not:

  • You’ve never considered using a staking plan before
  • You have a low volume or high volume of bets
  • Your strike rate is big or small

In this step-by-step case study, I’m going to show you exactly how you can do it.


STEP #1: Identify If You Are Long Term Profitable

Before we start getting into how we are going to stake, we need to determine whether we are going to be long-term profitable or not.

No staking plan will work if we are not long-term profitable.

But since we don’t want to wait in the long-term before we start maximising our bankroll growth and profits, we need to use a couple of statistics to help us do this.

The most important one is known as the A/E ratio or PIV (Pool Impact Value).

This figure compares the number of winners we find in our selections against the number of winners the odds have predicted we’d have.

As long as we’re beating the market, we’ll be long-term profitable.

And luckily, the calculation is just as simple as the concept. It is…

Winners รท Expected Winners

The number of winners we’ve got from our selections is usually a number we have immediately to hand ๐Ÿ˜€ so I’ll jump to how to calculate expected winners.

Here are some selections of mine:

DATE/TIMEHORSE NAMEODDS
05/04/2020 03:30Countess Constance20.43
05/04/2020 03:40Carthage7.34
05/04/2020 04:20Jimmy Two Times11.4
05/04/2020 15:40Ebony N Ivory6.37
05/04/2020 15:40Dream Farr3.78
05/04/2020 16:50Farmer Boy6.67
05/04/2020 18:20Whos De Baby4.8
05/04/2020 22:30Fourina19
06/04/2020 02:40Younevercall2.25
06/04/2020 04:50Piazon2.12
06/04/2020 05:40Ballyward4.95
07/04/2020 10:40First Sargeant9.92
07/04/2020 20:50Satchville Flyer11.51
07/04/2020 20:50Chikoko Trail5.05
07/04/2020 20:50Edge6.11
07/04/2020 20:50Kafeel10.52
08/04/2020 17:20Leoncavallo4.46
09/04/2020 13:30Late Night Lily7.72
10/04/2020 00:30Golden Horn3.32
10/04/2020 22:50Awaywiththegreys8.01
12/04/2020 15:00Prancing Oscar7.24
12/04/2020 17:00One To Go6.76
13/04/2020 11:20Kildisart8.14
13/04/2020 12:40La La Land5.48
13/04/2020 12:00Street Duel3.51
13/04/2020 19:50Green Zone3.92
01/05/2020 08:00Boomerang Bob3.41
01/05/2020 09:30Copper West2.9
05/05/2020 07:30Stringybark Creek4.66

In order to find the Expected Winners we need to take the number 1 and divide it by the odds for each horse.

Countess Constance would be 1 รท 20.43 = 0.05

What does this mean?

It means that this horse had a probability of winning of 0.05 or 5%, based purely on its odds.

We do that for every horse.

DATE/TIMEHORSE NAMEODDSPROB
05/04/2020 03:30Countess Constance20.430.049
05/04/2020 03:40Carthage7.340.136
05/04/2020 04:20Jimmy Two Times11.40.088
05/04/2020 15:40Ebony N Ivory6.370.157
05/04/2020 15:40Dream Farr3.780.265
05/04/2020 16:50Farmer Boy6.670.15
05/04/2020 18:20Whos De Baby4.80.208
05/04/2020 22:30Fourina190.053
06/04/2020 02:40Younevercall2.250.444
06/04/2020 04:50Piazon2.120.472
06/04/2020 05:40Ballyward4.950.202
07/04/2020 10:40First Sargeant9.920.101
07/04/2020 20:50Satchville Flyer11.510.087
07/04/2020 20:50Chikoko Trail5.050.198
07/04/2020 20:50Edge6.110.164
07/04/2020 20:50Kafeel10.520.095
08/04/2020 17:20Leoncavallo4.460.224
09/04/2020 13:30Late Night Lily7.720.13
10/04/2020 00:30Golden Horn3.320.301
10/04/2020 22:50Awaywiththegreys8.010.125
12/04/2020 15:00Prancing Oscar7.240.138
12/04/2020 17:00One To Go6.760.148
13/04/2020 11:20Kildisart8.140.123
13/04/2020 12:40La La Land5.480.182
13/04/2020 12:00Street Duel3.510.285
13/04/2020 19:50Green Zone3.920.255
01/05/2020 08:00Boomerang Bob3.410.293
01/05/2020 09:30Copper West2.90.345
05/05/2020 07:30Stringybark Creek4.660.215

Once you have the probability of winning for every horse, you add them all together.

In this case we get a total of 5.63 winners.

Which means… based purely on the odds we would have expected to get 5.63 winners from these selections.

Done.

That’s the Expected Winners.

How many winners did I actually get?

Eight.

Remember the sum we needed to calculate to find out if we were going to have a long-term profit was the A/E ratio:

Winners รท Expected Winners

Which in this case is:

8 รท 5.63 = 1.42

As the result is greater than one, this tells us that these selections are winning more than the odds suggest. But we already knew that because we had eight winners and the expected winners were 5.63.

What it tells us is that it we have a 42% edge on these selections.

How?

We take 1 away from the result and multiple it by 100 to get the percentage edge we have (assuming the result is greater than one).

If the number is less than one, then even when we have a profit we are not beating the odds and we can expect the profit to turn into losses the longer we bet unless we can beat the market and get this number greater than one.

In order to be able to successfully use a staking plan we need to have an A/E ratio of greater than one.

Remember that this is based on win bets, if you use a different bet type then you need to use those odds, e.g. place odds for place bets, win and place odds for each-way bets

So, to identify if you are long term profitable you need to:

  • Count the number of winners in your selections
  • Find the expected winners in your selections
  • Calculate the A/E (PIV) ratio
  • Make sure it is higher than 1.00

STEP #2: Staking Based On The Risk

There are lots of staking plans out there, and I will be looking at a lot of them in more detail, but most of them don’t take account of your risk when they determine the stake.

The majority of staking plans focus on whether you’ve won or lost the previous bets, and how much profit you’ve made.

They’re focusing on profit, and that means they’re focusing on the wrong thing!

Your staking plan shouldn’t be focused on building profits, and in this step I’m going to explain why…

Staking plans usually focus on profit because thats what bettors want.

Bettors are usually only interested in the profit they’re making. But, as you know, that’s the end result of the entire process. If, in the long-term, you have completed the process of finding selections successfully then you will have found a profit.

It’s a by-product of finding the right selections.

And your staking should be exactly the same.

There is one very quick way to make more profits if you have a long-term profitable strategy…

Place bigger bets.

The problem is you can’t place bigger bets without a bigger bankroll.

Which means… your primary focus should be on bankroll growth with minimal risk.

Whatever way you look at it, betting on a 20/1 shot holds more risk than betting on a 2/1 shot.

One has a 4.76% chance of winning and one has a 33.33% chance of winning.

I’m sure you’d agree that you’d prefer to stake more on the bet with a 33% chance of winning.

And there are two reasons that you should.

  1. The horse has a bigger chance of winning ๐Ÿ˜Š
  2. 33% chances will have shorter losing streaks

So we should only be staking based on the risk we are facing. Which means we are staking based on the odds of a bet.

How do we do this?

Simply by taking your edge and dividing it by (decimal odds – 1).

The result gives you the percentage of your bankroll you should stake on the bet.


STEP #3: Figuring Out What Your Edge Is

When I sat down to write this I was going to go through the calculation of figuring out your edge in detail. That calculation is:

(Odds x Probability Of Winning) – Probability Of Losing = EDGE

But then I thought… it’s impossible for most of us to know what our edge is on each bet. that we place.

Some of the big teams figure it out, and they place their bets based on the edge they have in the bet. You may have read of Bill Benter doing this in Hong Kong many years ago, and a lot of the larger international teams still do.

However, for you and me, we’re never going to have an accurate enough probability of a horse’s chance of winning to calculate our true edge on a bet-by-bet basis.

And if you have your edge even slightly out when using it to calculate your stakes, you’ll lose your bankroll faster than you can sneeze.

That leaves us with two options:

  1. We can set our edge based on what our A/E ratio is
  2. We determine a fixed edge and use that in all bets

Despite having seen posts saying you should use the A/E ratio, I don’t recommend that you do that.

This ratio tells you whether you have an edge, but it is not your edge on a bet-by-bet basis.

If you start putting in an 8% edge to figure out your stake, you’re going to be in for a wild and scary ride.

The A/E (PIV) ratio tells us whether we are beating the market, and this tells us if we are long-term profitable.

It does that very well, don’t try and make it do something it’s not supposed to.

Instead, I’d recommend setting a fixed edge for all your bets.

Personally I would choose from 0.25%, 0.50%, 1%, 1.5% or 2%.

The smaller the edge you choose, the more conservative your staking, the more protected your bankroll but the slower the bankroll will grow.

Usually 0.50% or 1% is going to suit most people.

Decide which suits you the best, and then move on to how you get the stakes for each bet.


STEP #4: How To Calculate Your Stakes

So far we have:

  • Identified our strategy is long-term profitable
  • Understood we are going to stake based on risk to maximise bankroll growth
  • Decided what our edge is going to be

And now we’re going to calculate what our stake size will be for each bet.

To do that we take our edge, I’m going to use 1% for this example, and divide it by our odds.

Taking Countless Constance, from the table above, at odds of 20.43 this would give us:

1 รท 19.43 = 0.05%

We stake 0.05% of our bankroll on this bet.

Just to explain why I have put in 19.43 instead of 20.43… Using decimal odds, which I always do, we need to subtract one off of them before plugging them into the calculation. This is because in decimal odds there is a one added to the odds to represent your stake, and we need to remove this before calculating our stake. Taking the odds of 20.43 and subtracting one leaves us with 19.43.

Now we have the sum you can see above, and it tells us exactly how much we should be staking on each bet.


Conclusion

Using proportional staking isn’t sexy, and it’s not going to get you massive spikes in your bankroll when high odds winners come in.

But in exchange for that you will be reducing the volatility of your bets. Here’s an example of selections, the first using flat bet staking and the second using proportional staking.

FLAT STAKING

Flat Staking Example

PROPORTIONAL STAKING

Proportional Staking Example

As you can see the profit of the flat staking is higher, but that’s because we are staking much more overall.

With proportional staking we see a much smooth graph with smaller peaks and troughs, a more consistent performance and a gentler journey that will suit the majority of us.

As the bankroll grows so will our stakes, and therefore the profit. But with far easier losing streaks and downswings to manage. And managing those losing streaks and downswings is at least 50% of the battle.

The reason flat staking sees more volatility and bigger losing swings, is because we are effectively over-staking, or betting more than the bankroll can comfortably cope with.

Have you ever tried using proportional staking?

Let me know in the comments below.

Michael Wilding

Michael started the Race Advisor in 2009 to help bettors become long-term profitable. After writing hundreds of articles I started to build software that contained my personal ratings. The Race Advisor has more factors for UK horse racing than any other site, and we pride ourselves on creating tools and strategies that are unique, and allow you to make a long-term profit without the need for tipsters. You can also check out my personal blog or my personal Instagram account.

6 Comments

  1. Another master class Michael!,

    I think the graphs show just how we all would like to see the profits grow. A losing streak is never comfortable but means itโ€™s much less likely to damage the bankroll, as the bigger odds are more likely not to succeed the loss is reduced. Sometimes we all need it laid out clearly as you have done for us to focus on what really matters most to achieve the desired end goal. Iโ€™m certainly going to adopt this way of betting from now on. Thank you for enlightening me

    Mark

  2. One of the most informative blogs I have read in many a year.
    Thank you ๐Ÿ‘๐Ÿ‘๐Ÿ‘๐Ÿ‘

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