I recently had lunch with John Jackson, one of the writers for SmartSigger. When it comes to statistics John would call himself an amateur, but he’s in fact a very knowledgeable chap and if he says he’s an amateur then it’s certainly at a very high level.
One of John’s biggest focuses on his betting is on optimising staking. And the reason for this is that it’s the staking which is at the root of causing most punters to continually make losses.
Even when they’ve got a profitable selection strategy!
Of course, it can be quite hard to recognise that staking not selection process is the issue. While John has written many articles for SmartSigger members which go into the details of why, how and a huge range of methods to properly manage your bankroll. I want to share just one of those with you today.
If you track your profits then it won’t be uncommon to see a graph that looks like this:
Most pro-bettors would be very happy with a graph like this. Over 1000 bets they made a profit 134 units, a very nice return.
However most bettors would never have made any profit with these selections.
Because of the volatility. It is the volatility that prevents most bettors from being able to make profits even when the selections are profitable!
Let’s take the biggest downswing in this example…
As you can see above, even with a small uplift at the end of this example there has been an overall downswing for more than 200 bets.
There are very few people who can cope with that kind of downswing, even when they know it’s going to finish in a higher profit. Getting your mind to override your emotion in these situations is very very difficult.
Would you still be betting when you were over 50 units down after more than 200 bets?
What about if you’d only started betting at the high point?
This challenge is what makes profitable betting elude so many people.
What about if your profit graph looked like this?
Would that make it easier for you?
The downswings are way smaller. That means less volatility which means it’s easier to not get emotionally involved in a downswing.
Rather than focusing on how much profits can be made, we should spend some time on concentrating on how we can reduce the volatility and risk of are selections to make the growth to profit a far smoother journey.
The fact that this will usually lead to more profit as well is a nice side-effect.
One method of doing this, one which John is always trying to show punters is a far more sensible way of betting and one which is a far better way of betting than flat stakes is to vary your stake size based on the odds of your selection.
If a selection has odds of 2.00 then the market is saying it has a 50% chance of winning. A selection that has odds of 5.00 means the market is saying it has a 20% chance of winning.
It stands to reason that we want to bet more money on the selections which have a stronger chance of winning and less money on the ones which have a lower chance of winning.
This has the effect of levelling the downswings and allowing us to get less emotionally involved as well as generate more profit.
And this is something that you can do very easily in Excel.
All you need is to use this formula:
=Bankroll/(Risk Level*(Decimal Odds – 1)/Edge)
The bankroll element of this equation is pretty self-explanatory, this is where you put the size of your current bankroll.
The Risk Level is a number that indicates how much risk you’re willing to accept. This is a personal figure, there is no right or wrong here. The lower the number the more risk you’re prepared to accept, the higher the number the less risk you’re prepared to accept.
In order to get this figure I recommend that you get all the other numbers in place first and then play around with it until you’re happy with the type of stake sizes your getting on your bankroll.
Next you enter the decimal odds minus one for your selection. And finally your Edge. If you’re unsure how to calculate the edge of your bets then let me know by leaving a comment and I’ll write another post explaining how you can go about doing that.
Start using this staking approach to significantly decrease your downswings and increase your profit.