In today’s article we want to speak about how to manage your bankroll effectively to get the most out of your money. We’ve written plenty about value betting already and we’ll continue to do so as it’s the key to long term success in betting. If you’ve ever had a gut feeling that a bookie has priced a bet ‘wrongly’ then you’ve instinctively got a feeling for value. Other bettors love to build complicated statistical models in their quest for finding value. With Bet Dynamo we like to take the statistical approach by looking at previous events to get a good indication of what may happen in the future.

One question we see fairly often on our Facebook pages is ‘how much should I bet?’ It’s a tough one to answer, especially for people new to betting, should you just stick with level stakes all the time, should we adjust the stakes to the odds? Maybe we should adjust the stakes based on the probability we give an event happening rather than the bookies’ odds? Maybe a percentage of the bankroll or we could get really complicated and go with something called the Kelly Criterion?

Let’s start with the basics; your bankroll. Your bankroll is how much money you have in your bookie’s account. Let’s have a chat then about some of the different bankroll management strategies. First of all; Level Staking

Level Staking

One of the easiest and probably the most popular of staking strategies, this is where you always risk the same amount of your bankroll regardless of the odds. Over 2.5 goals in Chelsea vs Liverpool is 1.86, you bet £10. Both Teams to Score is 2.25 in Burnley vs Manchester City, again you bet £10.

Percentage Staking

Percentage staking is again a very popular method of bankroll management. The idea being that as you win more bets you risk more money and if you experience a losing streak your bankroll is protected. However, if you remember your primary school maths there was the story of Achilles and the turtle; Achilles would never catch the turtle because the distance would keep halving the closer he got. This is impossible, obviously you can still lose your entire bankroll but with percentage staking there is, at least, a level of protecting yourself.

When winning it can be somewhat of a slow process though and it can be tempting to get greedy, but discipline is key and you need to look at this as a long term process. The one major flaw with this strategy is that it doesn’t take into account the odds. Should you bet the same percentage on odds of 2.15 as you would on something that’s 1.75?

Staking Based on Betting Odds

This is similar to the percentage staking method above but slightly different because it takes the odds into account. Let’s have an example, if you’re betting 5% of your £1000 bankroll on BTTS in Leicester vs Southampton at 2.00 that would be £50. But what if there’s a horse running later today at Sandown at 11.0. Would you put £50 on a longshot? No, so you need to calculate what you should risk. Here’s the formula:

(£1000 * 0.05) / (11.00 -1) = 5

The problem with this formula is that with short odds you need to risk more, so something like 1.55, what would you risk?

(£1000 * 0.05) / (1.55 - 1) = 90, so you’re betting £40 more than what you would have risked at odds of 2.0 above.

The Kelly Criterion

Now, this one might get complicated but stay with us here. John Larry Kelly was a scientist who came up with this formula in the 1950s. Basically this staking method takes into account both the probability of an event occurring and the value of the odds offered in relation to that probability. The resulting figure is called ‘the overlay’.

Here’s the formula:

Value = (% probability multiplied by decimal odds) minus 100%

Over the years there have been a few changes to the Kelly Criterion and professional bettors in particular have found it incredibly useful.

There are a few variations on the Kelly Criterion staking plan. If you do some sums on that formula you’ll quickly see that it can sometimes recommend massive bets, because of this some people prefer to use the ½ or ¼ Kelly, so taking the recommended stake and halving, or quartering it etc.

The biggest drawback of the Kelly Criterion is that you cannot really have multiple bets on matches occurring at the same time. So you need to have a strong sense of discipline with this staking method and stick to the plan.

What then should we do with all these possibilities? Well, something like a 10% or 5% Kelly might be to your liking. Here’s an example: Your bankroll is £1000, and you are betting on Liverpool vs Chelsea. You fancy Liverpool in the Asian Handicap market so you’re going with Liverpool AH -1, priced 2.10. You’ve done your research and you deem this to win with a probability of 50%. The recommended bet amount would £45.45.

(bankroll * chosen fraction) * (overlay/(odds - 1))

i.e (£1000 * 10%) * (50% / 1.10)

(£100) * (45.45%) = £45.45

We know that all this maths can be a bit of a head melter, but thankfully there are a ton of Kelly Criterion calculators around the web, so just have a search for them, bookmark it and do some paper bets to see if you think it would be suitable for you.