Last week we showed you why level staking is for losers and why both progressive and regressive plans are doomed to fail.
So what is a better money management solution?
Well the best approach is one that balances two competing beasts – risk and reward. Professional punting is about maximising your returns, but it is just as important to protect your bankroll.
Following literally years of analysis and number-crunching we found the best risk/reward balance is to bet to collect 5% of your bank.
So if a horse is at odds of $2.00, you outlay 2.5% of your bank which will return 5% (2 x 2.5) if the horse wins.
If a horse is at odds of $5.00, you outlay 1% of your bank to return 5%.
If the horse is at $10 you only outlay .5% of your bank to return 5%.
The simple calculation to determine your stake is 5 divided by the odds.
This method works because you’re outlaying more on horses likely to win and less on those with a lower chance of winning. You’re taking advantage of the fact that on a long-term basis the betting market is a very good guide – there is a perfect correlation between market rank and winning percentage. Favourites win more races than 2nd favourites, who win more than 3rd favourites and so on. And horses starting at $2.50 win more races than those at $3.00 and on it goes. The greater the price, the lower the winning strike-rate.
At Champion Picks we maximise our returns by betting to collect 5% of our bank, but instead of using the market odds we use our own rated prices. This means the greater the overlay the greater our collect and it has some strong similarities to a well known method called the Kelly Criterion.
Horses that we rate at $2.00 will win very close to 50% of races.
Horses we rate at $5.00 will win very close to 20% of races.
But our profitable edge is in backing these horses at a price equal to or better than their true chance of winning. For example getting $2.50 about a horse we have rated at $2.00 has a positive expectation.
Our staking plan involves outlaying no more than 2.5% of our bank on any one race and typically we’re in the 1.5% to 2% range. A punter’s bank might be $1,000 or it might be $100,000 but the percentage of their bank outlayed on any one race is the same and this maintains a good balance between achieving profits and protecting your capital.
Now if you wanted to get aggressive and bet to return say 10% of your bank per winner, in the short-term you may do well. But in the long-term you’ll almost certainly blow up your bank due to one of the most dangerous yet under-estimated enemies of a punter and that is variance.
Proportionate betting with the aim of collecting 5% can reduce the drawdown on your bankroll and is a great way of maximising returns.
{ 14 comments… read them below or add one }
what is the main reason you bet no more than 2.50% of you bank on any given race?
Hey Alan
That’s because any more than this amount leaves your betting bank vulnerable when a losing run comes along and that happens to almost everyone. If you’re betting more than 2.5% per race you need a phenomenal winning strike rate to avoid a losing streak.
Cheers
Dave
I’ve been punting using 5% of my total bank on each race, and I’m having phenomenal success. I started with a bank of $200 and have been sitting around 115% return now for 5 full race days in a row. So I bet 5% of my total bank.
Congratulations Barry but you’re going to need a very big strike-rate to be betting 5% of your bank. This a high-risk strategy unless you win an incredibly high percentage of your bets.
you would out lay more than 2,5 % if
rated as -
A 2.0 , get say 4,0 ( 50% of 5% bank = 2.5%)
B 4.0 . get 5,0 ( 25% of 5% bank = 1.25% )
TOTAL = 3.75%
this because ur min. take out figure for each value bet = 5% of bank
So if bank = $2000
hence ur min take = $100 ie 5% bank
thus A rated @ 2.0 = 50% = $50 , 50 x 2 = $100
B rated @ 4.0 = 25% = $25 , 25 x 4 = $100
hence outlay = $75 . 2000/ 75 = 3.75 %
That’s true Dareus but in that situation we wouldn’t bet on both horses. We dont back every single overlay, sometimes we will risk it (not back at all) and others we might save on.
That doesnt add up to me David ,
If you believe in your prices, an over – lay is a overlay
u might outlay more , but u are covering more horses
Don Scott would have done it that way .
Didnt Don Scott bust his bank and then take his own life?
Anyway…
It’s true that an overlay is an overlay, but that doesn’t mean you should back every single one of them. Any professional approach needs to have a risk management plan and in our case we don’t outlay more than 2.5 units because we don’t want to be over-exposed on any one race.
What if a horse is paying $8.00 that you fancy and your bank is $1000. Would you only bet $6 to return $48 which makes your 5%. Or would you still be backing with a 2.5% outlay which would give a much better return.
Mitch if we rated the horse at $8.00 we would outlay $6.25, so yes at odds of $8 it’d return 5% of our bank.
But if there were better than $8 available then of course we’d collect more than 5%.
You asked about the 2.5% outlay…we’d only bet that much if we’d assessed it as an even money chance but clearly that’s unlikely if odds of $8 is available. Although having said that we did have a UK winner at $262 that we’d rated $10 so that was a huge collect.
What sort of winning strikerate would you reccomend if Im sports betting with lets say an avg div of $2.50, betting to win 5% of my bank
2% sounds about right but I need to know your long-term winning strike rate.
I have been betting at the dogs, I do the form and watch the replays thoroughly but having to take middle tote is a problem as you would understand, my strike rate is around 42% but mostly prices between $1.70 to $3.40 what I do is divide my rated price by 2.38 hence my bet unit.
Have you any ideas where I can improve this or should I keep things the same.
If what you’re doing is working then that’s great.