In simple terms a staking plan is a strategy for how much you will place on each bet. If you are serious about making money from betting, be it on football, horseracing or even The X Factor, it is essential you have at least some form of staking plan in place. In this way you will be able to minimise the risk of going bust – that is to say losing all of your bankroll – and maximise your returns from winning bets. Without a staking plan it can be easy to lose all your money despite having a good knowledge of your sport or betting area and despite using the available free bets. Put simply, you may back 10 winners with a £10 stake and one loser for £1000, clearly resulting in a large deficit. Picking good Value Bets is one thing but if you allow your stakes to be influenced by greed, past losses, laziness, tiredness, alcohol or chance it can still be all too easy to end up with the down-and-outs and the have-nots of the gambling world. Having said that, I cannot say more unequivocally, no staking plan or system can turn bad value selections into winning ways.
Plans vary greatly in their complexity and how much risk they take on. Here we will look at a few options.
Flat or Level Stakes
This is the simplest plan and involves, as the name may give away, entail betting the same amount on each bet. Generally one would take the size of your bankroll and divide by the number of bets you want it to cover. So if we assume a £1000 bank you may decide you want to cover 200 bets and would therefore stake £5 on every bet. You may decide you want to cover 10 bets, which would give a stake of £100, or cover 500 with £2 per bet. Obviously the lower the number of bets you want to fund the higher your risk will be. 10 would generally be considered far too low and could quite easily be wiped out in one bad run of bets whereas 500 would be too conservative and reduce your stake on each bet to a level that is not sufficient to a) make a decent amount of money relative to your means or b) keep you interested and focussed. I would recommend something between 100 and 200, depending on your aversion to risk, as a number that will produce good results without putting you in too much danger of losing your bank.
This staking plan is good for beginners as it involves one simple calculation that provides your stake for life (or as long as you stick with it) and also makes the risk of losing all your money pretty small (provided you allow for a decent number of bets). However, being so simple it is very rigid, not allowing you to differentiate stake according to strength of the bet, which makes it difficult to maximise returns. This is good for when you start out as it allows you to focus attention elsewhere – namely on finding the right bet – but as you progress I would strongly recommend something more complex.
Fixed Percentage Stake
This plan keeps the number of bets you have in your bank fixed, even when you have won or lost. So if we imagine you work to a 100 bet plan then your bank is divided by 100 before each bet and that will be your stake – 1% of whatever you have at all times. This leads to staking more when you are winning and being more defensive when you are down, which theoretically is a good notion. If you increase your bank from £1000 to £1500 then your stake increases from £10 to £15. This enables you to grow your bankroll more quickly when things are going well and confidence is high. Conversely, should things be going badly you will be losing money less quickly and will always have the security of 100 bets in the bank (although of course these will decrease in size in line with your overall bank). If your bank does diminish, however, the major downside with this staking plan is that as you are staking smaller sums it becomes more difficult to recover your losses. It can also be quite fiddly as your stakes, unless you round up or down, will be very odd amounts.
Martingale/Point Chasing System
The Martingale system is a staking plan as old as the old hills and as foolish as your foolish friend’s foolish cat. It became popular in 18th century France and entails doubling your stake after a loss on an even money bet. In this way you will always win one times your original stake if and when you do eventually win. The problem with this plan is that it assumes an infinite bankroll and no limit on what you will be permitted to stake. Oh, and infinite time. If any of these three are issues, i.e. your aren’t an immortal Russian oligarch with access to bookies that allow stakes in the multi-billions, then give Martingale a miss. A slightly more complex, yet equally floored plan is the point chasing system. Here your bank is divided into, say, 100 bets and the aim each time is to make a one point profit. If the odds of the selection are evens you stake a point, if it’s 10/1 you stake 1/10th of a point. This is fine when winning but any lost stake is added to the point you are trying to win. So if you lose a bet at evens you now have your original point to win and the point you lost. Any bad streak – which Variance can inflict on anyone – can lead to rapidly spiralling stakes as you attempt to recover your losses. Let me repeat – chasing losses is bad!
Level Stakes Square Root Plan
This involves level stakes as per the first plan discussed and whenever your bank is breaking even or negative it sticks at this level. However, when your balance is above the original level your stake increases by the square root of the positive balance. For example, if your regular stake is £10 based on a 100 bet bank (and therefore a £1000 bankroll), should you increase your funds to £1100 by following our great betting tips you would increase your stake by the square root of £100, that is to say, £10, taking you to £20. This is a great plan as your bankroll is protected in the same way as the level stakes plan but you can maximise profit more effectively when things are going well.
The Kelly Criterion is by far the most complex of the staking plans we will look at. It was designed in 1956 by JL Kelly Junior as a way to maximise gambling returns and bankroll growth in the long-term. It has entered mainstream investment circles and renowned financier Warren Buffet incorporates part of Kelly strategy into his investment model. The formula is:
f = (bp – q) / b
f is the fraction of the current bankroll to wager;
b is the net odds received on the wager (that is, odds are usually quoted as “b to 1”)
p is the probability of winning;
q is the probability of losing, which is 1 − p.
Sadly that means less than nothing to me but the basis of Kelly’s theory is that two factors affect how much you should stake if you want to maximise profit. The first is the size of the edge or put another way, how much positive value the bet has. If you are offered 2.10 on the toss of a coin you would be sure to bet (assuming you have a good understanding of Value Betting) however, if you were offered 3.00 you would want to bet more, right? This is relatively obvious, as indeed, is the second point: bet more when the odds are shorter.
If you have the same level of value, say it’s 10%, on a bet at 2.00 you would bet significantly more than you bet on a selection at 50.00, even though the value (10%) is the same. In this way you’re bank grows at a similar rate irrespective of the odds whilst also protecting you from the greater variance at higher odds. The Kelly Criteria calculates your stake as a percentage of your existing bankroll so is similar to the fixed percentage stake plan mentioned above, in that your stake is recalculated for every bet, based on the outcome of the previous bet.
There are many issues with the Kelly Criteria, such as it relies on calculating your edge exactly and accurately, it is designed only to maximise long-term growth without account of short-term variance or risk of total ruin and it can throw up certain anomalies. In the very simplest of terms it is probably too aggressive for most people and would dictate wagers of uncomfortable magnitude. For this reason many people prefer some variant of Kelly, the most obvious being to bet a percentage of what Kelly recommends, for example half.
Although this will result in slower growth it will give you more protection from bad runs, protect your nerves from very large stakes and reduce the impact should you happen to miscalculate the value on offer.
In a sense all of these staking plans fail to take into account what happens when your bankroll grows. Ones that increase the stake can lead to you betting amounts you may feel uncomfortable with and the ones that don’t can leave you betting very small amounts. For this reason we recommend that you reconsider your bank every few months. Depending on what your aims are and how seriously you take all this will dictate whether you aim to build your bankroll indefinitely or whether you prefer to take winnings as profit. Some professionals have bankrolls in the millions and this allows them to take advantage of certain opportunities that may arise and in this instance you may be perfectly happy to have a very high stake, as Kelly or other percentage plans would dictate. However, others may prefer a more modest bank roll and a new kitchen/holiday/mistress. It may be a good idea to reassess your bank and staking plan every few months and you may choose to take profits at the same time or possibly withdraw them when you reach a set figure.
At the start of this discussion we considered that a staking plan should maximise profit and also protect you from losing your funds. In my opinion, to do this, your stake must reflect the size of your bankroll and the conviction you have in the bet. In essence this is the Kelly Criteria but in its pure form I find it too complex, too prescriptive and too aggressive, not to mention the fact that it relies heavily on calculating exact probabilities, which is exceptionally difficult to do consistently.
What I personally prefer is to use a combination of the discussed plans that takes into account my conviction in the bet and size of bank roll. My bank is at a satisfactory level now so I take profits every two months, increase the base stake when in profit and use a four point system that sees me stake between half and double that amount (so either 50, 100, 150 or 200% of my “stake”) depending on my confidence. Here the system is considerably less defined than Kelly as my “confidence” is inexact, a subconscious calculation that takes into account my perception of the value on offer and the length of the odds.
There are many more systems possible that are not discussed here – how many would you like to read before nodding off? – but my advice to you would be to experiment and find a staking plan that suits your experience, style and financial requirements, be it one of the above or some blend of them all. But once more, to reiterate – no staking plan can turn bad bets into good bets.