How to Bet on Sports. The Right Way.
Money Management in Sports Betting
In order to be successful at sports betting, it’s important to have good money management skills. These set of skills are more commonly referred to as bankroll management. In this context, the term bankroll simply refers to an amount of money that’s allocated for betting.
One of the biggest mistakes that most aspiring bettors make is ignoring bankroll management altogether. Even recreational gamblers should ideally have at least some plan for how to manage their money when betting. This is a necessity for anyone serious about making consistent profits.
The purpose of this page is to emphasize the importance of bankroll management, in hopes that you will take it seriously. It also provides some advice for how to manage your money properly, and gives details on the various staking plans available to help with this.
By taking into consideration all the information we have provided for you and by following all the advice we offer, you will significantly increase your chances of making a profit.
Why Bankroll Management is Important
Most people who bet on sports lose money. That’s an irrefutable fact, and one that leads many people to believe that sports betting was made for suckers. It’s not quite that straightforward though. It can actually be profitable with the right approach. It’s true that the bookmakers have the advantage of being able to set the odds with a built in profit margin, but this advantage can be overcome. In fact, there are many smart bettors who regularly and consistently overcome it.
So, if the bookmakers’ edge doesn’t prevent the possibility of making money from sports betting, there’s a big question to consider.
WHY do most sports bettors lose money?
There are actually several reasons why most sports bettors lose money. For starters, the majority of them simply don’t put in the necessary time and effort. The bookmaker’s edge CAN be overcome, but only with a great deal of hard work and commitment. Just being a big sports fan isn’t enough; there’s far more to successful betting than that. You absolutely need to understand the concept of value for starters, and you need to learn about the various betting strategies that can be used too.
Many people who put in the necessary time and effort still lose money though, even if they have a fundamental understanding of value and employ good strategies. One reason for this is that they don’t practice good bankroll management. Believe it or not, a lack of bankroll management is one of the single biggest reasons why so many bettors lose money.
You see, having a proper bankroll enables you to make more educated betting decisions. When a specific amount of money is set aside solely for betting purposes, that money becomes nothing more than a tool for betting. This is how you should view it. The focus should not be on how much you might win or lose per se, but rather on trying to make good selections for the right reasons. This is a lot easier to do when you’re practicing good bankroll management.
It also helps prevent you from making the following two mistakes.
- Betting too much.
- Chasing losses.
Betting too much can be a very damaging mistake, and yet it’s a very common one. Everyone has a finite amount of money, and losing too much of it through betting can lead to all kinds of problems. There’s always the possibility of losing your entire bankroll, but even those who can easily afford their losses can still be affected. For instance, they might get disheartened and stop betting completely, before having a chance to improve their skills to a level where they can make a profit. They might even abandon what would have been a winning approach, because it costs them too much money in the short term.
We should point out that NO-ONE picks winners all the time, not even the very best and most successful bettors. Remember that no strategy is perfect. Long-term winning strategy can be quite unsuccessful over a short period of time if there’s a run of unexpected results. By betting sensibly, a bettor won’t lose too much when those bad runs do occur and they will hopefully be able to benefit from sound strategies over time. Betting too much, however, can make a bad run very expensive. This is precisely why you should avoid doing that.
You absolutely shouldn’t chase losses either. This is another mistake that’s both damaging and sadly all too common. It would probably be fair to say that most gamblers have, at some point, chased their losses, and very few of them have done so with positive results. In fact, chasing losses almost always ends in disaster. Many gamblers learn this the hard way and choose to never do it again. Unfortunately, a lot of gamblers repeatedly make the same mistake, staking more and more money in an attempt to recoup losses.
Chasing losses can manifest itself in different ways. A bettor may stop trusting their judgment and just place wagers that they feel are safe, regardless of whether or not there’s any value in them. Alternatively, they may start placing wagers at really high odds in an attempt to win everything back in one hit. The most common way people chase their losses is by increasing their stakes. This is basically the same as betting too much and will invariably lead to the same problem: running out of money.
Key Points to Remember
- Poor bankroll management is one of the main reasons why so many bettors lose money.
- Having a proper bankroll allows you to focus on making quality decisions.
- Good bankroll management prevents you from betting too much and chasing losses.
Bankroll Management Explained
Bankroll management is actually very simple, in theory at least. Its purpose is to reduce your chances of going bust, and to ensure that you’re able to withstand runs of bad luck without running out of money. Hopefully, this will increase your chances of winning money, as you’ll have the time to develop and adjust your strategies.
The basic idea of bankroll management is to define and follow a set of rules that determine how much to stake on any given wager. These rules should be based on your overall budget, the way you bet, and your betting goals. We go into detail about how to establish these rules later on.
First, though, we should point out that good bankroll management requires strong discipline. Learning how to manage your money correctly is one thing, but actually doing it is more challenging. There’s little benefit in being disciplined 90% of the time if you lose self-control the other 10% of the time. The damage can still be done.
By setting a few rules about how much you’re going to stake, it becomes easier to maintain self-control. Just make sure that you do stick to them all of the time, even when it’s tempting not to.
This might be obvious, but we’re going to mention it anyway. Bankroll management is an important skill to master, for reasons we’ve already outlined, but you still need to be able to make good selections to be successful. If you end up losing almost every wager you place, it may be time to consider if sports betting is right for you. If you decide to continue, betting purely for entertainment, remember that bankroll management still matters. It will help you stretch your bankroll and allow you to be entertained longer.
Advice for Managing Your Money
Although there’s no single, correct way to manage your bankroll, there are some guidelines that need to be followed.
The first step is to set aside a sum of money that can specifically be used for betting purposes. This needs to be something you can afford, but the actual amount is up to your discretion. This money should be used exclusively for betting, and it needs to be something you’re willing to live without if you do happen to lose it all. In a best case scenario, these funds will be separated from your day to day funds; although this isn’t necessary as long as you’re keeping accurate records of how much you’re winning and losing.
Once you’ve decided the size of your bankroll, the next step is to decide the size of what’s known as a base betting unit. This is simply the amount you feel comfortable staking on any given wager. The most common suggestion is to choose an amount that’s between 1-5% of your overall bankroll.
We typically advise against going beyond 2%. You should only go higher than this if you are comfortable with the increased level of risk or if you tend to back mostly big favorites. You should definitely be at 1% (or even lower) if you tend to back longshots. This amount should vary depending on what your betting goals are. For example, if your plan is to aggressively grow a bankroll as quickly as possible, a higher percentage might be the better option.
The next decision regards which staking plan to use. The term staking plan is just another way to describe the set of rules regarding how much to stake. These plans can be broadly divided into two distinct categories; fixed plans and variable plans.
Fixed Staking Plans
A fixed staking plan is the best option for beginners in our opinion, and it’s also the simplest. There are two main types of fixed staking plan, and they are as follows.
- Level Staking
- Percentage Staking
With level staking, you stake the exact same amount for every wager. This would usually be one single betting unit, which is calculated based on your starting bankroll.
Your starting bankroll is $1,000, and you set the size of a betting unit at 2%. 2% of $1,000 is $20, which becomes the amount you stake on ALL wagers.
The principle is largely the same for percentage staking. You would again stake a single betting unit for each wager, but this would be calculated based on your current bankroll.
Your starting bankroll is $1,000, and you set the size of a betting unit at 3%. 3% of $1,000 is $30, so this becomes the amount you stake on your first wager. If it loses, your bankroll would now be $970. So for the next wager you would stake 3% of $970.
Variable Staking Plans
Variable staking plans are more complicated, but they are worth considering. With these, you adjust the number of units staked on each wager based on the following criteria.
- Confidence Level
- Potential Return
- Previous Results
- Expected Value
For example, with a staking plan based on confidence level you might stake anywhere from half a betting unit (when you’re not confident about a wager’s chance of success) up to three betting units (when you’re very confident about a wager’s chance of success). With a staking plan based on potential return, your stakes would vary depending on the odds of a wager. Higher odds would mean lower stakes, and lower odds would mean higher stakes. The aim would basically be to win roughly the same amount each time.
Staking plans based on previous results involve increasing or decreasing stakes depending on whether previous wagers have won or lost. Increasing your stakes is an attempt to recover previous losses, while decreasing your stake is an attempt to accelerate bankroll growth. We don’t like either approach and suggest avoiding these types of plans.
There’s a specific staking plan that’s most widely used for betting on expected, and it’s known as the Kelly Criterion. It uses a specific formula to calculate your stakes for each wager. Even though many bettors use this plan, there are still a great deal of betters that believe it serves no real purpose. For more information on this, please read our explanation of how to use the Kelly Criterion staking plan.
As you can see, managing a betting bankroll doesn’t have to be particularly complicated. You just have to establish a clear set of rules for determining how much to stake on each wager, and then stick to those rules. That takes discipline, but with the right level of willpower it can become second nature.
If you do stick to the rules and practice good bankroll management, then you should hopefully be able to avoid going bust. By only ever staking a percentage of the money you have to bet with, you should be able to ride out any bad losing streaks. We recommend making reckless bets to chase losses, and resist the temptation to increase stakes when things are going well.
Good bankroll management in conjunction with the ability to make good selections provides you with the best possible chance of making a profit in the long run.
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