Betting basics: How to manage your bankroll
The path to successful betting starts with the basics, and one of the most fundamental lessons is learning how to manage your bankroll.
Betting is not just about winning. As any successful bettor would tell you, a bad streak can easily wipe out hard-earned profits if you don’t master the other side of wagering: how to manage your bankroll. This is only one of the ways to mitigate risk. We have also covered six common betting mistakes in another article, so check it out too.
In this article we’ll discuss the most effective way to use your bankroll (sometimes also called just “bank” for short) and how to manage it properly. In order to do that, we’ll start by getting into a little more detail on the definition of two key concepts: the stake, and the bankroll itself.
After that, we will get into how to manage the two to make the most out of our money.
Our bankroll, this beautiful stranger
Simply put, our bankroll is the total amount of money we have available for placing bets.
First thing a bettor has to pay attention to, especially when just beginning, is to his/her bankroll. This money can be distributed throughout various bookies, e-wallets, cryptocurrencies, or even your actual bank account. It’s a good idea to not have it all in one place, in case you run into problems.
Important: your bankroll should be that extra money you don’t need for basic life needs. This means you should use a part of your savings and/or disposable income which you would be comfortable in case of loss, or spending as fun/hobby or even as a risky investment, so long as you understand what you are doing.
Personally, I like to think it’s a hobby when talking about sports betting. I use the money I would otherwise use to buy a six-pack or a bar of chocolate. Even if it seems little at first, it adds up, believe me.
Let’s assume you start off with a €100 bankroll. The first thing to know is that this amount will be increased by taking advantage of the various welcome bonuses some bookies offer (a very nice example of these is Cloudbet’s welcome treat, which gives you up to a massive 5 BTC bonus).
After this kind of bonus, your bankroll will have grown to €200 for betting purposes, which is not bad to begin with.
Now before we continue, we need to talk about stake. Even if you know what stake means, it’s good to have a clear, common definition to work with.
What’s the stake?
For our purposes, the stake is the amount of trust you place on a certain pick. It is an arbitrary number that quantifies this level. A stake can be low, medium or high. As a unit of measure we could place it on a scale from 1 to 5, 1 to 10, or 1 to 100 as is common in some European countries.
When evaluating stakes set by other people, make sure you understand the scale. It is not uncommon to see a stake 30 from a said “guru” being offered say, in Spain, as if it were the pick of the week, when in truth it could be a low trust stake. Be careful with these things.
I believe a good way to quantify and measure our stake is with a unit we can distribute on a scale of 1 to 10; this keeps things nice and simple. While there are people who use decimal stakes (0.25, 0.125 and similar), this can be confusing to others, as it requires some conversion.
A good example of stake trust distribution would be the following:
1 to 3: Low trust. Picks that have a probability of coming out but that are hard. Stake 1 can be used to come out with a precise result, a comeback, betting on the least favourite or the such;
4 to 6: Medium trust. Picks you can place with more peace of mind. We have data that indicates that our pick is likely to come out green (benched players, injuries, team news, etc);
7 to 9: High trust: Picks that make us feel confident. We have very good data on them and there’s a very high probability of it coming out green;
10: Reserved only for extremely high odds, almost fixed games. Do not trust third parties or tipsters who use stake 10 as a rule. It shows either lack of knowledge and terrible bank managing skills, or outright bad faith.
Now that we know the stake units and how to evaluate them, let’s convert them to a common currency value. It’s much easier to assess bets when measured against a scale we understand and can relate to.
A safe way to calculate the conversion is to use a simple formula. This formula will give us the maximum amount in currency we should risk in relation to a percentage of our bankroll for every unit of stake of the bet. Sounds complicated, but it is much simpler than it seems:
$Bet = (Stake x Bankroll) / 100
If you do this conversion, be careful with higher stakes (5 or higher). In my opinion, placing a bet with more than 5% of our bank is high. If you need to, reduce the amount to 5%.
Let’s illustrate this system with an example. Say you want to place a stake 3 bet and have a $200 bank, here’s what you would do:
$Bet = (3 x 200) / 100 = 600 / 100
$Bet = $6
This means that for a stake of trust level 3 and with a $200 bank, we should risk around $6 to optimise the use of our bankroll.
It might seem complicated to make this type of calculation, but after your third try - and hopefully your third win - this will become second nature to you. It’s not about being exact, it’s about being optimal.
Practice makes perfect, so ideally you should exercise your newfound skills by doing it. Before putting real money, try and solve for the following cases:
With a $100 bank we want to place a stake 1 bet. How much $ is that?
With a $500 bank we want to place a stake 3 bet. How much $ is that?
With a $1000 bank we want to place a stake 4 bet. How much $ is that?
With a $250 bank we want to place a stake 6 bet. How much $ is that?
The more you practice, the more intuitive it will become.
Why does it matter?
Now that you know everything about stakes you might ask yourselves, does it really matter that much? The answer is, only when you’re losing. And it just so happens that losing is a big part of the game. Believe me, even the best bettors have bad moments.
Losing streaks are real. The same way you can hit 15 or 20 consecutive greens, you might get hit with reds. Without a proper bankroll management system, five or six bad calls might wipe out our entire reserve. By using it properly, we could stand a 40-long losing streak and still have bank left to keep placing bets.
I believe the only way of not losing all your bankroll while betting is to learn to handle your stake correctly - it should be as basic as breathing correctly in pilates, and yet it requires the same level of discipline.
This isn’t the only system around - others, like Fibonacci, and the progressive system, are also good options, and each has their own pros and cons. In terms of calculating stakes, the Kelly criterion is also a good example of rational, risk management system. Whatever your choice, just be sure to be disciplined.
Some people might say such a system limits your profits, because of the conservative caps on bets. However, successful bettors will unanimously tell you that, in the long run, profits will always be larger with the system than without it.
It might look slower, but it’s much safer - and more fun, too, as you get to play another day. Going down to zero with your bankroll is not to anyone’s liking, except perhaps for bookies.