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Guest slot: Peter Smith on managing your betting

September 29th, 2006

    Creating and Managing A Betting Bank

You like a punt and think you have spotted an opportunity – but how much do you stake? Of course, it’s entirely up to you but I reckon a systematic staking plan will help to improve your betting.

Begin by creating a Betting Bank. I mean by this a separate sum of money, ring-fenced from your daily budget and preferably kept in a separate account. Its size will depend not just on your means but also what you feel comfortable with. My own Bank this year is £4,000 because that’s what I could afford to lose without it impacting my lifestyle unduly but the important thing is not so much the size as the identification of a specific amount dedicated exclusively to betting. This will give you a clear benchmark for your staking plan.

How? Well, the crucial consideration is that it is essential you never exhaust your Bank. If you bet regularly, you are certain to have long losing runs from time to time. If your Bank is big enough to sustain you through such spells, you can expect to recover those losses in due course but if you empty the Bank, that’s it; you are out of the game and losses will never be recovered. Bookmakers know this and depend upon it. Most punters, sooner or later, hit a run so bad that their resources are exhausted. They withdraw from the game and temporary losses become permanent.

The solution is to fix your stake as a percentage of your Bank. What percentage depends upon your success rate which in turn is dependent on whether you tend to go for short priced favorites or, like me, look for the longer shots. To illustrate, let’s assume a fairly moderate strike rate of 25% (i.e. you back one winner in every four bets). What is the longest losing run you are likely to endure?

Statisticians can get wonderfully complicated about such questions but for the purposes of this illustration, please accept that there would be a 1% chance of hitting a run of 17 losing bets. Round this up to 20 and it implies that at a standard stake of 5% of the Bank, there would be less than a 1 in a 100 chance of exhausting it. Even this might appear too high a risk, given the catastrophic consequences of hitting rock bottom, so I suggest two ways of reducing the risk further.

First, graduate your bets according to how good you think they are, allocating 1% to the weakest and 5% only to the ones in which you have the greatest confidence. Secondly, don’t scale the bets to the starting Bank but to the actual Bank, so that if it grows, your stakes increase and diminish when it shrinks. That way, in theory, the Bank should never be exhausted.

Applying these principles to my own Bank, I started the year working to a maximum stake of £200 (5% of £4,000) and a minimum of £40. In practice, most of my punts are round about the £100 mark. I’m fairly comfortable with that, which brings me to my last point.

Never mind the stats; don’t bet outside your comfort zone. If you are not comfortable risking 5% of your Bank on a single bet, don’t do it. On the odd occasions when I have significantly exceeded my self-imposed limits, I have felt miserable and however successful the bet has proved, the strain has simply not been worth it.

One benefit of a clear staking plan is the sense of control it gives you in respect of money management. This aids confidence which is likely to spill over into your betting generally. By following the simple principles outlined here, there’s a fair chance your results and profits from betting will improve automatically.

In fact, I’m prepared to bet on it.

Peter Smith (aka Peter the Punter)

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