A Beginner's Guide Part 3: Mastering Bankroll Management
Clarkson, Kapowski and Criterion
Welcome back, bettors! If you’re diving into sports betting, you might feel a bit overwhelmed. Don’t worry—we’ve all been there. Today, we’re tackling a crucial topic that will help you bet smarter and last longer in the game: bankroll management. Spoiler alert: you’re going to lose and lose often. Proper bankroll management makes this not devastating.
What is Bankroll Management?
Bankroll: The total amount of money you’ve set aside specifically for betting. Think of it as your betting budget. It should be money you can afford to lose.
Unit Size: A unit is a small portion of your bankroll that you bet on each wager. This helps manage risk. Again, proper betting is a battle of risk and reward.
Why is Bankroll Management Important?
Without proper bankroll management, you’ll likely lose your money quickly. Don’t get tempted by the cappers on Twitter who encourage you to take big swings. This is likely a losing strategy, and their slips on Twitter are likely fake. Sure buddy, you got a $70,000 bet down on Premier Lacrosse.
Proper bankroll management helps you:
Stay in the game longer: By spreading out your bets, you avoid going broke after a few bad bets.
Make smarter bets: When you have a plan, you’re less likely to make impulsive, emotional bets. And, it helps you know what to bet.
1. Set a Budget
First things first, decide how much money you’re willing to risk. You can afford to lose this amount without impacting your daily life. Treat it as entertainment money, like going to the movies or dining out.
2. Define Your Unit Size
A unit is typically 1-5% of your total bankroll. For example, if your bankroll is $500, a 1% unit would be $5. Most professional bettors stick to 1-2% to minimize risk.
Example: With a $500 bankroll, betting $5 (1%) on each game keeps your risk low while allowing you to stay in the game longer.
3. Stick to Your Plan
Once you’ve set your unit size, stick to it. Avoid the temptation to increase your bets after a win or to chase losses. Consistency is key.
Example: You win a $5 bet and now have $505. Your next bet should still be $5, not more just because you won.
4. Use a Staking Plan
A staking plan is a strategy for how much to bet. Here are a few common ones:
Flat Betting: Bet the same amount (one unit) on every game.
Percentage Staking: Bet a fixed percentage of your current bankroll.
Kelly Criterion: Bet sizes are adjusted based on the perceived edge and bankroll size.
Quarter Kelly: This is my chosen method where you bet a quarter of the amount suggested by the Kelly Criterion. You’ll often see this displayed on people’s recommendations with FK (Full Kelly) or QK (Quarter Kelly).
What is the Kelly Criterion?
The Kelly Criterion is a formula used to determine the optimal size of a series of bets. It maximizes the expected logarithm of wealth and is calculated as:
\text{Kelly %} = \frac{bp - q}{b}
Where:
bbb is the odds received on the bet (decimal odds - 1),
ppp is the probability of winning,
qqq is the probability of losing (1 - ppp).
Hey… that’s complicated, but you can find plenty of calculators online.
Why Quarter Kelly?
While the Kelly Criterion can be a powerful tool, it can also be aggressive and risky. To mitigate this, I use the Quarter Kelly method. By betting only 25% of the Kelly recommended amount, you reduce the risk and volatility, making it more suitable for beginners.
Example: If the Kelly Criterion suggests betting 8% of your bankroll, you would bet only 2% using the Quarter Kelly method. This way, you still leverage the advantages of the Kelly Criterion while maintaining a safer approach.
5. Track Your Bets
Keep a record of all your bets. Note the amount, odds, and outcome. This helps you analyze your performance and identify areas for improvement.
Pro tip: Find a tracker to do it for you. I use Pikkit, but there are others. Over time, you’ll see patterns and can adjust your strategy accordingly.
6. Avoid Emotional Betting
Don’t let emotions dictate your bets. After a big win or loss, take a break and revisit your strategy with a clear mind.
Example: You lose a few bets and feel the urge to place a bigger bet to win it all back (aka Chasing). Resist this temptation and stick to your unit size.
7. Review and Adjust Regularly
Review your bankroll and betting strategy regularly. Adjust your unit size and plan based on your current bankroll and performance.
Example: If your bankroll grows from $500 to $600, you might increase your unit size slightly but keep it within 1-2%.
Conclusion
Mastering bankroll management is the key to becoming a successful sports bettor. By setting a budget, defining your unit size, and sticking to a plan, you can enjoy the excitement of betting while minimizing your risk. Remember, it’s a marathon, not a sprint. Start small, stay consistent, and learn as you go.
Feel free to share your own experiences or ask any questions in the comments below. Happy betting!
Key Terms
Bankroll: The total amount of money you’ve set aside specifically for betting.
Unit Size: A small portion of your bankroll that you bet on each wager.
Flat Betting: Betting the same amount on each game.
Percentage Staking: Betting a fixed percentage of your current bankroll.
Kelly Criterion: A formula that determines the optimal bet size based on your edge and bankroll size.
Quarter Kelly: Betting 25% of the amount suggested by the Kelly Criterion to reduce risk.