Money management, sometimes called bankroll management, is not, strictly speaking, a betting strategy. It's the cornerstone of every betting strategy.
Your pot, or bankroll, is the amount you are willing to spend on your betting system over a fixed amount of time. The main benefits of creating one are:
Once your pot is in place, money management strategy becomes a question of how you deploy your resources. There are lots of ways to do this, but we will have a quick look at the most common ones here.
Always betting a fixed figure (usually a percentage of your initial pot), therefore ascribing equal value to all of your betting decisions and allowing the odds to account for variations. This is a safe start for every beginner, and never loses its value.
The amount you bet, as a percentage of your bankroll, is calculated by multiplying the odds (in decimal form) by the chances of winning, then dividing by the odds minus one.
For example, let's say you had a bankroll of £1,000 and wanted to bet on Real Madrid to beat Athletico in the Champions League final with Betfair Sports at 1.98, but thought Real had a 75% chance of winning. You'd bet ((1.98 x 0.75) - 1) - (1.98 - 1) = 0.494 or 49% of your bankroll, so £490. But it's vital to get the predicted chances of winning correct to avoid over or under valuing a bet; and it's also worth remembering that the Kelly Criterion instantly reflects the size of your pot, making it a strategy that pushes for aggressive growth.
Even more aggressive than Kelly, the Star System is essentially a more complex version of casino-betting's Martingale System, and involves an incremental series of rising bets to rapidly boost your pot. The series, which represents bet multiples, goes: 1, 1, 1 / 2, 5, 10, 15, 25, 40 STOP. The '/' represents the point to start the progression, which only ever occurs after a win. To employ this approach, you need to be incredibly confident in your predictions or risk losing everything due to gambler's fallacy.
The rise of online gaming has made it much easier to establish and track the development of your pot, monitor how and when to consider a strategic shift, and get the figures you need for tax returns.
Sites like Betfair provide their account holders with detailed bet histories and the option to download long-term account data. You are also able to set yourself both financial and time limits, both of which are worth making the most of. Building positive habits and taking control early isn't just about avoiding problems, it's about effective betting strategy. So head over to Betfair Sports today to test your new knowledge.
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