How To Manage Your Betting Bankroll
Successful bettor has to have covered two main factors: picking up good value bet, and perfect bankroll management. There are too many strategies how to keep your bankroll healthy. Let’s look at the famous ones, and see their pros and cons.
A Slice Of The Pie
This strategy is about to keep a constant percentage of your bankroll with each bet. But this method is not so simple. For example if you betting 5% of your bankroll, and you will suffer 33 loses in a row, you will be from $1000 on $200. Since your bet will not have always the same value, this method has disadvantage, because you are betting still the same amount 5%. You should think and calculate how much to bet on favorite with odd 1,7 and outsider with odd 3,5.
Similar to slice of pie, but this method considering the odds. So not just blind putting of the same amount of money on all bets.
So for example, you bet 5% of a $100 bankroll so $5 is your standard. If betting on 2.00 odds, the bet remains $5, but with odds 11.00 on outsider, is your bet only $0,5:
Bet = (Bankroll * Percentage Of Bankroll To Bet) / (Decimal odds -1)
Bet = ($100 * 5%) / (11 – 1)
Bet = $5 / 10
Bet = $0,5
Till now it make perfectly sense. But what about with bet on huge favorite with od 1,05. Never bet such a small odds, this is just to see problematics of this method.
bet = ($100 * 5%) / (1.05 – 1)
bet = $5 / 0.05
bet = €100
Now you can see that you bet your whole bankroll on single bet = huge mistake!!
This method of bankroll management has stood the test of time since its creation in 1950’s. But it still has some critics, let’s see how this is working.
Kelly criterion works with the probability of a given outcome occurring and the value of the odds offered in relation to that probability – known as ‘the overlay’. This means that it suggests you bet more depending upon betting value on offer, but it also means you have to assess the probability of a given outcome with consistency.
Firstly, the overlay is calculated simply as:
Overlay = (probability * odds) – 1
See this example: Real Madrid is playing at home against Barcelona. Real has odds 2.70 to win and we assume that probability of winning is at 40%. Is this for us a value bet? Let’s see:
Overlay = (0.40 * 2.70) – 1)
Overlay = (1.08) – 1)
Overlay = 0.08
Yes, it is value bet, it is giving us 8% value.
How use The Kelly Criterion
There have been many modification of this method, let’s check it.
The Full Kelly
This one is risky, it can recommend you a bet of even 50% of your bankroll, but if you hit winning streak bankroll will grow tremendously.
How is Full Kelly criterion calculated:
Percentage of bankroll to bet = Overlay / (Odds – 1)
Let’s consider our example again. How much of our bankroll should we bet on Real to win?
Percentage of bankroll to bet = 0.08 / (2.70 – 1)
Percentage of bankroll to bet = 0.08 / 1.70
Percentage of bankroll to bet = 0.0471
So with a betting bankroll of $100, the Full Kelly method recommend to bet 4.71% of your bankroll on Real Madrid to win the match, a total of $4,7.
The Fractional Kelly
This system is more conservative, you will net only certain fraction of the recommended bet. Fraction can be half known as Half Kelly or quarter knows as Quarter Kelly
How is Fractional Kelly criterion calculated:
Percentage of bankroll to bet = (Overlay / (Odds – 1)) * Set Fractional
Let’s consider our example again, we will us Quarter Kelly
Percentage of bankroll to bet = (0.08 / (2.70 – 1)) * 0.25
Percentage of bankroll to bet = (0.08 / 1.70) * 0.25
Percentage of bankroll to bet = 0.0471 * 0.25
Percentage of bankroll to bet = 0.0118
So with a betting bankroll of $100, the Quarter Kelly method suggests we bet 1.18% of our bankroll on Manchester City to win the match, a total of $1.18.
So do not wait and try these systems in real with the best online bookmakers.