Ask any seasoned bettor you know and see for yourself that effective money management in betting is just as important as picking winners.
Let’s face it – despite all the betting strategies that are intended to help you remain afloat and in the green when it comes to finances, most people who bet on sports end up losing their money.
One of the most important reasons why such a phenomenon is the case is because many a gambler ignore the fact that in order for a sound betting strategy to work, it needs to be applied rationally and on the basis of a clearly defined Money management system.
The biggest mistake most betting beginners will make is ignoring the bankroll management. In this sense – bankroll represents the amount of money allocated for betting. And the very first piece of advice that can be given to you is to always – and we mean always – stick to your determined bankroll and never exceed it.
Even though most of us bettors will end up losing money, that doesn’t have to be the case as betting can be a profitable pastime – or a business – with the right approach. And before we dive into the explanations regarding effective money management, it is of vital importance to determine the reasons why people lose money on betting.
Two main reasons exist:
- Betting Too Much
- Chasing Losses
To be completely honest and straightforward, even with all the advice and guidelines that can be found online for free, most of the bettors simply do not invest time and effort to grasp the elementary rules of betting and simple instructions that will help them – first and foremost – gain control of their own money and then learn the ways how to make more.
Betting too much is a detrimental mistake and obviously the most common one as well. A smart bettor needs to have a limit and that is one betting condition that is considered a rather important one. Betting too much in a short period of time is another common mistake as bettors will often mistake their starting wins for knowledge and expertise, but they need to remember that betting is a long-term process that requests discipline, patience and self-control.
Getting stuck in the middle of a losing run can also lead bettors into thinking their ‘luck’ will turn and that there is an end to a losing streak that is just around the corner. Winning probability is a system much more complex so instead of chasing your losses and investing more and more after each losing bet, it is better to take a break, cool your head, reset and reevaluate before starting the systematic approach all over again.
So now that we have determined some of the most common reasons why people end up losing money in betting, it is time to go over some guidelines and aspects that can help you reduce your chances of going bankrupt and helping you stay in the clear.
It is important to mention that there is no single and unified way to manage your money properly, but there exist several thoroughly developed systems intended to help you control your betting budget:
The expression is self-explanatory and it involves betting with a fixed figure which is usually a percentage of your total bankroll. A fixed stake allows you to allocate equally spread amounts, adding equal value to your bets and odds. This approach is considered one of the safest starting points for inexperienced bettors and novices.
Also called the Kelly formula – it is used to determine the optimal size of your bets. It involves a percentage of your betting budget which is calculated by multiplying the decimal odds by the chances of an outcome and then dividing by the odds minus one.
What this formula does is that it helps you determine a correct probability for an outcome, or at least correct to some extent. Kelly Criterion is supposed to use the formula to determine the exact amount of money you should invest in that particular event.
A budget of £1,000 to place on Chelsea winning the Premier League at the odds of 1.98 and Chelsea at 75% chance to actually do it will make the formula look like this:
((1.98 x 0.75) – 1) – (1.98 – 1) = 0.49
The result is translated into 49% of your budget, which actually means £490.
The Kelly Criterion is a strategy that pushes towards aggressive and exponential growth, thus making it suitable for more experienced bettors and those who are willing to take the necessary risk with a significant amount of money.
Originally used in casinos, Martingale is a money management system that helps you control the stakes by risking very, very much. More aggressive than the Kelly Criterion, Martingale works on a simple system of doubling your stakes every time you lose a bet. You need to keep doubling the stakes until you win a bet and then reset your stakes to the starting point.
This hard pushing system is eventually going to guarantee a profit but is quite hard to keep up with unless you have an unlimited betting budget.
Martingale is a tempting system but seeing that you can end up losing a £1,000 on what started as a £1 bet, and usually on not that enticing profits is not exactly everybody’s choice.
Effective Money Management can be achieved through different variations of the aforementioned systems some of which are – Star System or Row of Numbers – but what they all have in common is discipline and diligence.
A good bettor will find a way to control his budget by focusing on quality decisions made according to thorough research, which will usually be more than enough to prevent them from betting too much and going over the top.