As a maths-based punter, I find bankroll management one of the most interesting topics in punting.
The reason is that it’s largely an unsolved mystery.
Just what is the best amount to bet?
Bet too lightly and you’re not taking advantage of your bank. But bet too heavily and you can wipe it out.
For example, if you had a $10,000 bank, then you need to divide $10,000 into 100 unit, which is $100 per unit. So 1 unit = $100. If there was a horse rated at $2, you would bet to return five units, meaning a bet of 2.5 units ($250 based on a $10,000 starting bank). The pro punter would recommend a 2.5 unit bet in their tips. You might back it at $2.50, in which case you would return $625 should it win.
That is a sensible approach based on years of experience. It incorporates several excellent bank management strategies:
Firstly, more is outlaid on favourites and less on longshots. It makes sense to outlay more on horses that are more likely to win and less on horses that are more likely to lose. You’re less likely to lose your money on a favourite, and longshots can have long runs of outs that can quickly wipe out your bank. This approach effectively normalises the risk on any selection, whatever the price.
Secondly, the better the odds you can get, the more you will win. This is similar to outlaying more on better overs, which is in line with the best “advantage play” theories in the world, such as the Kelly Criterion.
Finally, betting to return five units is a sensible amount to aim to return. It allows a reasonable amount to be bet, but is also an amount that does not risk the bank during a poor run.
The biggest misconception in punting is that punting is all about winners. It’s not. It’s about finding selections that are better odds than what they should be. Well it is if you want to make a profit any way.
— Rod (@highlowrod) January 7, 2020
I believe a critical aspect of this approach is to maintain a 100-unit bank. That means the value of a unit moves depending on the size of your bank.
Say you started with a $10,000 bank betting $100 per unit. If you had a losing run and your bank dropped to $9,000, then one unit should change to $90. Likewise, if you had a winning run and your bank was $12,000, then one unit should be $120.
It’s important to adjust what a unit is worth periodically, because that will maximise your profits during a good run. That allows you to bet more and follow an exponential growth in profits. More importantly though, it will reduce your losses during a bad run.
A common mistake is to never adjust what a unit is worth. So in this example one unit would always be $100. There are no serious consequences when you are winning as it just costs you some profit, or breaking square as you’re betting the correct unit size. However during a bad run (which will happen to you at some point – see normalcy bias), it will take a bigger chunk out of your bankroll than it should. It may even be enough to wipe out your bank altogether.
Some say that reducing your bet size during a losing run costs you profit when the inevitable good run comes along. In reality however, that’s Gambler’s Fallacy. Reducing your bet size protects your bank from a losing run that could last longer than you’d like.
Some punters are able to adjust their unit size after every bet, which is great. More regular adjustments lead to more efficient bank growth. For others, that is practically impossible. Personally I adjust my unit size once a week, but I’d prefer to adjust it daily.
Most punters will adjust what a unit is worth each month or after a good or bad run. Ideally, you want to adjust what a unit is worth as often as you can. That will make the process of increasing your bank more efficient. It’s the number of bets you make rather than time that is most important when deciding on how often to adjust your unit size.