- Why you need to protect your betting bank in downswings, and take full advantage of upswings
- The importance of decreasing your unit size with your bank
In theory, the growth in your betting bankroll – or any investment bankroll, perhaps – is reasonably straightforward. As it grows, you can grow your betting with it.
If you’re using a 100-unit bankroll, for example, when the bank increases your unit size increases too, leading to exponential growth as you bet more and more in dollar terms.
But what about when the bank decreases?
Everybody goes through downswings, flat spots and losing streaks, when their bank decreases. And the unit size should decrease with it.
Or should it?
There are two schools of thought here. The first it just that – your unit size is always a product of your bankroll, so it just moves up and down with it.
The second is that you should never adjust your unit size downwards. The theory there is that you have the 100-unit bank to protect yourself, and that your betting activity will recover and kick back up… and if you’ve reduced your unit size during the downturn, it’s only going to take longer to win it all back.
We asked pro punter Rod, who runs the High-low package for Champion Bets. Rod touched on the topic in his series “Bet Like A Pro”, so we asked him specifically about the downward adjustment of your bank.
— Rod (@highlowrod) 8 May 2019
“Firstly, when it comes to adjusting the bank, it should absolutely be on every bet where possible,” said Rod.
“In theory, that’s the best approach for an exponential growth in the bank. Sometimes it’s impractical, so in that case at the end of each day – or whenever you can, essentially. Doing it every week, month, whatever, is not the best approach. It puts more of your bank at risk than you should.”
But if I adjust the unit size down, doesn’t this mean that when the eventual upswing comes, it’s simply going to take longer to recover because I’m staking less (in dollar terms) than when I was winning?
“That’s what everyone thinks, but it’s not right,” says Rod.
“It’s the Gambler’s Fallacy, which is optimism bias: ‘I had a bad run, so now I’m due for a good run’.
“Every bet is independent. Sure, assuming you have a profitable method, your results will go up eventually. But the question you need to ask is when is that going to happen? It could be next bet, could another 100-200 bets, or worse.
“Losing runs often last a lot longer than we want – that’s optimism bias – and we don’t know when they will stop. In that time, you’ve lost way more than you should have if you haven’t reduced your unit size.
“You’re effectively betting more aggressively. Say you have a 100-unit, $10,000 bank, so you’re betting $100 per unit. Then a losing run happens, and you drop 20 units. You now have an $8000 bank, but if you keep the unit size the same you’re operating with an 80-unit bank.
“You lost $2000 because you keep the unit size the same ($100 per unit), when it would’ve been less had you reduced it as you were losing.
“On top of that, you’re effectively being more aggressive because you’re now using an 80-unit bank and betting a larger portion of your bank on each bet.
“It isn’t ‘doubling up’ but it’s the same sort of thing – betting more aggressively when you lose”
So while reducing your unit size may seem like unnecessarily risk-averse behaviour, it’s actually just a smart measure to ensure you don’t lose too much and worse, start to chase your losses. That might as well be punting lesson 101 – chasing your losses never ends well.