How to avoid a $30,000 mistake

Punting Pointers

Successful punting is about backing horses that are over their true odds and having a sound money management plan. To be a long-term winner you can’t have one without the other.

Back poor value horses, but have a great staking plan? You will lose.

Back good value horses but have a poor staking plan? Again you will lose.

Back good value horses and have a good staking plan? It’s the only way to win.

Yet the vast majority of punters put far more work into deciding which horses to back and very little thought into having a clear money management plan that they will stick with through both winning and losing runs.

We recommend (well make that demand!) that all our members have 100 units set aside as a betting bank, meaning that whatever they’re starting capital is should be divided by 100. So if they have $1,000 to bet with, they are betting $10 a unit. A $10,000 starting bank means $100 a unit and so on.

In most races we will risk 1.5% to 2.5% of our bank and we have found this to be the best balance between two competing beasts – risk and reward.

Bet less than this percentage and it’s too conservative – you’re costing yourself profits.

Bet more than this and it’s too aggressive – sooner or later a losing run can really test your betting bank and psyche.

Even very successful approaches will have significant losing runs and since I have demonstrated that fact just a couple of weeks ago in the gambling industry, today I’ll venture outside the punting world and switch over to the stock market.

Everyone knows Apple thanks to the iPad, iPhone and iEverythingelse. Well over the last 10 years Apple shares have gone up 70 fold and that kind of return sounds like a phenomenal ‘smooth-sailing’ run. However during Apple’s otherwise meteoric rise there have been 5 substantial corrections that would test the mettle of any investor. On different occasions their shares have dropped in value by 27%, 41%, 43%, 56% and 82%.

Only those with the conviction of the beliefs and a sound money management plan could stomach such challenging times.

Continuing the financial theme I was chatting with a commodities broker the other day and the strong similarities with punting were very interesting. They specialise in certain markets, only trade when they have done extensive research and analysis which convinces them that they are getting value and they never chase losses. Also they never risk more than 2% per trade. Don’t you think we as punters could learn a bit from people who manage millions for a living?

But back to horse racing now and I want to tell you about a thirty-thousand dollar mistake from last week. Because it’s one thing to encourage and emphasise the importance of a 100 unit betting bank to everyone, but some punters choose not to follow this advice.

A member of our UK tips service was betting a flat $125 stake on each of our selections (by the way level stakes is never our recommended approach, but that’s a story for another day). One night recently he found himself short of funds at Betfair since he had only funded his account with a small percentage of his 100 unit betting bank. So he did a transfer to Betfair who are normally the fastest to make the funds available. Unfortunately on this occasion the transfer wasn’t credited to his account immediately so he had to miss that night’s UK betting.

As it happened we had a winner at $246.60 that night, costing our underfunded member more than $30,000. No doubt he’ll never make such a mistake again, but it’s a very expensive way of learning the lesson that managing your money is just as crucial as backing winners.