Opinion: Dumb Staking Plans You Need to Avoid
Good money management is a key tenet of enjoying consistent long-term profit. The best way to achieve this is through a sound and sensible staking plan. Otherwise, you could be short-changing yourself badly. It always amazes me to learn that people are happy to spend hours researching bets each week, but spend next to no time figuring out how much to bet on each selection.
A good staking plan is the difference between maximising your profits and an empty betting bank. For the record, flat stakes (and compounding) is the only staking plan you should use. This is the process of selecting a specific ‘value per unit’ and sticking with it. For example, you could have a £500 betting bank and decide you want 50 units. As a result, each unit is worth £10 or 2% of your bank.
With a flat staking plan, 50 units should be enough to help you ride out a bad run. Compounding is the process of raising the value of a unit once your bank gets high enough. For instance, if you get to £600, you can decide to increase the unit value to £12. You’ll notice that it is still 2% of your bank. Compounding works particularly well in strategies with a high win percentage. It is also okay to bet more than one unit on occasions where you know the bookmaker has made an obvious blunder, but that doesn’t happen very often.
However, despite the simplicity, and success, of the flat staking plan, punters routinely try weird and not so wonderful alternatives that typically end in disaster. All the while, they offer absolutely no advantage. For example, in the Wizard of Odds website, the author was able to prove that the Martingale system (normally used at the Roulette wheel) was no better than flat staking for profits when “measured by the ratio of expected loss to expected bet.”
In fact, he found that every betting system is equal to flat betting when compared in this manner. However, most of them carry a significantly greater degree of risk, primarily because they succumb to Gambler’s Fallacy.
What is Gambler's Fallacy?
It is the notion that an event is more likely to happen because it hasn’t happened recently. Conversely, it also suggests that because an event has happened a few times, it is less likely to occur. In reality, each event is independent of one another and should be treated as such.
Do you think a team is more likely to beat a rival because they have a turgid record in recent years? Logically, it would be less likely because of a psychological block. Also, do you think this team will win solely because you are on a bad run and the ‘law of averages’ says you are ‘due’ a win? Of course not! Yet punters around the world are effectively making these assumptions via the dumb staking plans they use.
Bad Staking Plans & Why They Are Dumb
The Martingale System
This system is often used in roulette and involves doubling your stake after every loss. Once you win, you go back to your initial stake. It should be easy to see how things get out of hand. Let’s say you bet £10 a time. After three successive losses, your fourth bet will be £80. After six losses in a row, your seventh bet is £640. Even if it wins, your profit is £10! That’s a pretty terrible ROI, not to mention the amount of stress you go through to win such a small amount of money.
The real idiocy lies in the idea that you can’t lose too many 50/50 bets in a row. Let’s say you use Martingale for Even money bets. First of all, the actual chance of the bet winning is probably 47-48% because of bookmaker overround. Even at 50%, there is a possibility of losing six in a row in a 50-bet sample. In a 500-bet sample, you can lose nine in a row! If this happens to you while using Martingale, your bank will be ruined. A 50-unit bank will only survive six consecutive losses, and you won’t cover losses if the sixth bet wins.
Stop at a Winner is another mind-bogglingly daft idea. As you can guess, SAAW involves betting until you get a win. You could lose four in a row and quit after bet #5 wins. What if your first bet wins? You HAVE to stop. Imagine the horror if the other three bets you picked out for the day go on to win.
Once again, this is a classic case of Gambler’s Fallacy. According to this system, you are less likely to win after your first winner which is fundamentally untrue.
This was devised in the 1950s and is often used in football betting. You calculate the ‘right’ percentage of your bank to bet based on the perceived edge you have in the market. Here is what the formula looks like:
f* = (bp – q)/b
- f * = The percentage of your bank you should bet wager. For example, betting 0.2 of your £100 bank means a £20 bet.
- b = The bet odds in decimal form, -1. 7/2 = 4.5 but you have to subtract one, so b becomes 3.5.
- p = Percentage chance of winning in decimal form 40% = 0.4 for example.
- q = Percentage chance of losing in decimal form.
Let’s say your bank is £300 and you want to bet on Fulham beating West Ham at 6/4. You believe Fulham have a 45% chance of victory, but the bookies only believe it is 40%. In this case, you have an ‘edge’ which means Kelly’s Criterion is applicable. Here is how much to bet:
f* = (1.5 x 0.45 – 0.55)/1.5
f* = (0.675 – 0.55)/1.5
f* = (0.125/1.5)
f* = 0.08333
You should bet 8.33% (or 1/12) of your betting bank. In this case, we would bet £25 on Fulham to win. It may seem harsh to call this a ‘dumb’ staking plan because it isn’t a bad idea in theory. Alas, in practice, it is unworkable. It assumes that you have correctly calculated your edge every single time. That simply doesn’t happen, and if you get a few bets wrong, it will massively reduce your bank.
The idea behind this plan is to create a ‘win target’ which dictates how much you bet each time. As the name suggests, it is aggressive when you are ‘chasing your losses,’ and as every successful punter knows, it is a disaster waiting to happen. As soon as you hit that inevitable losing streak, losses mount up quickly.
Imagine setting a £40 profit target. Here’s what happens when you lose five in a row (numbers are rounded up which means inexact totals).
- Bet 1: £26.66 @ 2.50. Loses. (Total Loss of £26.66)
- Bet 2: £33.32 @ 3.0. Loses. (Total Loss of £60)
- Bet 3: £66.66 @ 2.5. Loses. (Total Loss of £126.66)
- Bet 4: £55.54 @ 4.0. Loses. (Total Loss of £182.20)
- Bet 5: £148.20 @ 2.0. Loses (Total Loss of £330.40)
It gets bad pretty fast. Once again, you are ignoring the idea that every selection is an independent event. You aren’t more likely to win after five losses in a row than you are after five wins in a row.
This is a lot like Loss Recovery except for the fact that you don’t increase bets to chase losses. Instead, your stake depends on the odds, and you have a specific win target. For example, you may decide that you want a £10 profit if a bet wins. This means you would bet £20 on a 1.50 shot and £2.50 on a 5.00 shot.
What’s wrong with that you ask? If you are making bets, you should always believe they are going to win. Your goal is ‘value’ because that’s the only way to profit in the long-term, regardless of the staking plan. A 5.00 shot with a 16% chance of winning is NOT a good bet while a 1.5 shot with a 75% chance of winning IS great value. Rule #1 of betting, if it represents good value, it is a bet worth making.
As a result, it is a fool’s errand to change stakes because of odds. Let’s say you place three bets at 1.33, 1.50 and 4.00 with your £10 target. Bet 1 requires a £30 wager; Bet 2 requires £20 and Bet 3 requires £3.33. Your total stake is £53.33. You expect bets 1 & 2 to win which would yield a profit of £16.67.
However, if Bet 3 is the only winner, you are down £40! With level stakes, you would be £10 in profit.
Don’t say it won’t happen because it most certainly can!
Erm… What were you thinking?
The Worst Staking Plans lurking round the net…
No article on staking plans would be complete without some absolute belters you can find on forums. I’ve given my own names to a few:
- Forcing Value: If there is no ‘perceived’ value to your selections, force it by taking selections at odds of 2/1+. Instead of doing level stakes, try 15 doubles because if you win three of the bets, you earn more than by betting flat stakes. Outstanding! So, you acknowledge that your selections don’t have value but are assuming your 2/1 bets (implied probability of 33.33%) will win 50% of the time? I could have this ‘system’ all wrong to be honest, but it doesn’t make sense in any case.
- Super Saturday: Let’s say your first two bets lose. Multiply the loss by the odds of your next bet and remove two points. For instance, you have lost £20 and your next bet is at 5.00 which means you bet £60 for some reason (I think). Except for Saturdays because it is harder to pick winners so take away three points instead.
- Favourite’s Day Out: Monday, Tuesday (insert any day really) is the day when most horse racing favourites win so only bet on that day.
- Five-Star Belgrade: Divide your bets into 1-5 ‘stars’ and bet five times more on 5-star bets than 1-star ones. Presumably, you don’t think one-star bets have much of a chance so why waste money?
- 1326: In the year 1326, the people of England were still getting over the fact that King Edward II had banned ‘mob football’ just over a decade earlier. Even if football betting existed back then, it is unlikely that Medieval individuals would have used a staking plan as dumb as the 1326 Staking Plan. You can probably guess what it entails. Bet 1 = 1 unit. Bet 2 = 3 units. Bet 3 = 2 units. Bet 4 = 6 units. If you lose during any of the four bets, you return to the beginning. No, I don’t understand why anyone would choose such an illogical plan but then again, I wouldn’t mind a game of mob football.
Final Thoughts on Staking Plans
While there is no staking plan on earth capable of making up for the poor long-term performance of any betting system, sticking with a flat stakes plan and using compounding as your bank grows is the single best way to grow your bank sensibly and make the most out of your hard work.
Likewise, if you have invested in the Football Advisor Portfolio, you simply must adhere to a flat staking plan. The tips provided by FA come with unit recommendations for a reason.
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Patrick graduated from the National University of Ireland, Galway with an MA in Literature and Publishing but decided he would rather have the freedom of a freelance writer than be stuck in a publishing house all day. He has enjoyed this freedom since 2009 and has written thousands of articles on a variety of topics but sports betting is his passion. While his specialty is finding mismatches in obscure football leagues, he also likes to use his research skills to provide punters with detailed winning strategies in horse racing. You can check out his personal blog on www.lynchthewriter.com or Twitter @pl1982 where he writes content to help small businesses achieve success.