Written by Joel Williams
Bankroll Management is a form of risk management – it is a strategic plan of how bankroll is managed in achieving the goal of sustainable profit. It is a calculated balance of upside v downside. Staking in accordance with bankroll management is critical to long-term success.
BR Management is a concept that is alarmingly often misdefined, miscalculated, or misused by tipsters, and referred to by some bettors as difficult to stick to, as it requires discipline and consistency. If you are following any kind of sports betting or investment advice, you need to ensure you are adhering to a sound bankroll management strategy. Historic performance is sometimes a good indicator, but the reality is anybody can win for a short period of time. Investigate methodology, staking consistency, the sample size of the data and ask yourself – is this sufficient? Technical reasoning sits firmly behind any successful bankroll management plan.
The best investor in the world will still go broke if he doesn’t manage his bank.
The term ‘never put all your eggs in one basket’ rings true. In any form of investment, a sound investment can have a negative result due to unforeseeable circumstances that have impacted the original position. In a company, this could be a tragic event in a CEO’s personal life that has a negative impact on company management and therefore performance. In a sports match this could be a key player of a team getting injured in-play, also having an unpredictable negative impact on the outcome.
Bankroll management reduces this ‘luck’ factor, allowing those investors betting with a true edge to exercise the power they have over the market consistently, without being overexposed to variance or uncontrollable factors.
In the same way risk or ‘exposure’ must be managed from being too large, it’s important to not understake + Expected Value (EV) opportunities that present themselves, this is where bankroll management becomes an art. Calculation of stake is a task that only the person calculating the edge in a position or investment should manage, otherwise how do they really know how much to stake?
Following great investors with sound bankroll management helps take the emotion out of investing. Emotion is a leading cause for investment wreckage and a strong factor in what separates the 1% of winning traders in sports betting, from the rest.
5 Warning Signs you are mismanaging your bankroll.
If any of the following sounds familiar, you are likely on a one way trip to blowing your bank:
1. Your bet sizing is often based on ‘feel’ or how ‘hot’ you’re running at the time.
When investing in any field, but particularly sports betting, confidence can rise or fall quickly based on recent performance bias. It’s critical to take the emotion out of betting, if you vary your stakes on how you feel, you are certain to make costly mistakes.
2. You are not sticking to a proven staking plan or don’t have one at all.
As a recreational bettor or investor, it’s important to be able to leverage what others are great at. Put the time into research of a great professional sports picks or racing tips service, do the research well once, and it will pay you for a long-time to come. If the sports picks service you are following doesn’t have a proven staking strategy, should they really be telling you what to do with your money?
3. You bet on a player or team because you’re watching the game and it will make it more enjoyable.
Be careful to not let entertainment crossover with your strategy. Betting on sports is one of the most exciting ways to invest on earth, that’s the beauty about this industry. But a mistake so many punters make is going outside of a proven strategy for the purpose of entertainment – we see it all too often and it will certainly have a negative impact in the long term.
4. You withdraw from the bankroll for personal purchases
A bad habit recreational bettors get into is withdrawing winnings from their bankroll. This ultimately stems investment growth with compounding returns. It can also lead to frustration when there is a downswing, as you’re not seeing the growth you earned earlier as you’ve spent it. When investing in a bankroll, treat it as a long-term investment and remove it from personal spending – keep it separate. A $1000 withdrawal today from a $5000 bankroll (20% withdrawal) costs you $20,000 later when your bankroll could have been at $100,000 (20%). There are emergencies and big events in life, when withdrawing be sure to adjust your staking sizes accordingly with the bankroll management strategy.
5. You only use one or two bookies to place your bets because it’s convenient
Convenience is a lazy excuse to be only using one or two. Having multiple bookmakers allows you to achieve best odds more often when placing a bet. The difference a couple of cents each bet can make on your returns and bankroll growth over a 12 month period can’t be overstated. Don’t be lazy.
How we use bankroll management in Tip Titans
One of the bankroll management tactics we encourage members to employ is to adjust your unit size based on your bankroll changes. We recommend checking this regularly and implementing changes based on 10% increases or decreases.
For example, if you start with a $10,000 bank and a $100 unit size and your bank increases to $11000 by the end of your first week, we recommend you change your unit size to $110 until your bankroll changes by 10% again. This ensures you are managing risk during downswings and capitalizing during upswings.
A feature of the Tip Titan’s platform is that all bankroll changes and suggested unit size adjustments are calculated for you. Check your strategy section and you will have the option to set custom or recommended options. This will then calculate the ‘recommended bet’ figure for each tip you receive based on your personal settings.
We are committed to helping you learn and leverage a proven bankroll management strategy from the Titans of sports investment. If you have any questions about Bankroll Management, reach out to our Trader Success Team at Tip Titans.