Money management, or bankroll management, is one of the key skills required to be successful at sports betting. Despite this fact there are many aspiring bettors that don’t even understand the importance of good bankroll management, let alone how to do it properly. This is a huge mistake. Even recreational gamblers should ideally have at least some idea of how to manage their money. Those that are serious about consistently making a profit through betting absolutely must know how.
Correct bankroll management is in essence really quite simple. By just following a few straightforward rules you can vastly reduce your chances of going bust and ultimately increase your chances of winning money over time. However, although it’s easy to learn how you should be managing your bankroll, actually doing it is a little more difficult. It takes a lot of discipline and self-control, which can be hard when things are going against you.
On this page we try to really push home the importance of bankroll management, as hopefully that will help you take it seriously. We also offer some advice on how to manage your money correctly. If you follow this advice then you will almost certainly improve your overall betting performance.
Two Reasons Bookmakers Make Money
It would be fair to assume that bookmakers make money because they set the odds and have a built in profit margin. This is certainly why they ultimately have an edge over their customers, but if smart bettors can overcome this edge (and they can), then there have to be other reasons why the bookmakers consistently turn a profit. We are going to look at the two biggest of these reasons, which both relate to bankroll management.
Firstly, bettors quite simply bet too much. It doesn’t matter if they can afford to lose it; that’s not the point. Everyone has a finite amount of money and, if they bet too much then they will either go bust or possibly just get so disheartened that they stop betting before they have a chance to win. This is because, no matter how good anyone is at picking winning bets, no-one can pick winners all the time. Even the best bettors will have bad runs. If they bet too much during those bad runs then they could run out of money and be unable to get back to winning ways.
The second reason is very closely linked to the first and essentially causes the same problems. It’s the fact that people chase their losses. Pretty much every gambler has, at some point, chased their losses and it almost always ends in disaster. The best gamblers are those that learn from their mistake and don’t do it again. Unfortunately, many lack the required discipline and repeatedly find themselves throwing good money after bad bets in an attempt to recoup losses.
Chasing losses can manifest itself in different ways. A bettor may stop trusting their judgment and just place wagers that they feel are safe, regardless of whether there is any value in them. Alternatively, they may start placing wagers at really high odds in an attempt to win everything back in one hit. Most commonly though, when chasing losses people simply end up increasing their stakes. This is basically the same as betting too much and will invariably lead to the same problem – running out of money.
To summarize what we have written here so far, two of the biggest reasons why bookmakers make a profit are because people do not manage their money properly. Or, to put it another way, if you don’t practice proper bankroll management you will probably end up losing all your money to the bookies. Hopefully that will help you realize just how important good bankroll management is.
How Money Management Helps
The main aim of using money management properly is to stop you from running out of money. At the very least, it’s to ensure that you lose it more slowly. Obviously you need to be able to pick winning wagers as well if you are going to be successful, but that’s something of a given. If you lose every single bet that you make then sports betting is not really for you.
Basically, the principle is that you set yourself certain rules based on your budget and the way you bet. These rules dictate how much you can stake on any given wager. If you follow them then, in theory, you should be able to ride out any bad losing streaks without going bust. Providing you are a decent bettor and capable of making good picks then you should therefore make a profit over the long term.
Money management does need strong discipline but the whole point is that you have a set of defined rules in place that you know you should follow. The idea is that they make it much easier to maintain your self-control. The rules should help you to avoid making reckless bets and chasing your losses when results are not going your way. They should also prevent you from getting carried away when you’re on a good winning streak and tempted to dramatically increase your stakes.
Advice For Managing Your Betting Bankroll
Now you understand why good money management is so important and how it helps your chances of success when betting, we need to look at how you should go about doing it. We should start by pointing out that there is no single correct way to manage your bankroll, but rather there is a general principle that you need to try and stick to.
The first step is to allocate a certain amount of funds that you plan to bet with – this amount then forms your bankroll. This amount should be money that you can afford to lose and you should separate it from your savings and day to day funds. You don’t necessarily have to deposit it all at a sports betting site, just ring-fence it somehow.
Once you have decided on the size of your bankroll you need to decide what percentage of your roll should be your base betting unit. Your base betting unit is basically how much you want to risk on a normal wager. Somewhere between 1 – 3% is ideal but you can go as high as 5% if you’re comfortable with the increased risk.
Your next decision is whether you want to use a flat staking model or a variable staking model. We recommend flat staking primarily because it keeps things simple, but there is nothing wrong with variable staking. Flat staking simply means that you place all your wagers at your base betting unit. Variable staking means you can adjust the number of units for a wager. For example, you might back the occasional long shot and only want to risk half a unit on such bets or you might want to risk more than one unit on wagers you are particularly confident about. Two units is probably the most you should ever risk though.
Once you have made all these decisions, you know exactly how much you should stake on each wager you place. Let’s say you decide to use a bankroll of EUR2,000 and a base betting unit of 2%. If you are using flat staking then each of your wagers should be placed at EUR40 (2% of EUR2,000). You then adjust the size of each of your wagers as your bankroll changes. If it drops to, say, EUR1500 then your wagers should be placed at EUR30 (2% of EUR1,500). If it goes up to EUR3,000 then your wagers should be placed at EUR60 (2% of EUR3,000).
Providing you stick to the rules then you would have to go on a truly horrible run to lose your entire bankroll. On the other hand, if you’re successful then you’re able to increase the size of your bets as your bankroll grows. If you ever choose to withdraw some money from your roll then just make sure you reduce your bets back down again.
As you can see, good money management really is straightforward. The math involved is certainly simple enough – having the discipline to stick to the rules is not so easy. If you have the necessary willpower though, and can pick a decent percentage of winners, then you should be able to show a profit over the long run.