Don’t fixate on staking plans. They won’t improve the profitability of your strategy/system unless it already has an advantage or positive ‘edge‘. Verify that your selection method is profitable on an equal-stake basis before you look to optimise your approach to bankroll management.

**Staking Plans — Important Points**

### The Benchmark Is the Level Risk Staking Plan

A level risk staking plan means risking a fixed stake or ‘unit’ per bet (e.g. £5 stakes throughout my Mug Betting Experiment). A selection system that doesn’t produce a profit on a level stake basis won’t profit under *any* staking plan. Fundamentally it needs to have a positive edge.

There are two types of level-risk staking plans:

**You risk the same amount per bet, irrespective of the odds**. So if the odds are 2.5 or 10.0, you’d still bet the same amount. For Lay bets you’d have to calculate the correct risk (the liability) per bet.**You determine the risk from the odds.**This method accounts for the implied chance of winning. Higher stakes are placed on low odds, and lower stakes at high odds. The result is an even profit from any win, no matter what the odds were.

(2) is the better, safer option because it allows for more ‘attempts’ at striking a win at higher odds where there’s less chance of getting one. The variance is reduced such that both losing and winning streaks don’t impact the bank too much. The result is a flatter, less jagged PnL graph with fewer heavy swings of misfortune and fortune than in method (1). The main advantage to all this is that it makes the prediction of future performance a little easier.

However, putting peaks and troughs aside, the end result — the profit — is more or less the same for both (1) and (2).

### Most Staking Plans Can’t be Applied Effectively

There’s a few reasons why staking plans fail in practice. Consider the following:

**Bookmaker stake limits**. If a Bookie limits your bets, or only offers a low max stake for a particular selection, then you might not be able to bet according to your rigid staking plan.**Betfair liquidity.**To overcome Bookmaker stake limitations you could use Betfair, right? Yes — but that doesn’t guarantee you’ll be able to get your stake away at the odds you want. It’s still very much dependent on market liquidity.**Loss of potential profit**. This might sound contradictory to what you’re trying to achieve from a staking plan. But if your aim is to maximise the profit you earn from every bet you make, then your ultimate goal should be to*bet*as*much as you can comfortably risk*on each bet*. Sometimes staking plans suggest lower stakes, in order to promote steady growth and reduce risk. You need to decide what you value the most.**Complexity**. The more you have to refer to your spreadsheet to check the ‘correct’ stakes, the more work and admin you create for yourself. Remember that you usually have to be fast in professional betting — so you want to avoid wasting valuable time.

**This principle only applies to bets with an advantage or ‘edge‘. If you don’t have an edge, then betting more will only extrapolate your losses! *

## Other Staking Plans…

### The Martingale (Disastrous)

This is the poorest form of bankroll management. It is literally one of the worst staking plans ever devised.

The theory is that you keep doubling your stake every time you lose on an even money outcome (at odds of 2.0), until you eventually win. It’s simple, and it might work for a bit. But you’ll need an infinite betting bank and a Bookmaker that will enable you to bet up to an infinite stake…

Just for demonstration purposes, imagine you bet £20 on your first bet, and won on your 8th bet (at odds of 2.0 each time):

**Lose £20**(Total loss = £20)**Lose £40**(Total loss = £60)**Lose £80**(Total loss = £140)**Lose £160**(Total loss = £300)**Lose £320**(Total loss = £620)**Lose £640**(Total loss = £1,260)**Lose £1,280**(Total loss = £2,540)

… and now you’re betting **£2,560** having already lost **£2,540**, in order to make £20 profit overall!

Is it worth it? Can you afford to do it? Will the Bookmaker/Exchange enable you to bet enough each time?

Remember that losing streaks such as this are actually pretty common. So I wouldn’t try your luck with the Martingale.

### Loss Recovery (Bad)

The concept of this staking plan is to recover previous losses by adding them to your win target. It’s much like the Martingale staking plan in that it will inevitably come back to bite you you when you hit a losing streak. The key difference is that it’s open to any odds — not just even money (2.0). It requires a little more calculation for determining the correct stake.

Imagine you set a target of £20 profit, and bet at the following (random) odds each time until you won.

**Lose £13.33**@ 2.5 odds (Total loss = £13.33)**Lose £16.66**@ 3.0 odds (Total loss = £30)**Lose £33.33**@ 2.5 odds (Total loss = £63.33)**Lose £27.77**@ 4.0 odds (Total loss = £91.11)**Lose £74.07**@ 2.5 odds (Total loss = £165.18)**Lose £52.91**@ 4.5 odds (Total loss = £218.09)**Lose £238.09**@ 2.0 odds (Total loss = £456.19)

… and if the odds on the next bet are 3.0 then you’re betting with a stake of **£238.09**, having lost **£456.19** already, in order to reach the original £20 profit target!

Every time you lose you’re expected to raise the original target to recover previous losses. On the first bet I lost £13.33, so the next bet required a new stake calculation to work out how much I had to then bet to recover that loss **and** also reach the original £20 profit target.

Using selections with increasingly higher odds after each loss means less additional stake risk — but doing this means there’s more chance of losing on each iteration. In other words, this approach doesn’t help.

### Percentage of Bank (Good — Minor Adjustments Needed)

This staking plan is simple to implement, and is effective if used properly. You manage your bankroll by setting a stake risk relative to your current bank size. You always bet a fixed percentage of the bank on each selection.

The problem with this staking plan is that if you go on a losing streak, then you’ll lower your stakes relative to the bank size. Therefore you won’t benefit as much from winning bets which come after that losing streak.

Let’s suppose your bank is £1,000 and you decide to bet 5% of your bank size. Here’s an example set of betting results:

**Lose £50**@ 2.5 odds (Total loss = £50, Total bank = £950)**Lose £47.5**@ 3.0 odds (Total loss = £97.5, Total bank = £902.5)**Lose £45.13**@ 2.5 odds (Total loss = £142.63, Total bank = £857.37)**Lose £42.87**@ 4.0 odds (Total loss = £185.5, Total bank = £814.5)

The next bet now has a stake of 5% x 814.5 = **£40.73**

Already this stake is significantly less than the original £50. I won’t be rewarded as highly for a winning bet as I originally would’ve been (on bet 1). I’m beginning to ‘pen’ myself into a smaller bank that’s difficult to grow. This isn’t ideal.

What I suggest is that you manage the bankroll by only applying the % of bank rule once it has grown beyond the starting point. So in my case I’d maintain an even stake of £50 until the bank grows to over £1,000. Of course, this may *never* happen. That’s betting for you.

### Kelly Criterion (Good, Theoretically)

The Kelly Criterion is a staking plan used to determine how much of the betting bank should be risked on any given bet. The formula accounts for the odds, as follows:

The Kelly Criterion formula: (BP - Q) / B

*B = Decimal odds -1*

* P = probability of success*

* Q = probability of failure (i.e.* 1-p)

Suppose you are betting heads on a coin toss at odds of 2.0, where the coin is biased and has a 52% chance of ending up on heads. The 2.0 odds are therefore *positive* value, because it implies only a 50% chance.

**In this scenario:**

P = 0.52

Q = 1 – 0.52 = 0.48

B = 2.0 – 1 = 1

This works out as: (0.52 x 1 – 0.48) / 1 = 0.04

The Kelly Criterion recommends you bet 4% of the bank. A positive percentage implies an edge in favour of your bankroll, so your funds grow exponentially.

This staking plan has the advantage of ensuring the whole bank is never lost in one bet. In all, it’s a smart bankroll management strategy. But in practice you will find that the Kelly Criterion recommends bet sizes that simply aren’t possible due to restrictions at the Bookies/Exchanges. Theoretically it appears a lot more powerful than it *really* is.

**Final Notes**

There’s no substitute for finding value. Staking plans won’t ‘save the day’. But if you’re conscious of preserving your bank then I’d personally look to apply a simple percentage of bank plan (with the adjustment I’ve mentioned), or maintain a low equal risk and ride out the variance.

Keep in mind the limitations to any staking plan you apply. Stay rigid and be sensible with how much you risk.

#### Further Reading:

Calculating The Expected Value (EV) Of Your Bets

What is Value Betting? What Is A Value Bet?

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