How To Bet: Staking According To Profit Margin

At the Smart Betting Club, one of our goals is to help all our members not only make money betting through tipsters, systems and strategies but to understand better exactly how a profit is made by different betting experts.

The ultimate goal being to help empower as many people as possible to develop their own betting strategy or even to just help them simply understand some of the concepts of successful betting.

Via our regular Friday Weekend Wager emails, we have featured a number of articles to help with this goal, such as the recent columns from contributor – Herbie Fogg.

In this first of an ongoing set of articles, Herbie looks into value betting when it comes to horse racing – A key concept for every gambler to be aware of.

You can read more about Herbie and his free Key Racing News service here.

Stake According To Profit Margin

Picking good value horses is only the beginning. The mistake most people make is to link their stake purely to the probability of winning.

The size of stake should be controlled by the potential profit margin within the price. When applied correctly, you will often see a bigger stake linked to a longer odds selection – even though, statistically, it has less chance of winning than a 3/1 shot you are also backing on the same card.

Here’s how it works.

In gambling, probability (the chance of winning) is only one side of the coin. Effective betting is not just about winners, it is about the odds offered in comparison to your calculation of chance.

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How To Bet: Using Compounding Staking When Betting

Last week I touched briefly upon the topic of compounding  and I have continued to explore this in a feature article released in SBC issue 51.

In this article I have examined some of the various ways you can compound your stakes, using 3 different SBC recommended services to illustrate 3 example methods.

Each service uses a slightly different compounding approach, tailored to suit their strike-rate and profit level. The first service I look at supplies football advice and over the past 3 seasons, have turned £1000 into £17,369 via their recommended compounding approach.

Another of the 3 services supplies 1 daily racing bet at short odds and has a very good strike-rate of winners. Going back to Dec 2008 this would have turned £1000 into £2925.45 via a very simple method. You are unlikely to find growth of 192.5% like this from any savings account.

Of course, not every service is suited to compounding as the analysis of the laying service in my previous blog showed. Here the compounded bank would have returned a lot less profit than simple level stakes.

Compounding also comes with its own risks and it certainly can’t magic a losing product into a winning one. What it can do though is add steady growth and provide another string to your bow when it comes to your betting profits.

My message therefore is quite simple in that compounding can work, but only when you apply it sensibly. Here are some general rules of thumb.

1. Compounding will always make your returns more volatile even when its increases profits significantly.

2. Compounding works best on high strike rate, small losing run systems & tipsters.

3. Luck plays too big a role with big priced selections, so compounding will generally lead to squeaky bum time.

Check out my full article on compounding including the details on some of the best services to use it with by becoming a Smart Betting Club member.

(p.s. Those of you with iPhones – be sure to check out the new app from Oddschecker for mobile odds comparison for all UK racing meetings.)

How To Bet: Compound Staking – Will Einstein help you compound the problem?

In last week’s Weekend Wager column I touched on the subject of compound interest or ‘compounding’, which is often sold as the magic formula to getting rich quick, especially when betting.

The idea behind compounding is to constantly re-invest your profits back into your original bank. Thus your average stake size will increase as will your profit (that’s the theory anyway).

It’s often backed up by quotes from Albert Einstein where he declares compound interest as “the greatest mathematical discovery of all time” or the “8th Wonder of The World”. Whether or not he actually said these things is up for debate but it’s worth asking the question, does compounding work?

Well it depends on how you utilise it as it can be dangerous especially if you are dazzled by the £ signs and headline profit figures. The best thing to do is to check out the full impact, both in terms of profit and loss.

Take for example one service, which recommends a certain method of compounding (or re-investment as they call it). Via their banking advice, £1000 invested back in December 08 would now be £7718, effectively 671% growth.

The only problem with this is that the size of the bank is too small and they would have actually lost 95.9% of it during one losing run! Imagine you had a £10,000 starting figure, would you have the balls to continue if it went as low as £410!?!

Here’s another couple of examples from two different systems we feature in our latest edition.

The first example is from a high strike rate football system. Here you can see that compounding really works.

The next example is from a profitable but inconsistent laying system. Not so great!

In some circumstances, following such a staking plan will only compound your problems.

Less Boom But Less Bust!

What this service needs to do is effectively double the advised bank, so you are staking less on each selection. Of course you get less boom but also less chance of going bust (Gordon Brown would be proud!)

If taking this approach and compounding, the initial £1000 will still have grown into £3231.47 over the same period.  223% growth – not something to be sniffed at!

That one losing run I mentioned before would have only accounted for 47.95% of your bank, which is a bit more manageable.

I don’t know about you but I would be very happy with 223% long-term growth and a worst case scenario of losing 50% of my bank during a bad spell.

Pick up SBC Issue number 51, due out in the next couple of days for the full rundown on this approach, including details on how you could have made this 223% growth.

How We Can Help Further

I have kept the above example purposefully brief but getting your staking right is incredibly important, especially if compounding.

This is why we devote some much attention to staking in our Smart Betting Club newsletters. We rank and review close to 40 top performing tipsters including suggestions on the optimum bank size to use. Often tipsters themselves get it wrong or ignore staking completely, always double check and if in doubt, we’re here to help.