Sunday, August 23, 2015


Bet Sizing and the Cost to Your Bankroll

 

 
When it comes to betting on football games there are many systems out there. The most popular systems seem to follow the same basic idea. It goes along the idea of raising your bets when you’re winning and lowering them when you’re losing. That way you take full advantage of winning steaks and don’t get hurt on losing steaks. The reasoning behind this seems logical enough. That certainly sounds like good advice, but is it? It’s very bad advice actually. Before we get into the nuts and bolts of it, I have a simple question. How in the world does someone know they’re in the middle of a winning streak? And if they know that they’re in the middle of a steak, why wouldn’t they bet everything they have on the next game? After all, they would know they’re going to win the next game, because being in the middle of a winning streak means just that. The advice is silly on its face. As it turns out, that piece of advice has hurt far more gamblers than it’s helped. Raising and lowering your bet sizes actually makes it harder for you to win. Here’s an example. Take any series of 10 bets with 5 wins and 5 losses. If you bet the same amount on every game, you’re going to break even, no surprise there. Now let’s look at a sequence of bets, raising and lowering after a win or loss. It doesn’t matter what the order is for these 5 wins and 5 losses. I’ll do two below. The one on the left is 5 wins followed by 5 losses. On the right, 5 losses followed by 5 winning bets. The bet size will be 10% of the total bankroll after the last bet. The bankroll stars out at $1000.


 


   Bet size
  Bankroll
   Bet size
   Bankroll
1000
1000
win
100
1100
loss
100
900
win
110
1210
loss
90
810
win
121
1331
loss
81
729
win
133
1464
loss
73
656
win
146
1610
loss
66
590
loss
161
1449
win
59
649
loss
145
1304
win
65
714
loss
130
1174
win
71
785
loss
117
1057
win
79
864
loss
106
951
win
86
950

The first thing we notice is that both sequences end up losing money. Remember, when you bet the same amount on each game you start with $1000 and after 5 wins and 5 losses you still have $1000. When you change bet sizes, you end up with about $950. You’ve lost about $50 in both examples, picking the same games at the same win rate, 50%. The wins and losses can be in any order. As long as there are 5 wins and 5 losses the results will be the same, minus about $50. The second thing to notice is that when you juggle the bet sizes, you have to win at a higher percentage rate to make money. Where 50% was break even, when varying bet sizes it’s a higher number.

There’s no doubt about it, raising and lowering your bet sizes makes it harder for you win money.

This doesn’t mean to never raise your bet or lower it. If you use a bankroll, there will come a time you should change bet sizes. As your bankroll grows it only makes sense to raise your bets, and vice versa. However, you should change your bet size very rarely, as changing it does come with a hidden cost. If you don’t use a bankroll, you should never change your bet size during a season.

Most gamblers don’t understand this concept and consequently make it harder on themselves to win. Don’t fall into this trap!
 

 
 





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