Gambling Bankroll Management
Betting bankroll management and awareness of variance are essential skills for bettors. What is the relationship between odds, edge and variance? What are the bankroll implications of varying odds? Read on to find out.
- Poker Bankroll Management
- Bankroll Management Calculator
- Sports Betting Bankroll Management
- Betting Bankroll Management Calculator
By understanding what to expect over a series of bets, sound bankroll management will assist a bettor in avoiding certain behavioural biases such as Overconfidence Bias, Self-attribution Bias, and The Illusion of Skill, that may erode expected profitability over the long-term. This article explores how odds, edge and variance interact and can help guide bankroll expectations for bettors.
- Once you’ve set aside a set bankroll amount, you need to determine what percentage of your bankroll you will wager on any one event. For beginner bettors, we recommend that you keep the size of your bets consistent: Select a unit size somewhere between 1-5%. Conservative sports bettors should bet 1-2% of their bankroll per single bet.
- Bankroll management is an important technique that will help give sports bettors a chance to win more of their wagers. Proper management means wagering a fixed amount and an amount that’s appropriate for the total bankroll size. Doing this is the first step toward profitable sports betting.
- The single most important part of a winning sports betting strategy is bankroll management. Bankroll management refers to how you choose to allocate and handle your funds while making bets. Proper bankroll management can help increase the longevity of your bets and help to propel you to the upper echelon of professional betting.
- The simple answer to this question is that bankroll management helps you gamble responsibly. When applied properly, it ensures that you bet within your means and don’t risk money that you can’t afford to.
Bankroll management
Tynic Bankroll Management (Android): Originally designed for lottery players, Tynic also works well for casino gaming. It helps you break your bankroll into blocks and protects your budget if you go on a losing streak. Easy Bankroll (Android): Easy Bankroll is a great tracking app that lets you select games, dates, and even venues before you.
Managing a bankroll and understanding variance are crucial skills for any bettor. From poker players to sports bettors, traits that all successful bettors will possess include their ability to understand and quantify their edge, and to attribute variance to either good or bad luck.
Consider a bet at odds of 2.0, which implies a probability (no margin) of 50%. If a bettor can accurately determine that the true probability is 52% (true price of 1.92), the expected return for each bet made at 2.0 will be 4% (2.0/1.92 – 1). This can be referred to as the bettor’s ‘edge’.
Now let’s assume a bettor starts with a bankroll of 100 units and bets a fixed one unit. After 100 such bets, the bettor’s bankroll could be anywhere from 0 to 200 units, however it is expected to be 104 units - a profit of 4%.
By simulating this scenario 10,000 times we can see the effect of variance on the bettor’s bankroll in the chart below.
Poker Bankroll Management
Understanding variance
While the average result was just under a four unit increase in bankroll, the difference between the best (+38 units) and worst (-30 units) outcomes is substantial. As a bettor it is important to understand variance and be aware that a 4% edge doesn’t guarantee a 4% profit.
With this simulation of 100 bets, 90% of the time a bettor can expect a return of between -12 units and +20 units. A 10 unit drawdown (from your starting bankroll) can be expected around 20% of the time, however just 2% of the time a bettor will experience a 20 unit drawdown.
Interestingly, 32% of the time a bettor can expect to be down after 100 bets, despite a 4% edge on every bet.
If we increase the bettor’s edge to 10% (true probability of 55% for a wager at 2.0), a loss occurred 13% of the time after 100 bets.
The chance of a drawdown of 20 units or more was just 0.4%. Of course, as the edge increases, the likelihood of a bad run decreases, but what happens when the number of wagers is increased to say 5,000. The chart below shows the first scenario above (52% true probability, betting at odds of 2.0) simulated 10,000 times.
Whilst the worst outcome was bad at -72 units, only 28 (0.28%) of the 10,000 simulations delivered a loss after 5,000 bets. In 90% of simulations a return of between +82 units and +314 units was generated. This reflects a return on investment (ROI) of between 1.64% and 6.28%.
How does the scenario change if instead of betting at 2.0, the odds are 4.0 (implied probability of 25%)? If we determine the true probability to be 26% (true price of 3.846), the expected return for each bet remains the same at +4% (4.0/3.846-1), but what happens to variance?
How do the charts compare?
Comparing the two charts, we can see that variance has increased significantly despite an identical bet size, number of bets and expected return. The standard deviation of returns increased from 1.4% to 2.4%. The range of simulated outcomes is 64% greater in the scenario betting at 4.0, and the 90% confidence range is 72% wider, representing an ROI between 0% and 8%.
In the first scenario, the bettor lost the entire 100 unit bankroll on just 2 of the 10,000 simulations (0.02%). In the latter, the entire 100 unit bankroll was lost in 6.3% of the simulations. A 50 unit drawdown was significantly more likely (25.7%) when backing the 4.0 outsider compared to betting at 2.0 (2.0%).
In the worst scenario betting at 4.0, almost three entire bankrolls (-276 units) would have been lost. What this example shows is that with a constant bet size, number of bets and expected return, variance increases as the odds increase.
As such, a bettor that predominantly backs underdogs can expect to have more and larger swings in their bankroll than a bettor that backs favourites, even if their edge is the same.
Given it may take months or even years for a sports bettor to make 5,000 wagers, it is probably more relevant to understand the bankroll implications whilst making a significantly smaller number of wagers.
Assuming a bettor can find 4% edge at odds of 2.0, and bets a fixed 1 unit, the chart below shows the chance of having a certain unit drawdown from your starting bankroll over a series of between 100 to 1,000 bets, based on 10,000 simulations.
By making 1,000 bets at odds of 2.0 and with an edge of 4%, the chance of experiencing a certain drawdown appears to be approaching its upper limit, especially for smaller drawdowns. As the bettor’s edge increases, the chance of a certain drawdown decreases. The chart below plots this probability for a series of 1,000 wagers at odds of 2.0, based on 10,000 simulations.
For example, with a 4% edge, the chance of experiencing a 20 unit drawdown during the course of having 1,000 bets at 2.0 was 17.4%. However, the chance of being down 20 units or more after 1,000 such bets was just 2.8%. Understanding this difference will ensure a bettor is able to look through short term variance with a view to their long-term edge.
Different bankroll implications
What are the bankroll implications if we keep the bet size and edge constant but vary the odds? The chart below plots the probability of various drawdowns (from starting bankroll) when a bettor places 1,000 1 unit bets at various odds, with an edge of 4%. Each series of 1,000 wagers was simulated 10,000 times.
Recall that when betting at odds of 2.0, there was a 17.4% chance of being down 20 units at some stage through a series of 1,000 bets. At odds of 5.0, the chance of a 20 unit drawdown increases to just under 60%. With an identical stake, edge and expected return from a series of bets, predominantly backing favourites or longshots has drastically different bankroll implications in terms of variance.
Understanding what type of bettor you are is therefore critical to dealing with the inevitable swings you will experience.
To quantify this variance, consider again a series of 1,000 bets. By varying the odds (implied probability from 10% to 90%) and edge, the chart below plots the standard deviation of returns.
We can see clearly that variance increases as the odds lengthen (or as implied probability decreases), in line with the analysis above. From the chart above, making 1,000 1 unit bets with 10% edge has a standard deviation of 6.5% if all bets are made at 5.0 compared to 2.5% betting at 1.67. In both cases the expected return is +100 units (+10%).
An interesting result is that for odds shorter than 2.0, as edge (and thus expected return) increases, standard deviation actually decreases. Finding an increasing edge in odds shorter than 2.0 is rewarded not only by the increase in expected return but with a reduction in variance.
Summaries to be drawn from the data
This article has examined the relationships between odds, edge and variance by simulating a series of bets with a positive edge.
While a larger edge and number of bets increases the likelihood of outrunning a period of bad luck, it is important for sports bettors to understand what type of bettor they are, and to be able to quantify their edge.
This will allow them to more easily avoid being discouraged during a downswing or succumbing to overconfidence biases when results run in their favour.
While a bettor may not know their precise edge at the time of placing each bet, previous Pinnacle articles have discussed reasons for using Pinnacle’s closing price as a measure of the true price.
If the closing price can consistently be beaten, Pinnacle’s low margins mean it is likely that a bettor will generate a positive long-term return.
Bankroll Management Calculator
If a bettor is able to generate a long-term profit betting at Pinnacle’s closing prices however, it may be that they have found an inefficiency that the market fails to incorporate. Pinnacle’s policy of welcoming winners ensures that an edge remains available to any bettor for as long as it exists.
Get the best odds online with Pinnacle across all major sporting events.
If you’ve ended up on this page, then you’re most likely considering the possibility of using a bankroll management plan for your gambling. If that’s the case, I’ve got you covered. I’ve designed this page to help you learn what a bankroll management plan is and decide if one is right for you.
Personally, the use of a bankroll management plan has been an excellent decision for me. I feel like I matured quite a bit in my gambling career once I started making use of one. As you’ll see below, many great benefits come along with using this beneficial tool in conjunction with your sports betting or casino gaming action.
What Is a Bankroll Management Plan?
In a nutshell, a bankroll management plan is a tool to help you manage your money. Specifically, it’s geared towards your betting bankroll and helping you get the most out of it.
Sports Betting Bankroll Management
Up first, you’ll need to determine how much your bankroll is. Since everyone is different, this amount may vary significantly. Your bankroll could be $10 or $10,000, depending on your financial situation. However, always remember you should only bet with money you can afford to lose.
Once you’ve established the size of your betting bankroll, you’ll then create a customized bankroll management plan to help you strategically handle those funds. To do this, you’ll craft rules to follow despite what you think or feel in your gut.
When you’ve got the rules of your bankroll management plan all finalized, it’s then as simple as following them when you’re playing casino games or betting on sports.
To view some specific bankroll management ideas for different areas, you can view these pages relating to sports betting and poker strategy.
Benefits of Using a Bankroll Management Plan
When it comes to using a bankroll management plan while you’re gambling, there are two primary benefits associated with it. I’ll explain each of them below so you’ll be able to understand how they can assist you.
Strategic Approach
Before I ever learned what a bankroll management plan was or started using one, I was all over the place with how much I’d wager on any given bet. Unfortunately, this is how most folks who participate in sports betting and casino action go about it. However, the issue is there’s nothing strategic about it. And, because of the lacking strategy, it’s not an efficient way to use your betting dollars.
Luckily, with a bankroll management plan, you can use a strategic approach to your gambling bets. No matter how much money you have in your bankroll, it makes sense to try and get the most out of it. By doing this, you’ll be able to gamble longer on the same amount of money.
Another massive thing that’s great about using a bankroll management plan for your gambling is it can help you remove the potential impact of emotions. Personally, I have a significant tendency to chase losses when I’m on a losing streak. However, when I’m using a bankroll management plan, I stick to it and ignore what my emotions might be telling me in terms of betting big to try and recoup my losses.
Alternatively, you may need to work on keeping your emotions in check when you’re on a winning streak. During these times, it’s possible to feel unstoppable. In turn, you may end up betting way too much compared to what you would have with a bankroll management plan.
Stretching Your Betting Dollars
Another significant benefit of using a bankroll management plan when gambling is that you’ll be able to get the most out of your gambling dollars. This means you’ll be able to play for longer than if you just bet whatever amount you felt like at any given time without a strategy.
For most of us, there’s only so much we can budget for gambling. So, it’s vital to try and get the most out of every dollar possible. Otherwise, there’s a good chance we’ll run out of cash quickly and not be able to gamble for as long as we’d like.
For example:If I’ve got $100 in my betting bankroll, and I risk it all on one roll of roulette, there’s a decent chance I could lose it all and be out of money after just a single wager. But with the use of a proper bankroll management plan, I’d be able to sustain multiple losses and still not be out of money. In short, you’re much more protected with the use of a plan than you are without one.
Is a Bankroll Management Plan Right for You?
Now that you understand what a bankroll management plan is and the potential benefits of using one, I want to help you determine if it makes sense for you to have one. Using the questions below, you’ll be able to get a better idea if a bankroll management plan should be part of your gambling toolset.
Do You Have Unlimited Gambling Funds?
Unless you’re incredibly lucky, chances are you don’t have an unlimited amount of cash to use for gambling. While it’s nice to dream about having an endless supply of funds for gambling, that’s not the reality for most individuals around the world.
If you’re anything like me, then you’ve got some funds to use for gambling every month. In my case, it’s not a little, but it’s also not what I’d consider a lot. With that in mind, I make use of bankroll management plans to help me better manage the funds I set aside for my sports betting and casino action.
However, if you’re one of the lucky few who has a seemingly endless supply of cash for gambling, a bankroll management might not be needed. That said, I’d still consider using one to ensure you’re methodical with the funds you’re using for your gambling.
Do You Want to Get the Most out of Your Gambling Cash?
One of the best perks of using a bankroll management plan is it can help you maximize the amount of times your gambling bankroll will last you. It’s one of the main reasons I use one. Instead of potentially blowing all my cash on a handful of bets, I can spread things out in a systematic method to ensure I get the most bang for my buck.
Ultimately, it’s up to you to decide if you’re looking to get the most out of your gambling bankroll. If you’re just placing a handful of bets here and there, it may be less relevant to you. However, if you’re planning to regularly bet on sports or casino action, using a bankroll can help you strategically place bets to help stretch your bankroll to the max.
Do You Like Organization?
Another thing to consider when trying to determine if you should use a bankroll management plan or not in conjunction with your gambling is if you prefer organization or not. If you like when things are well laid out and organized, a bankroll management plan is probably an excellent fit for you. However, if you’re more of a “fly by the seat of your pants” kind of person, it may not be right for you.
Personally, I like organization, but it differs depending on the type of gambling. I love using a bankroll management plan for casino games like roulette and also for my sports betting. However, when it comes to slots and poker, I’m more of a free spirit. Keep in mind, you certainly don’t have to use a bankroll management plan with all forms of gambling. It may also make sense for you to mix and match things depending on your preferences.
Conclusion
I hope this blog has been able to help you learn more about bankroll management plans and if they’re a good fit for your unique needs. If you liked what you read here today, this website is packed with tons of other helpful information to help you get the most out of your gambling.
If you’re a newcomer to this sites, I’d suggest checking out some some of the most popular games and gambling guides:
No matter what types of gambling you’re into, you’ll find tons of information on this site to help you expand your knowledge and skillset. Thanks for reading, and good luck with your future use of bankroll management plans!