Bankroll Management
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When we are investing in the medium to long term, we must accept that at any point along the journey there will likely be some short term losses. No investment is without risk, and this is definitely true when betting. Even the most successful bettors endure losing runs, which are unavoidable where we are at the mercy of any kind of statistical outcomes. In betting, these short term swings are called 'variance'.
The classic example of variance is a coin toss. Even though you have a 50/50 chance of winning, at some stage there will be 10 consecutive heads or 10 consecutive tails at some point, and we need to make sure we have enough in the bank to cover this possibility. However, if we take measures to manage this risk then we become more comfortable with the events which are beyond our control.
In all investments, there is a payoff between risk and reward. Before we see the dollar signs and dream about retiring on a yacht, we first need to ensure that we stay in the game! We should therefore focus on minimising losses before we look to maximise gains. At The Edge Betting, we take the following approach to staking and managing risk levels.
Advised Stakes and Suggested Bank - the points system.
As everyone's staking will be different, bets are advised in points (either a 1, 2 or 3 point selection). So, a 3 point selection will be 3 times your usual stake. Our bankroll is the number of points we are willing to invest to follow the service.
For The Edge Betting service (advised to Win only), we have calculated that 500 points are required to comfortably follow the service and ensure that your investment is able to cope with the longest expected losing run.
There are two ways you can calculate your staking and bankroll.
- Identify how much you are willing to invest into your 'bankroll'. Let's say its $10,000. This does not mean you need $10k in cash, right now. What it does mean is you need to have that source of funds should you need it, and are willing to put that amount 'at risk'. If we have $10k, a betting bank of 500 points would allow you to stake $20 per point (i.e 10,000 / 500).
- This can also be calculated in the reverse way. There may be a stake per point that you may be comfortable with - e.g. $30 per point. For a betting bank of 500 points then we require a bankroll of $15,000 (i.e 30 x 500).