How Much Should I Be Betting?
One problem many gamblers/bettors have is not knowing how much to bet. Gamblers tend to “let it ride” when they are on a hot streak or sometimes chase losses when they are losing. An advantage bettor will stick with a gameplan and part of a proper gameplan is to be discipline with wager amounts.
The Kelly criterion is a formula used to find the optimal amount to wager in a series of bets with two outcomes. The Kelly formula will do better than another strategy in the long run. The formula is as follows:
f= the fraction of your bankroll to bet
b= net odds (odds that are quoted “b to 1″, for decimal odds subtract 1 ie. 2.24 would be 1.24)
p= probability bet will win
q= probability bet will lose (1-p)
For the most part to find the probabilities it is self determined.
A simpled example is a coin flip. If you are getting odds of 1 to 1 on a coin flip the variables would be:
b= 1
p= 0.5 (probability of winning is 50%)
q= 0.5 (probability of losing is 50%)
f would come out to 0. If f is 0 or a negative number the formula advises not to bet.
Since in most cases it is hard to get the exact probabilities it can be a good idea to stay on the safe side and bet a bit less than the formula suggests.
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Comments
Good points and good points from Scott also. I tend to work an a percentage of my bank, but there are so many differing views on this. Still, if there were no differing views then there would be no betfair market.
Sticking to a plan is a big part to being successful trading on betfair. It’s when you deviate from the plan or get greedy you get into trouble. I know when I first started trading I didn’t really have a plan and would take some big losses.
Grubber, I think it is important to work with a percentage of your bank that you are comfortable with. If you work with a higher percentage than you are comfortable with you will do things differently. Basically, do not risk more than you are ok with losing. Responsible gambling is not risking money that is needed in other areas of your life.
The Kelly formula I think is essential for a punter to use.
theBA
Sticking to a plan is the main concern. Pre-Betfair, it was all just place a bet and let it ride. Now with the ability to play in-running, you can trade throughout the match without any pre-conceived idea - just reacting to events on the court/field/rink etc. If you mix the two, it tends to end up in trouble…