I have always preached that there is no way to make money in the long run from betting without having a strict staking plan in place.
But which staking plan is the best?
The answer is: A simple and straightforward staking plan. Nothing complicated; just plump for flat staking with or without a ratcheting mechanism.
All other staking plans contain one or another problem and I can guarantee that there is definitely not a single staking method in existence, which makes a failing betting system work.
Therefore, firstly work out a sound betting system and then secondly, adhere to a modest and plain staking plan. Keep the money management as simple as possible because it is already difficult enough to keep up with everything that goes into monitoring a betting system. You will perhaps also have to think about juggling your bank between various bookmakers and exchanges if needs be.
In today’s article I’m going to show you a fuss-free staking plan using the example of our 2017-18 Winter League portfolio .
As mentioned, it’s a combination of a flat staking plan and a ratcheting mechanism.
With the help of our HDAFU Tables and, in particular, their Inflection Point graphs, it is now easy to develop a portfolio of bets with a definite mathematical edge.
And in conjunction with our chosen staking plan, the portfolio of 2017-18 Winter Leagues performed as follows:
We started with a betting bank of 4,000 units and finished after 47 weeks and 518 bets with a total 38,925 units.
Of course, it wasn’t a smooth ride the whole time. Especially at the start of the season, the first 15 weeks (up to 27/10/2017) were very tough. 153 bets were placed but the result was pretty much a zero sum game. It did eventually rise to 5,562, but for all the time invested and work performed it was quite a frustrating experience.
From this point until the end of December, results were better and the ratcheting system helped the bank up to 13,792 units. But then another rough period started.
Nevertheless, it was worth it! A very long slog (47 weeks!) for a profit of 34,925 units. A great result vindicating the soundness of both the portfolio of bets and its staking plan.
Just as a side note, if you want to learn more about how the portfolio was originally compiled and how it performed in detail then you will find our report here: System Football Betting: 2017-18 Winter League Report – 35k in 138 Days
But let’s get back to the topic of the article: proper staking…
Image 1 showed you the performance of the portfolio using ratcheting, but if we would have applied a flat staking plan only (without ratcheting), then the Profit/Loss curve would have looked like this:
You can see straight away that the simple flat stakes (without ratcheting) also produces profits, but the curve is much flatter – here, the betting bank only increases from 4,000 units to 13,909 units. Flat staking lacks the exponential element of a ratcheting system to grow a bank, but on the other hand, it is much easier on the nerves as I will show you later in this article.
But first here are a few definitions…
Flat staking simply means that you wager on every bet exactly the same amount of money, without any deviations. But this may include some consideration towards the risk of each bet. You may therefore wish to stagger your stakes according to the implied probability (odds) of winning each bet:
- VERY SIMPLE: decide to stake a flat 100 units on every bet in the portfolio.
- SIMPLE: decide to stake a flat 100 units on bets with odds below 1.50, 50 units on bets with odds between 1.50 and 2.50, and so on.
But whichever of the two options you choose, you are in effect still ‘flat staking’.
Ratcheting is a progressive money management approach where the size of the stakes move by degrees, upward or downward, depending upon results.
(A) If your portfolio wins, increase the stakes!
With ratcheting the stakes are variable and depend on the size of the bank. However, the percentage of the ratchet (in our case 2.5%) always remains constant.
If at the end of a round of matches (or week) your bank has grown, all bets placed the following week should be adjusted to the higher bank.
For example, if the bank increases from 4,000 to 4,500, the stake increases from a flat 100 units to 112.50 per bet in the following round (i.e. stake remains at the base level set of 2.5% of bank).
The percentage of the bank used per bet stays ‘flat’.
(B) If your portfolio loses, reduce the stakes!
Nevertheless, you also need to guard against bankruptcy. If your portfolio experiences a losing round, reduce the stakes for each bet but not before the bank drops to 75% (or below) of its highest point.
You may think that this method is simply a stop-loss strategy, but it isn’t quite the same. I will explain further down in the article why we used 75% as the margin for our downwards ratcheting and not any other number.
Should you lose at the end of a round (week), continue to play each bet with the same, unchanged stake until the bank’s previous high has shrunk by 25%.
This means that in the event of a short-term loss, the stake continues to refer to the bank at the highest level it has reached so far and does not adjust to the lower bank until the bank has dropped to 75% of its peak size.
Only then is the stake recalculated (reduced) and the ratchet process begins again.
To be clear on this point, in the event of a run of losses, the stake size per bet always remains in relation to the highest bank to date and should not decrease until the threshold of 75% of highest bank ever is reached. (If you have for example, a very bad start to a campaign, the 75% trigger point may well apply to your starting bank).
Only then will the stakes be adjusted (reduced) to this lower bank size. This will then be your new starting bank. All further bets from then on refer to this bank and the ratcheting process begins again.
The bank drops from 4,000 to 3,800: The stakes remain unchanged, flat 100.00 (= 2.5% of the starting bank of 4,000) for the next period (round/ week).
After the next round the bank closes with 3,520. Still, the stakes remain unchanged, flat 100.00, using the previous bank of 4,000 for its calculations.
Only if the bank closes with under 3,000 (75% of 4,000) will the stake sizes be recalculated.
Using the starting bank from our previous example, the bank has dropped to 2,800. This has now become the new starting bank and the stake is recalculated:
2,800 x 2.5% = 70.00
With the reduction of over 75% of the bank from its former highest level of 4,000 (100 unit stakes) to 2,800, the stake size is recalibrated and remains flat at 70 units.
Afterwards, if the bank starts to rise, you will need to begin increasing the stakes again.
Say, after the next round you bank has gone up to 3,150.
3,150 x 2.5% = 78.75
The adjusted ‘new’ stake is now 78.75 and remains in place until either the bank drops to 75% of 3,150 (2,362) or the bank grows above 3,150, when stake amounts will be 2.5% of the new, larger bank size.
We have seen that ratcheting is purely a method of ‘flexible flat staking’ to encourage exponential bank growth.
The idea is to start off with stakes of 100 units and, if everything goes according to plan, by the end of the season the stake sizes should hopefully be in the multiples of 100 units.
Looking at the other side of the coin, the losses during this time will be in the same proportions, and not everyone is comfortable when losing a few thousand units in an afternoon, even if its ‘just winnings’ from previous rounds.
Bear this in mind before you decide to try ratcheting. Are you a disciplined person? Are you able to function when you have a few thousand riding on a few matches?
If your answer to these questions is ‘no’, then please do yourself a favour and stick to flat staking only! Do not try ratcheting, at least not to the end, and stop increasing your stakes when you reach the limits of your comfort zone (or have achieved target).
You may find it helpful to follow the explanations in this article with the help of our dedicated Excel workbook detailing our 2017-18 Winter League portfolio. Not only does it contain the match data and calculates the flat and ratchet staking results, but it also shows how the portfolio was composed and provides many other useful snippets of information.
We are sure that you will feel the nominal £5.00 GBP charge is a real bargain.
The size of this .XLSX Excel file is 568KB:
>>> 2017-18 winter league campaign <<<
Even the soundest portfolio of bets will experience bad periods where one bet after another (or even one round after another) is losing. It happened to us from the 09/12/2017 (2017 week 50) – 11/03/2018 (2018 week 11). Three months of more losing rounds than winning ones! Tough indeed!
Here are two images that show the profits/losses together with the bank development during this rough period using flat stakes versus ratcheting:
Both staking plans produced profits but, to put the choppy ride into even better perspective, you will need to note that the results summarised in Image 4 were by this time already based on a ratcheted bet size of 344.80 units (as at 09/12/2017), and this has grown to 707.82 units by 11/03/2018.
The period spanned more than 15 weeks with nine losing rounds (60%). From the 23/12/2017 – 12/01/2018 there were many losses, not huge, but enough to be nerve-racking!
The biggest losing round of bets with flat staking was: – 578
The biggest losing round of bets with ratcheting was: – 4,091
Tough! This again highlights the difference in volatility between flat staking and ratcheting. Steel hearts only required here!
The biggest profit round with flat staking was: 1,785
The biggest profit round with ratcheting was: 6,155
Great! But please don’t get carried away too much!
Moral #1: If you are a person that finds it challenging to keep emotions under control, stick to flat stakes! The best laid plans fall to pieces if you can’t cope during the really rough times.
It is always better to be a modest winner than a brave loser.
In the previous section you saw the monetary effects of winning and losing when using flat stakes only or when ratcheting. However, the differences become even more obvious if you look at the profits/losses in relation to the bank:
When staking flat our example portfolio only produced a maximum loss of – 8.1 % of the bank. The winnings too were pretty ‘modest’: a maximum of 20.7%.
Ratcheting involves a far greater rollercoaster. The maximum loss was as high as – 15.2 % of the bank. The maximum winnings were: 52.6%.
Moral #2: As I have already said, simple flat stakes (without ratcheting) are much easier on the nerves than ratcheting. The exponential growth a ratcheting system produces goes hand-in hand with exponential losses.
In the article Bank Management & Stake Size I explained the ‘scientific’ calculation of the percentage of starting bank that should be used for betting.
It was based on the average of the three largest losing rounds (weeks):
12%, 15.2% and 14.6% >>> average: 13.9% (rounded: 14%).
We can use this figure of 14% to calculate the stop-loss margin. You see, everything is somehow connected. The stake size, the stop-loss margin, and much more.
To be able to sit through a run of at least two losing rounds in a row where the bank is depleted by 14% each time you need to calculate as follows:
86% x 86% = 73.96%
Let’s round this up to 75% to be more risk averse (safety conscious).
Hence, if your portfolio loses, reduce the stakes but not before the bank drops to 75%. It is very unlikely to happen but it may, you never know. By the way, our bank didn’t drop a single time below the 75% threshold during the Winter League 2017-18 Campaign.
Please bear in mind that all the calculations and explanations are based on a portfolio of just over 500 bets with an expected hit rate of around 50%. Should your portfolio be different (no two are alike), then you will need to carry out all the calculations using your own figures.
If you cannot calculate this for yourself in such great detail then either stick to the 75% threshold, or perhaps lower it to 65% (if you have a lower risk aversion) as advised in previous articles.
Moral #3: Better to be safe than sorry. If you are new to ratcheting it’s probably better if you play with smaller stakes than the calculations actually permit (e.g. 1.5% of your betting bank instead of 2.5%) then you won’t reach the stop-loss margin too quickly.
I hope you’ve enjoyed this article and learned something about sound staking and ratcheting. However, if you are still unsure on any point, please feel free to ask any questions via the comment section below.