As any follower of sports knows, good teams and/or players need both a good offense and a good defense to be successful. One without the other is a recipe for long-term disaster and a lot of people believe that a good defence is the reason champions are made.
Well the same holds true in sports investing. First of all you need a good offence which means either a long term systemic analytical approach to picking winners or access to a trusted advisor. What is a trusted advisor? Simply it’s someone who has proven their ability over a sample size at least 3000 picks that they can achieve a win rate of 55-60%. It’s not someone that has had a good record in the past week or past month, but one that has consistently shown they can identify + Expected Value plays again and again.
But having a great offence i.e successful system and/or advisor does not guarantee long-term success if proper money management is not utilized. This is your defence against failure and ruin when the inevitable bad streaks occur.
What are the steps in proper money management:
1. Identify the size of your bankroll.
This is not simply the amount of funds you have available in sports betting accounts but the amount of funds you are prepared to comfortably commit to sports investing. And always remember this doesn’t include rent or grocery money but an amount you are prepared to lose that will not affect you or your family’s lifestyle.
2. Identify your “unit” size.
Which is the amount you are comfortable wagering on most picks. In this regard as a guide we recommend that your normal unit size not exceed 1-2% of your bankroll. Here it depends on your individual comfort level and whether you are a conservative or aggressive sports investor. So for example if you had a $1000 bankroll, your normal bet size for each selection should be either $10 or $20 max. As your bankroll; increases so can your unit size proportionately. When your bankroll decreases you can lower your unit size, knowing it will take longer to recover. The whole goal here is to help ensure you can withstand the bad cycles both emotionally and financially and still be around for the upticks.
3. Only increase your wager size when situations are identified indicating there is an extra edge.
The rule of thumb would be 2x the unit size, sometimes 3x and on the rare occasion 5x. Keep track of your record for these multi unit wagers to ensure that the extra risk long-term has been warranted and you achieve at least a 60% win rate. Its risk versus reward and if your win rate isn’t a little higher than you really aren’t getting an edge.
4. Don’t increase your unit size when you go through a bad streak.
Thinking you’re destined to win soon. While flipping a coin long-term should produce 50% heads and 50% tails, it’s not uncommon that you could flip 10 or more heads in a row. That doesn’t mean the 11th flip should produce a tail, it’s still 50/50. Remember the best handicapper’s may win 55-60% of their wagers. They still lose 40-45% of the time and can easily lose 8 of 10 wagers or worse. They won’t win every bet, every day, every week or every month. But long-term they do and you need to protect yourself to ensure you’re still in the game when they win 15 of the next 20.
5. Don’t play parlays.
To try for those big wins or to make up ground quickly if a losing streak has happened. The more plays in the parlay, the lesser chance of winning. So avoid this practice as your normal way of wagering on sports. It’s fine to partake in these from time to time, but as an exception only, and rarely for a full unit size. We have recommended some in the past year on the rare occasion, but have limited these to only 2 wagers in the parlays. It wasn’t so much to try and get a big win, but more so to take advantage of the value apparent in both selections.
Money management can be pretty boring and requires a lot of discipline. It’s the grinding approach to sports investing. Think of it as a business not a “get rich quick” approach. Be a Sports Investor, not a Sports Gambler.