at iTipsports Racing we have always advocated that subscribers that they should adopt some basic principles when investing into their betting. So, following from our e-book “The 10 Minute Guide to Backing More Racing Winners” we wanted to follow this up with some basic principles. So please have a read of the below that if applied we feel will help you with your racing betting journey.
What is a Staking Plan and why use one!
A Staking Plan is a big part of the tool box when it comes to having success investing on racing/sport betting. It literally underpins the whole idea of money management and is the integral part of adjusting risk back in your favour as much as possible.
At iTipsports our staking plan revolves around using “units”. The way we determine a unit is essentially 1% of your Betting Bank per unit (if this concept is new to you please see our article on Betting Bank). This 1% number can be arrived at in one of two different ways (depending on your approach to risk)
1. Initial Bankroll
You can determine the 1% on the amount of your initial bankroll.
For example an initial bankroll of $1000 would be a $10 unit size and this unit size is used until you either double the bankroll through winning (ie: turn your $1000 into $2000 which would then move you to a $20 unit) or if you half your bankroll through losing (ie: turn you $1000 into $500 the $5 would become the new unit).
The advantage to this approach is you are riding the variance of risk (both upside and downside) in a very consistent manner giving yourself a good chance if you have an edge to make money long term or at least not endanger your ability to ride out variance by being under funded. The adjustment of the unit size at double or half bankroll does alter this slightly but it just becomes a new level of bankroll and you start again from there.
2. Rolling Bankroll
In this situation you determine the 1% of your bankroll exactly how it sounds, 1% of your actual bankroll. So for example if after day 1 your bankroll is $1200 (ie won $200) your new unit size for the next betting day is $12. The opposite also applies if your bankroll was $800 (ie lost $200) your new unit size for the next day would be $8.
The advantage of this method is offset but its disadvantage is you are exposed to upside and downside risks at differing levels of staking meaning you might have your best winning day at only $8 unit and your worst losing day at $12 units which in itself is a massive 30% differential.
Whilst it would seem it also applies the other way (ie best winning days at $12 and worst losing days at $8) in reality this doesn’t happen because you are only adjusting down after losing days, meaning that you can’t be at a superior unit size on a winning day because there is no superior unit size it is only ever the new baseline.
This method does mean you can grow your bankroll quicker than example 1 if you are winning, however it can take a lot longer to regain losses as you have to “win a lot more than you lost” if that makes sense as you are using an inferior number.
A Staking Plan is simply a method of investing the “units” as discussed above in a strategic manner that allows you to both balance the risk of your investment and attempt to extract the most upside if your investments are correct.
So lets have a look at an example and see if we can explain the situation using a $10 unit
| Horse | Bookie odds/percentage | Our odds/percentage | stake | return |
| Arigato | $10/10% | $7/14.2% | 1 unit ($10) | $100 |
| Fling | $4.6/21.7% | $6/16.7% | 0 units | $0 |
| Foxy Lady | $21/4.75% | $15/6.7% | 0.5 unit ($5) | $105 |
| Lady Naturaliste | $3.40/29.4% | $2.90/34.5% | 1.5 unit ($15) | $51 |
| Maozi | $5/20% | $10/10% | 0 units | $0 |
| Reward | $6.5/15.4% | $12/8.3% | 0 units | $0 |
| She Shao Fly | $9/11.1% | $12/8.3% | 0 units | $0 |
| Written Advice | $31/3.2% | $100/1% | 0 units | $0 |
| Total | 115.5% | 99.4% | ||
When placing an investment you are always wanting to look for positive expectation ie: the chances of something happening are in your favour vs the price offered for that thing to happen.
So in the above example after analysing our data we believe the horses in green to be a positive expectation result for us (ie we believe the real chance of the horse winning is greater than what the market says) and have staked in a manner to realise an even better return.
So Arigato we have as 14.2% chance of winning (bookie has it 10%), Foxy Lady we have at 6.7% chance of winning (bookie has it 4.75%) and Lady Naturliste we have 34.5% chance of winning ( the bookie has it 29.4% chance) so if we are to assume our analysis of work is correct we can back these three horses and cover 55.4% of the winning chances in the race, however we don’t have to back these horses evenly (flat bet) we can stake according to the two key elements of value they are:
a. The chances of the horse winning and
b. How much bigger the price you can get versus the chance of winning.
So in the above example we have outlayed a total of $30 for a return of either Lady Naturaliste $51 (this horse is considered 34.5% chance to win) ($21 profit)
Arigato $100 (this horse is considered 14.2% of winning) ($69 profit)
Foxy Lady $105 (this horse is considered 6.7% of winning) ($74 profit)
So when you boil all that down essentially what we are saying is we are investing $30 with a 55.4% chance of a return. If this was a “hard number” we would be risking $30 to win $16.20 (ie 55.4% of $30) however our worst case is $21 profit then $69 and $74 so as you can see well above the expected return.
If we were NOT to stake and simply “flat bet” (ie use one unit size) it would look like this
Lady Naturaliste $10 @ $3.40 (return $34 or $4 profit overall-all bets)
Arigato $10 @ $10 (return of $100 0r $70 profit overall -all bets)
Foxy Lady $10 @ $21 (return of $210 or $180 profit overall-all bets)
As you can see there is greater variance in the risk and the minimum $16.20 that you should get from a $30 risk @ 55.4% is only evident in two of the horses. Now whilst the returns on those two are much larger you are risking a lower return on the horse most expected to win (34.4% chance on Lady Naturaliste) this can create greater volatility in your bankroll.
So essentially staking becomes very much a central pillar to extracting the most value from your investing and whilst the idea of staking and value investing can be a little hard at first to comprehend, if you stick with it and do or read more about it the more familiar it will become.
At iTipsports this has assisted in increasing your knowledge on Staking Plans.