What is staking?
While deciding how to wager your money can present a bit of a challenge, deciding how much to bet can be even more difficult. As all professional gamblers know, a staking plan is essential if you want to turn a profit and take home some winnings.
In brief, a staking plan is a method of calculating how much the value of your stake should be in order to minimise your potential risks or maximise your potential profits. It is important for you to decide which of these goals you want to focus on, as it is not possible for a staking plan to do both. If you are looking to increase your profit, you will inevitably increase your risk of incurring losses.
Why is staking important?
A lot of research and professional advice suggests that the amount you bet can actually have more of an impact on the result than what you bet on in the first place. Your stake amount is what determines whether you walk away with small change or a life changing sum of money. It should therefore never be underestimated when it comes to considering your betting tactics, whether it’s on a horserace, football game or at the poker table.
An expert insight
Ed Thorp, a professional blackjack player and author had a plan to win. He was a talented card counter and his string of wins were so significant, they led Las Vegas casinos to fight back against the tactic with the implementation of multiple decks of playing cards.
Despite the obvious importance of his playing strategy and expertise, Thorp attributes a large part of his success to John Kelly Jr: a mathematician who created the staking formula that Thorp used to his advantage.
Although commonly neglected by novice and newbie punters, Thorp claims that a considered betting strategy plays a major role in determining whether you win it all or lose it all. “Playing strategy is maybe a third to a quarter … of what you’re going to get out of it, “he said. “Betting strategy may be two or three quarters.”
So how should you stake your money?
There are five main betting strategies that you can implement when it comes to betting your money. Research has been conducted in order to discover the most successful method. This involved 500 simulated bets for each of the five different betting systems. The probability for winning for each method was at 55% on a Binary bet.
In order to ensure all the results were reliable, each method was capped at an initial bet of $100 and started with a bank of $1,000 to play with. However, due to the unique strategies of the all-in method, this started with an initial bet that was worth the full bank amount of $1000.
This survey delivered some definite results. It did show different simulations had vastly different outcomes, even when the variables were controlled. This gave some crucial insight into how you should be staking your bets if you’re serious about winning.
The five different staking methods
Here is a brief explanation of the five most popular staking methods. We’ve explained which ones yield the best and worst results, so you know what to do and what not to do with your money.
Strategy 1: Bet everything
If you’re a casual sports better, this will most likely be the staking method you play with. It is one of the most common strategies and involves betting your entire bankroll on a single bet. While this does give you the advantage of earning large returns quickly, it does involve a huge amount of risk. If you encounter a single loss, you will lose all of your money and be completely out of the game.
How did this strategy perform?
After the first bet, the bet everything strategy was off to a great start. It had earned as much in winnings after a single bet than any of the other strategies did in the first seven bets. However, when it came to the second round, this strategy lost. That meant that the entire bankroll was spent and there were no further chances to make any winnings.
While the potential to make massive amounts of money may be tempting, the chances of successfully progressing through all 1,000 rounds of betting at 55% odds is so small, it borders on impossible. Due to this, this is one of the least effective staking methods you can employ.
Ruling
Bet everything is a BAD staking strategy.
Strategy 2: Fixed wager
If you’re betting on a sport like football and are not certain who’s going to win, then fixed wager betting is a safe way to play. This method involves choosing a fixed amount to bet, dividing it by your potential wins and not varying the wager amount, no matter how much you win in return. While this does drastically reduce your risks of losing your entire stake amount, it is one of the slowest ways to build up your winnings.
However, if you’re a more confident sports better, you can buy professional tips, picks and predictions to speed the process up.
How did this strategy perform?
In the simulation, this method did accrue profits, but very slowly and steadily. At round 83, this method had increased its amount from $1,000 to $3400. However, it did experience a drop after the 95th round, giving it a total purse worth $2300.
The fixed wager strategy was one of the only ones to avoid any losses and while this is good news for players adopting this strategy, it can be a painstakingly slow process with little profit to show at the end.
Ruling
Fixed wager is a GOOD staking strategy.
Strategy 3: Martingale
This is another high-risk strategy that looks to turn a quick profit. With the Martingale strategy, you double your stake after any failed bet. The aim of this is to recuperate your losses with the winnings from your next successful bet.
While this does offer the potential to increase your winnings faster than the fixed wager strategy, it could get very expensive very fast. If you are unfortunate enough to experience sequential losses, your required stake will continue to double until you are putting huge amounts of money on the line.
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How did this strategy perform?
As stated above, the Martingale strategy can not survive long strings of losses. At the 83rd round of the simulation, there were 11 losses in a row. This completely obliterated all Martingale’s stakes and resulted in the hypothetical player being required to bet an eye-watering $403,000 in one bet to try and recuperate all the losses. Compared to the maximum amount reached during the simulation of just $6300, this is both an impractical and unwise proposition.
Ruling
Martingale is a BAD staking strategy.
Strategy 4: Fibonacci
Similar to Martingale, the Fibonacci staking method is a progressive betting system. It is far more mathematically complex than the above staking strategies and is based on a theory from 1989, which focuses on exploiting the difficulty bookmakers experience in predicting the draw.
The Fibonacci strategy involves betting on a draw and if you experience a loss, you continue to bet on another draw. Bear in mind that you can only bet on draws with a probability above 2.618. You also need to increase your betting stake according to the Fibonacci sequence, which operates on a N3 = N1 + N2 formula. Although this sounds complicated, it simply means that, after the initial two numbers, each additional bet amount should be the sum of the two numbers preceding, e.g. 1, 1, 2, 3, 5, 8, 13, 21, etc. The premise of this is that you can overcome all of your previous losses by continuously increasing your stake amount.
How did this strategy perform?
When it came to the 11-in-a-row losing streak after the 83rd round, just like the Martingale strategy, Fibonacci was out of the game. While the Fibonacci player would not have had to bet as much as the Martingale punter, with a maximum bet of $33,500 required, it’s highest purse total was also lower. At its most successful, the Fibonacci total only reached $4,100 before it was all lost.
Ruling
Fibonacci is a BAD staking strategy.
Strategy 5: Proportional betting
This is one of the best ways to handle your wagers and increase your chances of turning a profit quickly. There are a number of variations of the proportional betting system, but they all work by slightly Increasing successful bets after each win.
For the simulation, the Kelly equation was used. This means that each bet is calculated by dividing the edge by the odds. In the simulation example, the edge was 10% and the odds were even. This means that you divide 10 by 1 to get 10. You therefore bet 10% of the wallet on the initial bet (in the example, 10% of the $1,000 purse equates a $100 bet). If this returns a win, your wallet will increase and therefore your bet amount will too (10% of the new $1,100 wallet equals a $110 bet). By doing this, your winnings increase at a faster rate compared to fixed wagers, while your losses slow down.
How did this strategy perform?
As with all the other strategies, the 11-bet losing streak had a big impact on the purse of the proportional betting strategy. Starting off in round 83 with a total of $7359, this dwindled significantly down to $2286.
While fixed betting may be a good way of protecting your winnings (having only dropped by $1,100 during the losing streak), it has nothing compared to the potential earning power of proportional betting. By the end of the 500 bet simulation, the $6400 total of fixed betting was completely dwarfed by proportional betting’s massive $18,275 winnings.
Ruling
Proportional betting is the BEST staking strategy.
So how should I play?
While the simulation does prove that different staking methods can deliver significantly different results on the same bet, it does not give you a sure-fire way of winning. It is always important to do research to discover what the most effective staking strategy is for different types of bets. That effort could be the difference between a complete failure or a winning total of $18,275.