However, in practice the true value of each bet can differ. Moreover, by not adjusting your stake after each bet could mean you’re overexposed to risk. If your fixed stake is too high relative to your bankroll, a losing streak can significantly deplete your funds. Equally, by not increasing your stake as your bankroll grows, you could be leaving money on the table.
An alternative approach to flat staking is betting a variable amount based on the size of your bankroll. This is known as fractional staking which involves adjusting your stake to a proportion of your current bankroll. As your bankroll grows, so does your stake, and vice versa.
By increasing your stake in line with the growth of your bankroll, you’re able to capitalise on winning streaks and maximise your returns. Furthermore, you’re maintaining a level of protection against potential losses. This approach inherently prevents you from going bankrupt as you’re always betting a fraction of the bankroll you have left.
Example:
Consider two sports bettors: Bettor 1 and Bettor 2. Both start with a bankroll of £2,000 and place 1,000 bets at odds of Evens (2.00) with a 55%-win probability.
Bettor 1 adopts flat staking, consistently betting £100 (5% of his starting bankroll) regardless of the outcome of his previous bets. If the 55%-win probability holds true, he’d win 550 bets and lose 450, resulting in a profit of £10,000. His final bankroll would be £12,000.
Bettor 2 employs fractional staking, starting with a bet of £100 (5% of his bankroll). For every subsequent bet, he adjusts his stake to represent 5% of his current bankroll. For example, if his first bet wins, his second bet is £105 (5% of £2,100); if it loses, the second bet is £95 (5% of £1,900).
Due to the variable stake, we simulated 10,000 betting sequences based on the above inputs to account for the inherent randomness and variability in outcomes. Based on our simulations, Sports Bettor 2 achieved an average profit of £10,480, while his bankroll grew up to £12,480.
Sports Bettor 1:
Starting bankroll of £2,000, betting with a £100 flat stake.
55% Win Probability at Evens (2.00) over 1,000 bets ≈ 10,000 profit
Sports Bettor 2:
Starting bankroll of £2,000, betting a with fractional stake (5% of bankroll)
55% Win Probability at Evens (2.00) over 1,000 bets ≈ 10,480 profit
The example above demonstrates the mathematical advantage fractional staking has over flat staking over a long series of bets.
In both cases you must cap the maximum stake per bet in order to protect your bankroll. As a rule of thumb, you should never stake more than 5% of your bankroll on any single event. At Bet Investor, we err on the side of caution which is why we’ve historically recommended staking no more than 2.5% of your bankroll per bet.