Bankroll Management

Bankroll management is what separates professionals from amateurs. Your edge is worthless if you go broke before it materializes. A bettor with 5% edge betting 20% per bet faces 90% chance of ruin. The same bettor at 2% stakes has 0.1% ruin probability. The math is clear: bet sizing determines survival. Every successful bettor treats bankroll management as non-negotiable—it's the foundation that makes everything else possible.

Why Bankroll Management Matters
Staking Methods
Kelly Criterion Deep Dive
Risk of Ruin
Bankroll Sizing
Advanced Strategies
Common Mistakes

Why Bankroll Management Matters {#why-it-matters}

The Variance Problem

Even with genuine edge, losing streaks are inevitable:

Win Rate	10-Bet Losing Streak Probability
55%	0.03%
50%	0.10%
45%	0.25%
40%	0.60%

Over 1000 bets at 55% win rate:

Expected 10+ losing streaks: 0.3 times
Expected 8+ losing streaks: 1.5 times
Expected 5+ losing streaks: 17 times

The Stake Size Impact

$10,000 bankroll, 10-bet losing streak:

Stake Size	Loss	Remaining	Recovery Needed
1% ($100)	$1,000	$9,000	+11%
2% ($200)	$2,000	$8,000	+25%
5% ($500)	$5,000	$5,000	+100%
10% ($1000)	$6,513*	$3,487	+187%

*Cumulative with decreasing stakes

The Compounding Effect

Proper staking lets winners compound:

$10,000 bankroll, 5% edge, 1000 bets:

Stake Method	Ending Bankroll	Growth
1% fixed	$15,000	+50%
2% fixed	$22,000	+120%
Kelly optimal	$35,000	+250%
5% fixed	Variable (high ruin risk)	±300%

Staking Methods {#staking-methods}

Flat Betting

Same stake amount for every bet, regardless of edge or bankroll changes.

\text{Stake} = \text{Fixed Amount (e.g., $100)}

Pros	Cons
Simple to execute	Doesn't adapt to bankroll changes
Easy to track	Suboptimal growth
Low cognitive load	Doesn't account for edge size

Best for: Beginners, recreational bettors

Fixed Percentage

Bet same percentage of current bankroll:

\text{Stake} = \text{Bankroll} \times \text{Percentage}

Example: 2% of $10,000 =$ 200

Bankroll	2% Stake
$10,000	$200
$12,000	$240
$8,000	$160
$15,000	$300

Advantages:

Stakes grow with wins
Stakes shrink with losses (protects bankroll)
Mathematically sound

Best for: Intermediate bettors

Confidence-Based Staking

Vary stakes based on confidence level:

Confidence	Stake
High (clear value)	2-3%
Medium (solid edge)	1-2%
Low (marginal edge)	0.5-1%

Warning: Requires accurate self-assessment. Most bettors overestimate high-confidence situations.

Kelly Criterion

Mathematically optimal stake based on edge:

\text{Kelly \%} = \frac{p \times b - q}{b}

Where:

p = probability of winning
q = probability of losing (1-p)
b = odds - 1 (net odds)

Covered in detail below.

Comparison Table

Method	Growth Rate	Variance	Complexity	Ruin Risk
Flat	Low	Low	Minimal	Low
Fixed %	Medium	Medium	Low	Very Low
Confidence	Medium-High	Medium-High	Medium	Medium
Kelly	Maximum	High	High	Zero (theoretical)
Fractional Kelly	High	Medium	Medium	Very Low

Kelly Criterion Deep Dive {#kelly}

The Full Formula

f^* = \frac{bp - q}{b} = \frac{p(b+1) - 1}{b}

Where:

f* = fraction of bankroll to bet
b = decimal odds - 1
p = true probability of winning
q = 1 - p

Worked Examples

Example 1: Even money bet with edge

Odds: 2.00 (b = 1)
True probability: 55%
Kelly: (0.55 × 2 - 0.45) / 1 = 0.65 / 1 = 6.5%

Example 2: Longshot with edge

Odds: 5.00 (b = 4)
True probability: 25%
Kelly: (0.25 × 4 - 0.75) / 4 = 0.25 / 4 = 6.25%

Example 3: Favorite with edge

Odds: 1.50 (b = 0.5)
True probability: 70%
Kelly: (0.70 × 0.5 - 0.30) / 0.5 = 0.05 / 0.5 = 10%

Kelly Quick Reference

Edge	Odds 1.50	Odds 2.00	Odds 3.00	Odds 5.00
2%	4%	2%	1%	0.5%
5%	10%	5%	2.5%	1.25%
10%	20%	10%	5%	2.5%
15%	30%	15%	7.5%	3.75%

Why Use Fractional Kelly

Full Kelly is theoretically optimal but:

Problem	Consequence
Assumes perfect edge knowledge	We estimate, not know
High volatility	50% drawdowns common
Psychological stress	Hard to stick with
Edge estimation error	Overbet if edge overstated

Solution: Fractional Kelly

Fraction	Risk Reduction	Growth Sacrifice
100% (full)	None	None
75%	25%	6%
50%	50%	25%
25%	75%	44%

Most professionals use 25-50% Kelly.

Kelly Calculator

\text{Stake} = \text{Bankroll} \times f^* \times \text{Kelly Fraction}

Example:

Bankroll: $10,000
Kelly optimal: 8%
Using 50% Kelly: $10,000 × 0.08 × 0.50 = **$ 400**

R = \left(\frac{1-a}{1+a}\right)^n

Where:

R = probability of ruin
a = edge (as decimal)
n = bankroll in units

Risk of Ruin Table

2% edge:

Bankroll (units)	Stake (% of bankroll)	Ruin Probability
50	2%	14.3%
100	1%	1.8%
200	0.5%	0.03%
500	0.2%	~0%

5% edge:

Bankroll (units)	Stake (% of bankroll)	Ruin Probability
50	2%	4.9%
100	1%	0.2%
200	0.5%	0.0004%

Practical Guidelines

Risk Tolerance	Max Ruin Probability	Required Units
Conservative	<1%	100+
Moderate	<5%	50-100
Aggressive	<10%	30-50

Bankroll Sizing {#sizing}

Starting Bankroll Calculation

Based on stake size and risk tolerance:

\text{Bankroll} = \frac{\text{Desired Stake Size}}{\text{Stake Percentage}}

Desired Stake	At 1%	At 2%	At 5%
$10	$1,000	$500	$200
$50	$5,000	$2,500	$1,000
$100	$10,000	$5,000	$2,000

Minimum Viable Bankroll

Betting Frequency	Minimum Units	Example at $50/bet
Casual (10/month)	30 units	$1,500
Regular (50/month)	50 units	$2,500
Active (200/month)	100 units	$5,000
Professional	200+ units	$10,000+

Bankroll Segregation

Account	Purpose	Percentage
Main betting	Active wagering	70-80%
Reserve	Drawdown protection	15-20%
Withdrawal	Locked profit	5-10%

Rule: Never bet reserve funds. They're insurance.

Advanced Strategies {#advanced}

Dynamic Staking

Adjust stake percentage based on results:

Recent Performance	Stake Adjustment
+20% bankroll growth	Increase stake 25%
Steady (±5%)	Maintain current
-10% drawdown	Reduce stake 25%
-20% drawdown	Reduce stake 50%

Sport/Market Allocation

Diversify across uncorrelated bets:

Market Type	Max Allocation
Single sport	50% of bankroll
Single event	5% of bankroll
Correlated bets	Combined 5%

Simultaneous Stakes

When placing multiple bets:

\text{Max Concurrent Exposure} = 20\% \text{ of bankroll}

Active Bets	Max Per Bet
1	5%
2	3%
5	2%
10	1.5%

Bankroll Rebuilding

After significant loss:

Remaining Bankroll	Strategy
80%+	Continue normal staking
60-80%	Reduce stakes by 25%
40-60%	Reduce stakes by 50%
<40%	Consider rebuilding funds

Profit Taking

Lock in profits periodically:

Growth	Action
+50%	Withdraw 10-20% of profits
+100%	Withdraw 25-33% of profits
+200%	Withdraw original bankroll

This protects lifetime profits from future variance.

Tracking and Adjustment {#tracking}

Essential Metrics

Metric	Formula	Purpose
ROI	Profit / Total Staked	Efficiency measure
Units Won	Profit / Unit Size	Standardized performance
CLV	Odds Taken / Closing Odds	Edge verification
Max Drawdown	Peak to Trough	Risk assessment
Current Drawdown	Peak to Now	Current risk status

When to Resize Stakes

Trigger	Action
Bankroll +25%	Consider increasing stakes
Bankroll -20%	Decrease stakes
500+ bet sample	Recalculate based on actual edge
Monthly review	Adjust for changed circumstances

Tracking Spreadsheet Essentials

Column	Purpose
Date	Timing analysis
Event	Record keeping
Stake ($)	Actual amount
Stake (%)	Percentage of bankroll
Odds	Price taken
Result	Win/loss
P&L	Profit/loss
Running Bankroll	Current total
Drawdown	From peak

Common Mistakes {#mistakes}

Mistake 1: Betting Too Much

Symptom	Consequence
10%+ stakes	Rapid ruin during downswing
"Sure thing" big bets	No such thing; variance kills
Chasing losses	Compound problem

Solution: Never exceed 5% on single bet. Ever.

Mistake 2: No Defined Bankroll

Problem	Result
Betting from main account	Can't track properly
No clear limit	Bet more than can afford
Mixed funds	Emotional decisions

Solution: Dedicated, separate betting bankroll.

Mistake 3: Ignoring Variance

Belief	Reality
"5% edge = consistent wins"	40%+ drawdowns possible
"10-bet losing streak rare"	Happens to everyone
"I should be profitable by now"	Need 500+ bets

Solution: Expect variance. Plan for it.

Mistake 4: Not Adjusting Stakes

Scenario	Correct Action
Bankroll doubled	Can increase stakes
Bankroll halved	Must decrease stakes
Edge changed	Recalculate Kelly

Solution: Review stakes monthly.

Mistake 5: Overconfidence in Edge

Estimated Edge	Bet Accordingly	Actual Edge	Result
10%	10% stakes	3%	Overbetting, high variance
5%	2.5% stakes	5%	Correct
5%	2.5% stakes	-2%	Slower loss (time to detect)

Solution: Use fractional Kelly; be conservative.

Unit System {#units}

What is a Unit?

Standard measure to track results independent of stake size.

1 \text{ unit} = \text{Standard bet size} = 1\% \text{ of bankroll}

Unit Tracking Example

Bet	Odds	Stake	Result	Units Won
A	2.00	1u	Win	+1.0u
B	2.50	2u	Loss	-2.0u
C	1.80	1u	Win	+0.8u
Total		4u		-0.2u

Converting Units to ROI

\text{ROI} = \frac{\text{Units Won}}{\text{Units Staked}} \times 100

Example: +10 units from 500 units staked = 2% ROI

Unit Profitability Guide

Monthly Units	At 1% Stakes	Interpretation
+5-10	+5-10% ROI	Solid edge
+2-5	+2-5% ROI	Small edge
±2	±2% ROI	Breakeven
-2 to -5	-2-5% ROI	Losing, review

Kelly Criterion Calculator - Optimal stake sizing
Bankroll Growth Simulator - Project growth
Risk of Ruin Calculator - Calculate ruin probability

Bankroll Management

Bankroll Management

Frequently Asked Questions

Evgeny Volkov

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