Next, you should think about the type of investor that you are. Are you aggressive or conservative? Are you experienced or a novice? The answers to these questions will help you to determine the size of your typical bet. This is called your “unit” size.
We typically recommend that a sports investor bet 1% – 3% of their bankroll on each bet. Conservative sports investors (or beginners) should bet 1%-2% on a play. Note that professionals are normally in the 1% range.
Aggressive sports investors might want to bet 3% on a play. 2% is a good medium; it allows you to withstand a losing streak while helping to build up your sports investing bankroll. Very aggressive investors might bet 4% or 5% of their bankroll on a bet, but this is too risky for most investors.
Why not 4% or 5%? The short answer is: Streaks and the risk of ruin. If you bet amounts that are too large, a bad streak could cut your bankroll in half (or worse). You then might feel like you need to reduce your bet size – just before the inevitable hot streak. Smaller bet sizes are more prudent and allow you to stick to your approach and stay disciplined.
“True” Bankroll and “Risk Capital”
Whenever we talk about percentages of bankroll, most casual bettors feel that they are on the “high end” of the ranges we discuss. This might SEEM true – but only because the “true bankroll” for most casual bettors is higher than what they have in their accounts. That is, many bettors might have $X in their accounts, but are willing to add another $Y if they draw down their account. Professionals normally already know their “full bankroll” and need to preserve their “capital” versus “risk of ruin.”
Investors – and in this case, sports investors – need to understand the level of their “true bankroll” or “risk capital (allocated to sports).” Once investors take a serious look at their finances, they might better understand the “true” level or amount they allocate to sports investing. They might then realize that 1%-2% of their “true bankroll” or “risk capital” is indeed a realistic bet size.
Summary: Money Management and Playing Defense
Many of our articles focus on SportsInsights.com’s philosophies and contrarian strategies that have proven to work over time. In this article, we focused on money management – an area where most bettors do not pay enough attention. In essence, good “money management” is a lot like playing good defense. Money management will allow you to “stay in the game” during tough times so that good handicapping strategies (your offense) can put you ahead.