Successful Betting Systems require Successful Bankroll Management

Thinking only in terms of quality of an idea is not enough to choose betting systems for value investing on draws.

No matter how accurate the business analysis is, how logical the thinking process is, how winning the betting system is if you do not have a suitable risk taking plan for the investment.

Along the way, there will be unavoidable losing runs.

Those losing runs already happened in the past despite the positive returns of the betting strategies on draws. 

However, bad runs are nothing to worry about if you are well prepared for them.

In this regard, you have to protect yourself by deciding the worst-case scenario that you can face.

If you want to succeed with your system, you must first survive with your bankroll.

Uncle Point

What is the maximum level of pain that you are willing to suffer?

It is an Uncle Point: the maximum number of units of your bankroll that you can afford to lose.

In other words, the maximum percentage of the bankroll that you are willing to lose.

The better you define the Uncle Point, the better you can choose your betting system.

Maximum Drawdown

To determine if a betting system is suitable for your Uncle Point, the Maximum Drawdown is an excellent starting point.

It helps to assess if the Uncle Point you set have a wide margin of safety on it.

In this way, you protect yourself so that the Uncle Point is far less likely to be hit.

Moreover, you reduce the chances to miss the positive expected returns of a system due to an early exit from the investment.

However, it is not enough to stick to the MaxDD  in itself. As already said, it is just the first step.

In fact, there must be enough money to continue to bet at the same pace without changing the staking plan. You also need to face the next downswings. Furthermore, if the system is in the early stage, the betting sample size could not provide a consistent MaxDD .

For all those reasons, you will be out of games in no time without a wide margin of safety.

If your Uncle Point is 40 units, do not invest in betting systems with a MaxDD of 20 units. If your Uncle Point is 80 units, do not invest in betting systems with 40 units of MaxDD.

Consequently, a solid Uncle Point must have an additional units number well above the MaxDD of a betting system.

As a general rule, this is as true as the lower the betting sample and the higher the average odds of a betting system. 

For example, if you consider that my 2 lower volume value betting systems have, on average, a MaxDD of 30 units, I think that at least 100 units enable to be on a quite safe side for investing in one of them.

Bonus Track

I would like to suggest this betting simulator as a very good tool to determine the expected variance of a system and bankroll growth going forward.


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