I often get asked if I’m a gambler or an investor and my immediate response without hesitation is to answer that I am an investor. The way I approach my betting is that of an investor. I know that my initial starting bank is never fully at risk and that I expect to see a return on that bank come to the year-end.
So how do we know if we are gambling or investing and what measures do we need to put in place to ensure that we are not at risk?
At the start of every season whether it be the flat, jumps or the all-weather I start with a specific bank used for that code. So, for example, at the beginning of April of last year, I had a 500 point bank and that is solely to be used for the flat racing. Last November I withdrew my profits and the bank sits there until the start of this year’s season. That bank is my whole investment for the season.
Using carefully selected systems and methods I know each ones expected losing streaks and what percentage of the bank I should be risking on each selection. This allows me to cover myself when I do hit the losing streaks but also, by running several systems in one portfolio, when one is showing a negative, the other is showing a positive.
This picture is, of course, somewhat different to how I started out and that was gambling. Throwing money at anything in the hope that it would win!
Makes me cringe now!
So how do we know if we are gambling or investing?
One of the biggest parts of being a successful punter is money management which includes staking plans. If we know that our expected losing runs are likely to be 10 runners in a row then to only have a bank of 10 units would, of course, be gambling. This is because our investment of 10 units is immediately at risk. We would need at least 30 units to cover this type of expected losing run and this would then, albeit, as long as the system was a credible one, be an investment.
So how do we work out our banks to cover ourselves and make sure we are investing rather than gambling?
The easiest way to do this is by using an excel sheet and apply the following equation to one of the cells.
LOG(Number of selections)/-LOG(1-Strike Rate)
You’ll need to change the strike rate to a decimal format for the equation to work. We simply divide the strike rate by 100.
I then multiply the answer by 3. This will give me the bank required to know that I was investing rather than gambling.
Have a look at the example below:
LOG(120)/-LOG(1-0.21) = 21 losers (rounded up) multiplied by 3 = 63 units
So for the next 120 bets, I would expect to lose up to 21 bets in a row. I multiply this by 3 to give me 63 units. Let’s say I had £1,000 to start, then I would divide 63 into this to give me £16 per bet.
Have a look at your own systems and use the above to determine if you are using the correct size bank and also the correct stake size.