Bankroll Management Basics: Stake Sizes, Drawdowns and the Kelly Formula

Bankroll management is deciding how much to stake on each bet so that a bad run does not end your betting. It does not create an edge. It protects you while results swing around, and it keeps your betting within what you can afford.

What a bankroll is

Your bankroll is money set aside for betting that you can afford to lose entirely. It is not rent, savings or borrowed money. Keep it separate from everyday spending, and never top it up to chase losses. See chasing losses.

Flat staking with units

The simplest method is to define a unit as a small fixed share of your bankroll, usually 1% to 2%, and stake one unit on each bet. With a bankroll of 1,000, a unit of 1% is 10.

• It keeps your stakes small compared with the swings.
• It makes results easy to track, because you count in units.
• It stops a single bad bet doing serious damage.

Why small stakes matter: the drawdown maths

Look at what a run of 10 losses in a row does to a bankroll at different stake sizes:

• Staking 1% of the current bankroll: 0.99 raised to the power of 10 leaves about 90% of the bankroll.
• Staking 10%: 0.90 raised to the power of 10 leaves about 35%.

Ten losses in a row is not rare. See variance and sample size. A bettor staking 10% needs a gain of about 187% to get back to where they started, while the 1% bettor needs about 11%.

Percentage staking

Instead of a fixed amount, you can stake a percentage of the current bankroll. Stakes then shrink after losses and grow after wins, which slows the damage of a bad run. Flat staking is simpler, and either works if the stake is small.

The Kelly formula

Kelly staking sizes each bet by its edge. The formula is:

stake fraction = (b x p - q) / b

where b is the odds minus 1, p is your probability of winning and q is 1 - p.

At odds of 2.20, b is 1.20. If you believe p is 48%, then (1.20 x 0.48 - 0.52) / 1.20 = about 4.7% of your bankroll.

Here is the catch. If the true probability is really 46%, not 48%, the correct stake falls to about 1%. A small error in your estimate makes the Kelly stake several times too big, which is why almost nobody uses full Kelly. Cautious bettors use a quarter or half of it, and they cap every stake at a few percent. If your estimate is not reliable, Kelly is the wrong tool.

Staking plans do not beat the margin

Plans such as doubling your stake after a loss, or increasing stakes after a win, change how your results look but not what a bet is worth. If each bet has a negative expected value, no plan makes the total positive. Doubling after losses in particular can turn a short bad run into a ruinous one: after seven losses in a row your next stake would be 128 times the first.

Practical rules

• Decide the bankroll and the unit in advance, and write them down.
• Keep stakes at 1% to 2% for most bets, and do not exceed 5% on any single bet.
• Set a loss limit for the month, and stop when you reach it.
• Keep a record of every bet: date, market, odds, stake and result.
• Never raise your stakes to win back losses.

Where tips fit in

A tip gives you information, never a stake instruction. Whatever the confidence figure says, your stake should follow your bankroll and your limits. See how to read a tip page and our methodology.

Vantip Team. Information only, not betting advice. 18+. Betting carries risk; see our Responsible Gambling page.