The best horseracing betting systems (Part 2)

What are the best ways to successfully stake your bets.

 

In the first blogpost about staking methods, and betting plans, we looked at two of the simplest ways to stake your bets (level stakes and fixed stakes).

This time we take it a step further by looking at several betting strategies which fall under the broad umbrella term of “compound staking”…

Percentage Stakes Betting

One of the issues highlighted with level stakes betting is that, technically, your betting bank is finite…

And, ultra worse case scenario, if you had a truly horrendous losing run (unlikely, but let’s just cover all the bases) then your funds are going to run out, and you’ll need some level of re-investment.

So how to avoid this..?

Well, one way is by adopting percentage stakes betting, where instead of having a level stake on each bet in terms of units/points… you have a level stake in terms of the percentage of your bank.

This means for each bet you will invest a pre-set proportion of your current bank balance… maybe 1%, or 2%, or 5%.

A figure that will be determined by your risk profile allied to the size of your bank, the strike rate of the bets you’re backing, and the ROI (Return On Investment) of the bets, and your general confidence in the information.

But crucially, and this is the principal difference between this method of betting and level stakes betting, as your bank increases and decreases with every winner/loser, so the monetary value of stake will become bigger and smaller.

Because while the percentage figure of the bet remains constant in relation to your bank (each bet = 1%, or 2%, or 5% of the balance)… the balance is an ever-changing number.

e.g. your chosen percentage stake bet is 5% of your bank total
         ↪ you start with a £1,000 bank… so your first bet stake is £50
         ↪ this bet loses… so your bank balance drops to £950
         ↪ so your next bet is staked at 5% of £950… which equals £47.50
         ↪ this bet wins at 2/1 (3.0)… which raises your bank balance to £1,045
         ↪ making your next bet equal to 5% of £1,045… which equals £52.25
         ↪ and so on

What you see is a constant percentage level for each bet (5%) but an increase in stakes after every winner, and a decrease after each loser.

This means there are two main advantages of the percentage staking method over level stakes betting, and they are…

(i) your bank instantly becomes unbreakable, because your stakes will always be a small percentage of any balance you have left in your account, however big or small.

(ii) when you’re on a winning run, your ever-increasing stakes will help to accelerate your profit-making… and when you’re losing, your stakes will decrease, and so reduce the strain on your bank.

This illustration is the simplest way to demonstrate the percentage staking plan in operation, and there are further variations to this method.

But it certainly merits interest to backers who want the peace of mind that their bank will never be “broken”, and it also allows those who might naturally be quite conservative with their bets, to stake to higher cash levels – because these bigger monetary sums still only represent a small fraction of their (increased) betting bank.

Square Root Staking

Like the use of percentage stakes, the style of betting that Square Root Staking represents is also put in the category of “compound staking”.

In other words, your stakes are being determined by your bank size, with the effect being you increase your stakes when winning, but decrease them when losing.

So profits are boosted (or compounded) and losses are minimised.

Which all sounds good in theory!

Now the percentage staking method is the most easily understood, and most commonly used, variant of this method.

But there is a downside with the percentage plan, which the square root method aims to counter.

Because with percentage staking, should your betting bank drop into a loss, after a poor run, your stakes will naturally reduce… so that when you hit the next winner, or series of winners, your stakes will be starting from their lowest/smallest point.

So you’ll be losing money to “bigger” stakes, and then trying to recoup losses by (initially) using much smaller amounts.

e.g.  your notional £1,000 starting bank has dropped to £500
         ↪ so with percentage staking your stakes will have halved
         ↪ let’s say, 5% of £1,000 = £50, but 5% of £500 = £25
         ↪ meaning the next winner you back will only carry a relatively small stake
         ↪ and so recovering losses will take longer, and require more winners

So what square root staking does, in effect, is to split your bank into two halves – Profit and Loss.

Profit is when your starting bank is in the black (it’s gone up) and Loss is where it’s in the red (it’s gone down).

And this is how your stakes are determined, depending on the position you’re currently in…

(i) Profit – you take your initial percentage staking amount (say 5%), and then add to this the square root of the profit figure your bank is currently showing…

e.g. start bank = £1,000, current bank level = £1,100
         ↪ original percentage staking is 5%, so original stake = £50
         ↪ current profit is £1,100 – £1,000 = £100 √ (square root) = £10
         ↪ add the £10 “profit” onto your original £50 stake = £60

(ii) Loss – if your bank balance is the exact same, or less, than your original starting amount… then you use your original stake (in this case 5% or £50) for every bet until you’re back in profit. And then revert to the method shown above, where you top-up your stakes by adding the square root of your profit figure.

So this method aims to bail you out of a loss situation, quicker than the percentage staking plan, by not decreasing your stakes when you’re behind.

This means you’re not losing to big stakes, then trying to recover will small ones.

And when in profit, you also have the chance to boost your stakes, and so your profit-making potential, by topping-up your original cash stakes with a share of the profits you’ve made up to this point.

There’s an element of “having your cake and eating it” on show here. This method tries to provide a win-win scenario whether you’re in front or behind.

1326 Staking Plan

While this method of staking your bets can be seen as a compound strategy, it’s also got many things in common with recovery or sequential staking systems like Fibonacci or Martingale.

The essence of the 1326 staking plan is that you increase your stakes when winning, and decrease them when losing.

But unlike previous examples, the change in the cash sum placed on each bet isn’t related to your overall bank position… simply the result of the previous bet.

And the plan gets its name from the sequence of stakes you employ on a recurring series of four bets (1–3–2–6)…

e.g.  your first bet = 1 point
         ↪ the second bet = 3 points
         ↪ the third bet = 2 points
         ↪ and the fourth bet, you guessed it, is staked to 6 points

And how it works in practice is fairly simple.

Every time you back a winner…

Your next bet is staked to the level laid down in the pattern (1 point, then 3 points, then 2 points, then 6)…

And should you back four winners in a row, the fifth bet sees the sequence repeat from the start… so back to 1 point… then 3, 2 and so on. Until you (eventually) back a loser.

Every time you back a loser…

You go back to the start of the sequence, with a 1 point stake.

e.g.  you back two losers, followed by two winners, then one loser
         ↪ would see a staking pattern of 1-1-1-3-2-1
         ↪ your first bet has a 1 point stake as it starts the sequence…
         ↪ then your second and third bets also have a 1 point stake (because they both follow a loser)
         ↪ your fourth bet is a 3 point stake, as it follows on from a winner…
         ↪ and your fifth bet also comes after a winner so is staked to 2 points.
         ↪ and when this loses, your sixth bet would see you start the sequence again back at 1 point

The upside to this plan is where you hit a series of winners, and your stakes immediately start to ratchet upwards – thus maximising profit.

Also, your biggest stake will only come after three straight winners, meaning you’ll be betting out of profit and not over-extending yourself.

There is no safety net, like the percentage staking plan, should your betting bank slip into negative equity, but with a sizeable initial starting bank (relative to the expected maximum drawdown) the 1326 should still function over the long-term.

And even though is does seem a little convoluted, the method-behind-the-madness does make some sense and it’s by no means as hair-brained a staking system as some we’ll go on to study!

 

OPINION: There seems to be a distinct USP to the range of “compound staking” plans… in that they are trying to accelerate winnings, whilst at the same time slowing down any bank losses. Can one system do both at the same time? Well, that seems to be the case. Or does it simply end up returning similar profits to, say, level stakes – just taking a more scenic route? Quite possibly. Either way these plans are much more palatable than the next group we’ll go on to discuss – the “recovery staking” plans like martingale, Fibonacci and Labouchere – click here to read on