The Square-Root betting strategy
Could this be the best of both worlds when staking your bets
You know I like a staking system…
Some way of using your betting bank to increase the yield, but without massively raising the risk element.
Now you can click here and read the series of articles I wrote some time ago about the various staking systems that punters choose to employ…
From the logical to the downright daft!
Well recently I was looking through some old files and I came across the piece you’ll see below. It was written back in 2005 and published on the Practical Punting website in Australia.
It talks about the Square Root betting strategy.
I reproduce the article more or less in its entirety, just changing the Aussie dollars into GB sterling.
See what you think…
“Basically, it’s a simple method of increasing your stake when you are in profit. The more in profit the bigger the stake.
Your stake is divided into two parts; the Base Stake (BB) and the variable amount (SR) which increases as the bank increases.
Let us assume that you have a bank of £2,000 and you are betting to a 20 unit bank. In other words 1 per cent stakes. This means that you will be betting £10 as your Base Stake (BB) and you will always bet £10 from now until the cows come home.
Now when it is time to place your bet you check to see if you are showing a profit. In this example, if you have more than £2,000 in the bank.
If you are showing a profit, let’s say you have £2,049 in the bank, a profit of £49, then what you do is calculate the square root of the amount and then add that to the stake. So if your starting bank was £2,000 and you have £2,049 then the next SR part of the stake would be £7 (the square root of £49). Therefore, this next bet would be £17.
And that’s it. If the bank is showing a large profit then the stake will be large. If the bank is showing a loss then the stake will be the bare minimum of £10.
James Selvidge, an American, is one of the pioneers of pushing the cause of square root staking.
He says SR betting is a better bet than going at things level stakes. He may be right, he may be wrong, and only a varying number of tests, over varying numbers of years, will come close to proving that he’s right, or wrong.
This is what Selvidge has to say in his book Money Management, published 21 years ago:
“The profit leverage in “base bet plus square root of the profits” comes from the SQ factor. The greatest dynamics come from the smallest possible base, which is $2 (in USA).
“If the beginner starts by backing his key handicapped selections with a single £2 base plus square root, a 30 per cent win level at a £12 average payoff can produce a £2,500 profit in 45 to 50 racedays with four to five key bets a day.
“Flat betting 200 races at £2 each costs £400; winning 60 at an average £12 implies a £320 profit. So BB+SR can be 800 per cent of flat bet results (actually more, as this increases as win percentage increases).
“Flat betting at £2 those 200 races, and winning 50 per cent of them at £12, would create a profit of £800, a 2/1 return on risk capital.
“If you put a 50 per cent win level at an average £12 payoff to the test, based on BB+SR, this profit is reached by the 25th bet, with 175 races to go. By the 100th race, the halfway mark, profit would exceed £10,000. By the 200th race, the horse player is still under £150 as a single bet and profit would approximate £25,000, a return on risk capital of over 60/1.”
Selvidge’s figures make for absorbing reading and eyebrow-raising attention. Whether things could ever work out so neatly in practice is another thing.
As we all know, patterns are hard to detect and even harder to predict in racing. Losing runs can be terrifyingly long, winning runs abysmally short.
Selvidge wrote the above text in 1979, but a few years later he was saying that all BB+SR flows should be mathematically structured on a £1 base. However you do it, the square root on profits idea should be worth testing. Don’t rush in to it. Look at it carefully and see if it suits your particular sets of selections.
Check them out over an extended period. It will be well worth the time and trouble to find out one way or another if the idea holds up for you”.
So there you have it.
That’s what Philip Roy made of it all some 20+ years ago.
And whilst I appreciate the maths can seem a little confusing at first glance, the SR betting strategy is clearly trying to offer backers the best of both worlds…
More aggressive than simple level stakes betting…
Less extreme than constantly betting a percentage of your total bank – whereby you lose proportionately larger sums to begin with, then try to win back your losses with comparatively smaller amounts. Which can seem slightly counter-intuitive.
What is suggested here takes the edge of two opposite staking methods (fixed and variable) and tries to include the best of both in a hybrid approach.
And if it works for James Selvidge, I guess it can work for you too!
OPINION: We all want to win as much as we can when the winners start to flow. However, being punters we also want to lose as little as possible should we hit a lean spell. It’s the age old conundrum of trying to slew the risk-reward calculation to be more in our favour. Clearly this is what the Square Root betting strategy tries to do – and with some success you might say. If only on paper!
