5. Financial strategies

To avoid this happening to you, it is necessary to choose the appropriate financial strategy that would help you to manage your bank effectively. There are plenty of financial management strategies (moreover, you can come up with a similar financial strategy yourself). Let’s consider the most common of them:

Fixed
Fixed profit
Percent from a bank
Martingale
d’Alembert and Counter d’Alembert
Oscar Graind
Kelly Criterion
Row of numbers

Fixed (FLAT):

The simplest strategy you can only come up with. The amount of the bet is fixed and unchanged for a certain period. Further they often add: “regardless of the type and nature of the bet,” although with such formulation this strategy is certainly losing.

But even without this, its applicability is limited to a very narrow bounds, although this strategy is often presented as a great benefit for beginners, apparently, deriving it from the rule of “do not increase the amount of the bet after the winnings,” which is not always right. Blindly following these advice is less likely to lead you to success. Strictly speaking, this strategy is applicable only in one case: when you all the time bet on one of two opposite outcomes (handicaps, totals) with the same coefficients, and every time your task is only to select from the set of events the outcomes, which seem most probable to you. The Americans play this way, since this is the simplest game that does not require special intellect, in contrast, for example, to the choice of three unequal outcomes, “winning of the hosts/draw/winning of the guests”, where this strategy will be harmful. If you, for example, make bets on handicaps in basketball, the coefficients for which are all the time equal to 1.91, then this strategy is possible, but does not guarantee your profit at all.

But you can set for yourself fixed amounts of bets on most ordinaries, expresses and on the variant of the system (and these amounts can and, as a rule, should differ), which you bet out of any game strategy, and this, perhaps, will already be correct.

Modification of this strategy is a fixed profit strategy

Fixed profit:

Here, in contrast to the “traditional” flat, not the amount of the bet is fixed in advance, but the amount of net profit from each bet. And the amount of the bet, thus, varies depending on the coefficient, and it is determined by the formula:

amount of the desired net profit
------------------------------
coefficient - 1

In particular, if the coefficient is 2, then the amount of the bet will be equal to the size of the desired net profit. In principle, it is not necessary to set a single net profit for all bets. For example, you may break your bets by certainty levels and assign your fixed profit value to each certainty level, the greater is the certainty level, the greater is the value.

Comparative analysis of fixed strategies. It is curious, which strategy is better: a fixed amount of a bet (FAB) or a fixed profit (FP)? It turns out that each of the strategies is good in its field, depending on the coefficients. Let’s consider this mathematically by comparing the functions of the averaged net profit for each of them. Thus:
FAB: f1(k) = S1*(K-1)*p(K) - S1*(1-p(K))
FP: f2(k) = S2*p(K) - S2*(1-p(K))/(K-1),
where S1 s fxed amount of a bet, S2 is a fixed amount of a profit, K is a coefficient, p(K) is a probability of our guessing of the bets with a coefficient K. If p(K) = 1/K + V(K), where V(K) is some function expressing our advantage over the bookmaker line, which, obviously, should also depend on K. Without distorting the meaning, we can take V(K) = C/K, where С is a particular constant, showing the effectiveness of our predictions (for example, if for K=2 our predictions have an advantage of 10% over the line, we can consider that C=0.20). Thus:
FAB: f1(k) = S1*(K-1)*(1/K+C/K) - S1*(1-1/K-C/K) =
= S1*((K-1)*(1/K+C/K) - (1-1/K-C/K)) =
= S1*(1+C-1/K-C/K-1+1/K+C/K) =
= S1*C;

FP: f2(k) = S2*p(K) - S2*(1-p(K))/(K-1) =
= (S2/(K-1))*((K-1)*(1/K+C/K) - (1-1/K-C/K)) =
= (S2/(K-1))*(1+C-1/K-C/K-1+1/K+C/K) =
= S2*C/(K-1);

We can see that both these functions have the form S(K)*C, where S(K) is the dependence function of the sum of the bet on the coefficient. And for FAB, the function S(K) is not a function at all, but a constant (according to the condition), and thus the averaged net profit function for this strategy is also a constant, i.e., it does not depend on the coefficient. But the function of the average net profit for FP depends on the coefficient, because the dependence of the function of the sum on the coefficient, and this dependence is inverse. Obviously, the last function intersects the line S1*C at the point (S2/S1)+1, and since the function f2(K) is monotonously decreasing, up to this point the average net profit of the FP strategy is larger than that of the FP strategy, and after this point it is less, with the same K.
This shows that if the quality of your predictions is not satisfactory (that is, C<0, which is equivalent the fact, that the product K*P(K) <0, i.e., your predictions have negative mathematic expectation), then neither strategy will bring you a profit. But if the quality of your predictions is good, then by manipulating these strategies, you can increase your profit.

Percent from a bank:

The simplest, but the most reliable strategy. You determine the amount that you can allocate for the bets, and every time bet a certain percentage of what’s left of that amount. For example, if you allocate $100 for the bets, you decide to bet 25%. If you lose once, you will have $75 left, and the next bet will be 25% of that amount, i.e. $18.75, etc. The advantage of this method is that you will never lose all the money

The development of this strategy is the Kelly Criterion.
You can modify this method by dividing the money for different types of bet, for example: 5% of the bank – for express, 15% - bets on “shoo-ins,” etc. It is recommended only that the total percent does not exceed 25% of the bank, otherwise the amounts of the bets in case of series of misfortunes can fall below the minimum acceptable bet in the betting office. To prevent this, it is possible to apply the breakdown of the bank to ranges, and to set the percent for each range. Example:

MARTINGALE:

Martingale is the most famous financial strategy, originally developed for use in the casino. With the help of this strategy, you can stay in the black, even if you lose often. However, this is a strategy of a high risk, and with an unconsdered application it can drain you dry.

Its concept is very simple: the bet amount doubles every time after losing, and returns to some initial value after winning. Let’s say you start to bet with $ 100, you lose, the next bet is $200, you lose again, then $400 and you win, and the next bet is again $100. To get a profit by playing on this strategy, it is necessary to bet on events with a coefficient of at least 2. Example:

D'Alambert (D\'ALEMBERT):

This strategy is also known as The Pyramid, and it was also developed for use in casinos. Compared to Martingale strategy, it is less popular but less risky. In the basic version, you increase the bet amount by 1 unit each time you lose, and decrease by 1 unit when you have a gain. The amount of 1 unit you define yourself (it can be, for example, 100 rubles, or $20), the most important thing is not to change it later. Example (for events with a coefficient 2):

Counter D’Alembert (D\'ALEMBERT):

The idea is the same, except that you increase the bet, when you win, and reduce it when you lose. Example (coefficient 2):

OSCAR GRIND:

Designed for playing roulette, for betting on "red/black", and therefore, applicable for betting on events with a coefficient 2. The amount of 1 unit you determine yourself (it can be, for example, 100 rubles, or $20).

Rule 1. The goal is to get a profit of 1 unit at the end of each cycle, and if it requires a smaller rate than the one that should be in accordance with other rules, the rate should be reduced to this value. This rule has the highest priority
Rule 2. Initial bet is 1 unit.
Rule 3. If the initial bet is lost, the second bet is also 1 unit.
Rule 4. The bet after the loss is of the same amount as the lost bet.
Rule 5. After the gain the amount of the next bet is increased by 1 unit.

Example (coef. 2):

KELLY CRITERIA:

The criterion was developed in 1956 by John L. Kelly. As opposed to strategies like Martingale, Kelly's criterion will not lead you to bankruptcy, because it always determines the rate of interest as a percentage of the amount of money you have. Thus, the risk of complete bankruptcy is excluded. But this criterion requires that you correctly assess the chances of the events, at least not worse than the bookmaker does. If this is the case, then the following formula gives the optimal bet amount:

(coefficient х your prediction) - 1
--------------------------------------------
coefficient - 1

Example:
Your bank: $10000
Coefficient on the event: 5.00
Your prediction on the event: 0.25 (25%)
We get: (5.00 х 0.25 - 1) / (5.00 - 1) = 0.0625. I.e. you need to bet on this event $625 (0.0625 x $10000).

The main advantage of this strategy is that you lose less money when your bank decreases. If your average bet is 10% of your money, then if you lose 6 times in a row, you will still have 48% of the initial bank. And if you determine the probabilities of events by 10% more accurately than the bookmaker does, then the probability that you lose the bet with a coefficient of 2.0 ten times in a row is only 0.033%!
But at the same time, Kelly criterion will not lead you to quick enrichment. On average, with each bet your bank will grow by 5% if you determine the probabilities correctly.

Before you begin to determine the bet amounts by the Kelly criterion, you have to solve for yourself the following questions.
The size of the bank. It is quite sufficient if you allocate funds in the amount of 10-15 sizes of your average single bets. Naturally, you must be prepared to lose this money, although not all at once.
How often and how well you can determine the chances of events. Experience is very important in the art of sports betting. Choosing the right event for bets is often enough to win, but this is also the hardest part. Only by accumulating experience, you will grow as a player. To find the most advantageous coefficient, you need to study the lines of as many offices as possible (naturally, of those in which you have the opportunity to bet). At the same time, it is necessary to select those events, the coefficients for which are overrated, and this does not happen very often: as a rule, no more than 2 to 5 events per week. For example, if you chose an event with a coefficient of 2.0, you have to be sure that its chances are not less than 50%, because the bet amount directly depends on this probability (which, however, is in any case your subjective opinion).
Duration of the game.How long are you going to play on this strategy? If you set a goal, finish the game as soon as you reach it, take the gain, and only then you can start a new game with the same or another initial amount. Thus, you can feel that you have earned money, because it is the bookmaker, not you, who actually has the money that is in your account in the betting office.

Many players use Kelly’s formula, but some believe that this is too risky, since it requires an accurate assessment of the chances of the event. If you overestimate them, you risk to lose money, because the bet amount calculated by the formula will be too big. But you can use a decreasing coefficient, for example, divide the obtained result by 2, which will reduce the risk. Another way is to use Kelly’s formula to determine the proportions of bets, i.e., for example, how much to bet on the game 1 compared to the game 2. This can be done in the following way: for example, according to the formula you got that you need to bet 4% of your bank on game 1, and 2% on game 2. If you are going to bet $100 on both these games, then you need to bet 4/6 = $67 on the first game, and 2/6 = $33 on the second one.

Row of numbers (DIE ABSTREICHMETODE):

This is a German strategy similar to Martingale, and, like most progressive strategies based on a constant increase in the size of bets, it was originally invented for a casino. But it is more moderate than Martingale, and the first gain does not always cover the previous losses. On the other hand, it also will not lead to such a rapid increase of the bet amount.
"Row of numbers" is customizable strategy. This means that you can manage the amounts of bets depending on your needs. But at the same time, it will require more efforts from you, for example, you will have to write down this row of numbers, add numbers to it when you lose, and cross them off when you win.
First decide how much you want to win. Suppose, $1000. Then determine how long it will take. If you play on events with a probability of 2.00, the probability of your gain for each bet will be, say, about 40% (it’s better to underestimate than overestimate your capabilities). If we divide $1000 into 20 gains $50 each, we can calculate how long it will take to win the entire amount of $1000. Predicting events with an accuracy of 40%, you will lose 60% of all bets, i.e. you will lose 50% more often than winning (6/4). In case of a gain, you have to remove two numbers from the row: the first and the last. In case of a loss, add one number to the end of the row. The starting row will look like this: 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50

Calculation of the bets amounts. The amount of the first bet is equal to the planned gain, divided by a coefficient without a unit. If you lose it, a number equal to its amount is written up to the end of the row. Each subsequent bet is equal to the sum of the first and last number of the row, divided by a coefficient without a unit. If it wins, the first and last number is removed from the row. If it loses, a number equal to its amount is written up to the end of the row

Although the progression in this strategy is not as great as in Martingale, it is still a quite risky strategy. If you fall into a series of misfortunes, you can fail. Everything depends on how you make up your series. Therefore, it is recommended to first test this strategy without actually making bets.