A sound system to manage your bank makes you place reasonable stakes and avoids you from betting too much in one single match. The objective is to maximize the return on your investment but with controlled risk. Our money management system is defined by the following variables:
The Kelly method helps us decide what percentage of our bankroll will be placed on each bet. This figure varies depending on both the perceived value and the odds. The perceived value iss very much to do with the probability assigned to the event by Sportyy and its comparison with the implied probability within the odds.
The Kelly method is very interesting from a theorical point of view, but it’s too risky when applied in its pure version (Full Kelly) as it suggests too high stakes. If we apply the Kelly formula with a 1/10 factor results are much more reasonable and conservative. The outcome is just the result of multiplying the Full Kelly result by 0.10. Moreover, we add the restriction that the wager will never be higher than 4% of our bank.
Overlay = (Sportyy Probability X odds) -1
The ”overlay” is the advantage we’ve got over the bookmaker because of having made a better estimation of the probability of the event. In order to be a value bet, the overlay must be >0. In Sportyy we prefer to have an additional security margin and we have established a 10% minimum overlay to launch the pick.
Sportyy Probability: 50% = 0.50
Overlay = 0.50 x 2.35 – 1 = 17.5% = 0.175
(1/10) Full Kelly = 0.1 x [0.175 / (2.35-1)] = 0.013 = 1.30% of bankroll
As you can see in the following chart the formula shows that the higher the odds the higher the stake and vice versa. The rationale is that if the price is higher the bet has more value and therefore we should bet more in order to maximize our profits.
In order to fully define our bankroll money management it’s necessary to determine what kind of bankroll we use to calculate the stakes. These are the 2 options:
ROLLING Bankroll: You update your bankroll after every pick. It means that if there are profts you reinvest them and if there are losses your bankroll is reduced. If our initial Bankroll is 1,000 € and we win 30 € in the first bet our following bankroll will be 1,030 €. If in the second bet our stake is 4% our next bet will be 4% of 1,030 = 41.2 €.
FIXED Bankroll: You always use the initial bankroll to calculate your bet amount. It’s as if you spent the money you have won or replaced the money you have lost. If our initial Bankroll is 1,000 € and we win 30 € in the first bet our following bankroll will also be 1,000 €. If in the second bet our stake is 4% our next bet will be 4% of 1,000 = 40.0 €.
At Sportyy we strongly recommend using a Rolling Bankroll strategy. If things go well you capitalize on your profits and growth can be exponential. And if they go wrong you reduce the risks progressively. Obviously, if you want to spend the money you win you will have to use a Fixed Bankroll strategy.
(*) In order to fix the stake of our picks we base our decision on this Kelly methodology. However, the stakes you will se are multiples of 0.50% as we want to make things more simple for our users.