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Within the expert betting community, MM does not stand for Monday Morning. It stands for money management and this is crucial for anyone who wants to become more successful at betting on esports and other sports.
As a serious esports better it should not take too long before you find out that value is the key to success in betting. Unfortunately, finding value bets is not enough. Because even if you only play value bets and are really good at finding them, you still risk ending up with a deficit or even losing your whole bankroll if your money management is not on point.
Don’t miss out on this guide, cause it will really help you out!
/ Kenny Powers
The world of betting is not a fair place. If you play bets at minus value, it does not matter if you have good or bad money management – you will also end up with a deficit. Conversely, it’s not enough to just play value bets and then expect to end up with a plus. You risk ending up with a deficit anyway since everything depends on your money management. All too often you see talented esports betters who are quite good at identifying value and finding good bets but still have a heavy deficit. This is because they are not good at money management or more often because they have no idea what money management is.
So, let’s get down to the nitty-gritty and take a deep dive into the universe of money management.
Lots of talented esports betters possess enough knowledge, talent and qualities to make a profit on their betting, and yet they end up losing the money in their bookmaker accounts. And that even if the esports betters in question only play sensible bets at reasonable odds (also known as value bets). How can that be? If you only play value bets, then your betting economy should have a positive trend and in the long run return a profit, right? That’s what the math says at least. However, it is not that easy.
The issue can be illustrated as follows:
- Value bets + money management = profit
- Value bets + no money management = probable deficit
- Low value + money management = deficit
- Low value + no money management = lose entire bankroll
Just give it a thought. The problem for esports betters who are aware that value bets is the way, and maybe good at finding and playing value bets, but who also lack good money management, is that they are typically going to take too much risk with their bankroll (the amount of money they have to play for). Let’s have a look at a typical example:
The classic example is that an esports better has found a good bet at a bookmaker, puts money into their account, places the bet and wins. So far so good, but it rarely ends here. Based on years of experience on both sides of the bookmaker industry, I dare say that the vast majority of this money, which the bookmaker has currently lost, ends up back in their box. Plus the player’s initial deposit.
This is because the typical reaction pattern for a regular player is not that he or she demands their money paid out of the bookmaker account and into their bank account after winning. Over 95 percent of all bookmaker customers leave their winnings in the bookmaker account, which in principle is not a problem. What subsequently goes wrong is that the players often take higher risks with the winnings and end up in bad money management.
The classic example of extremely poor money management is that the player, after winning the first bet, puts all the winnings at stake again. If the player wins once again, the entire winnings go on to another bet. In that way the player is predestined to lose the entire bankroll as it goes without saying that it is impossible to keep a 100 percent record. The average bookmaker customer may not bet the entire winnings on a single bet after winning the initial bet, but betting around 40-50 percent of the bankroll is not uncommon. Although it is not as bad as risking the entire bankroll, it is still very bad money management. The risk is too great and there are too many eggs in one basket.
Never connect your bets mentally and try to compensate your losses with new bets
In the opposite ditch of bad money management, we find the so-called “double-up system” which is known from roulette. Technically, the system is known as “Martingale” and means that every time you lose, you double your bet (assuming you play at around odds 2,00). Since you cannot continue to lose forever, but at some point must win, the system will always make a profit. When you win, you win the originally deposited sum, and then you are back to square one. But this system only works in the perfect world and you can quickly lose a huge sum of money if you are not careful.
Practical things such as the size of your bankroll, as well as the bookmaker’s deposit limits will put an end to the accelerating deposits if you lose too many times in a row. And the size of the bankroll must be big. If, for example, you lose seven times in a row, you have to go up to 128 times your original stake, and the chance of winning the eight time is not greater than the first time.
A good mantra is that “the coin has no memory”. If you play heads or tails, and the coin has landed on tails the last seven times in a row, there is still only a 50 percent chance of the coin landing on heads.
The ball in roulette also has no memory and in bookmaking seven losses in a row do not guarantee that luck will turn at the next bet. Therefore, the double-up system as well as the previously mentioned system where you put your entire bankroll at stake (Paroli as it is called in the casino world) is the two worst money management systems that exist. Unfortunately, these two seem to be very popular.
In bookmaking, it is typical for the customer to deposit a sum of money (for example 30 euros) and place them on a carefully thought-out bet at for example odds 2,50 / 1.5/1. The bet is a winner and the player now has 75 euros in the account. The player thinks that it’s not enough money to make a withdrawal but if it was 300 euros or dollars, it would be different. Therefore, the player decides to continue betting until there is at least 300 euros in the account and then make a withdrawal. That decision is not bad in itself, but the way the average player tries to reach the goal will typically be filled with poor money management. As mentioned earlier, the player will have too high stakes on the subsequent bets, and therefore it all too often ends up with a lost bankroll.
The aforementioned examples are the worst in terms of poor money management. But actually, more than 95 percent of all bookmaker customers have poor money management. Or rather, what most of them have is no money management at all, as very few are aware of the concept. This means that all their energy and attention is used on finding the individual bets and nothing is used on strategy. This results in the stakes often becoming more or less random.
The main factor for how much money you put on a bet, should never be based on how much you won on your previous bets.
If you use this form of money management (which is the same as no money management), then you must not only be good at finding value bets, you must also be very lucky to make a profit in the long run. What typically happens is that you take too many chances with your bankroll and your stakes become too big. If you want to be successful with your betting, there is only one thing that works in the long run and that is to ensure a large risk spread!
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This phenomenon is known from the stock world, where large investors always make sure that to have a relatively wide/broad portfolio. And that is even more essential when betting. The stock market is not reliable and can even outsmart the experts, but betting is by nature a riskier business than buying shares.
Even if a share price drops, it is rare that you lose your entire investment overnight – something that often happens with bets. Therefore, a large risk spread is essential which means playing singles (or maximum doubles) at relatively small stakes in relation to your total bankroll.
But how should you manage your bankroll? How do you run a good money management practice? This article has dealt with common mistakes and with what you should definitely not do. What you should do instead is put your betting into a system of sensible risk diversification. There is an excellent system that I use, and that many of my friends use in either a pure or a modified form. The good thing about the system is that when the basic philosophy is accepted, it is flexible according to targets and temperament and can thus be adjusted according to personal needs.
The name of this system is the J. Kelly betting system, which is, in my opinion, the most realistic betting system that you can implement in your day-to-day betting.