Proper money management obviously requires the adoption of only the best staking plan for sports betting. Therefore, players are often wondering if they should follow flat betting or apply the Kelly criterion.
In a few words, Kelly criterion suggests risking a percentage of capital, depending on value betting. On the other hand, with a flat betting strategy players should wager the same amount of money on each bet.
The best staking plan debate
The question arises because it is widely believed that the Kelly criterion is best for betting online, while, in fact, its use is appropriate only if our betting system has been actually proved profitable.
However, in order to reach that conclusion, we must wager with a flat betting plan for a large number of bets.
Quite a few times, I have discussed the issue both on the Internet as well as meeting with friends. It is certainly a matter of concern for a large number of sports bettors, who, after they have heard that winning in betting comes with proper money management techniques, they try to find the most advanced staking plan, thinking that profit is linked to complexity.
Yet, things should be much simpler and easier, till we conclude to the appropriate staking plan. First of all, we have to prove that our betting system, that is used to find our picks, actually yields profit.
Before you choose a staking plan, backtest your system
The flat betting strategy helps in this direction, particularly if there are historical data of previous events. In that case, the so-called backtesting is the best evidence of the profitability of our system.
Briefly, backtesting is the process of verifying the system’s performance using results and stats of matches already completed. Thus, we can confirm that our system would have worked in previous months, resulting in profit. If our predictions are based on the same criteria, chances are that our system would continue to record the same performance in the future.
However, it is relatively difficult for a player to have readily available all these historical data, which would be needed to come to safe conclusions about the system, before successfully predicting the outcome of each match. For example, a system could take into account the rate of which the team’s top attacking player scores on each match. If this statistical value is not available in the historic data at hand, backtesting is impossible.
Why flat betting is the best staking plan to start with
Therefore, the most common solution is to apply the flat betting technique with the system in the upcoming matches, as a method which could verify if our system is indeed accurate. By betting with fixed stake on a satisfactory sample of games – for example 500 bets – the player will be able to analyze more statistical data with the system. These stats will prove immediately and effectively whether the system is profitable.
Such statistical data of interest will be the variance and standard deviation, the profit rate, the maximum drawdown and more, which will strengthen the bettor’s confidence, before commencing to implement the system with real money. Furthermore, the conclusions which will be drawn by flat betting, as the above stats, will be helpful for implementing other more complex staking plans, such as the Kelly criterion.
Subsequently, by applying a more complicated staking plan, which usually defines each wagering as a percentage of the available capital, the player’s betting method could have maximum performance, taking advantage of the analysis and the conclusions acquired during the flat betting period.
Still, if a bettor has not confirmed that their system is indeed profitable, runs the risk of experiencing heavier losses in less time!
This happens as the Kelly criterion maximizes both profit and loss. So, if a player bets following a losing betting system, a lot more money will be lost with the Kelly criterion rather than just applying the flat betting technique.
As a conclusion, it makes sense before we decide to learn what the criterion Kelly is and how it is applied, to prove that our betting system generates profit by testing it on flat betting.