Risk is always a very subjective discussion point, as everyone has very different attitudes to risk and also finds themselves in very different positions at different stages of their life. With betting I view risk as the amount of your bankroll you are willing to bet on a certain outcome.
One of the (few) things I remember from University was a lecture on risk and the three different types of attitude/mindset that people have. They are either risk averse, risk neutral or risk loving. They are pretty self explanatory and really help define what type of punter we all are.
One of the beauties of the betting game is that you ultimately decide which category you fall into and you will choose strategies that fit the attitude to risk that you have. What’s also great about the game is that there isn’t just one way to be successful in this game.
I know people that have taken outrageous risks with their bankroll and been successful. I also know others who have taken hardly any risk yet have managed to be very successful. Small winner after small winner can really add up. There is no set formula.
One thing I should say and have talked about it before is that is when I am placing bets the risk is all on me. I am not betting using other peoples money. If I lose, I lose my money. People betting other peoples money will have a different attitude to risk.
My attitude to risk has changed over time. Once you have a family, you are understandably less willing to take the risks you may have, when in your 20’s. It is just part of the evolution you undertake during this game.
Many people will use something like Kelly’s Criterion (KC) as a staking plan as it helps to optimise bankroll growth. They will use different versions dependant upon their attitude to risk. Some people may use the full KC, others half KC or even a quarter KC. I have undoubtedly cost myself money over the years by not following KC but again it is all about personal preference. One of the problems I have with it is it requires you to know your exact edge. That is an incredibly hard thing to know. You can estimate it but its not ideal.
You also have to make calculations constantly based on bankroll. It is great for some people but not something I use. I will talk about staking plans in a different tweet. The recent hedging debate really highlights your attitude to risk.
I have always been happy to let bets ride and not hedge them (viewed hedging as being risk averse) as long as the bet being placed was a -ve EV bet. As has subsequently been proven this isn’t an optimal strategy and something I have undoubtedly got wrong over the years.
I heard the following question recently asked to Jeff Ma about how much of his bankroll he would put on the line if he was offered 5/1 on a coin toss. He wouldn’t be allowed to hedge and he said $100k. I am not sure of his bankroll but it is a tiny % of his bankroll.
My attitude is very different. I believe I would have upwards of 50% of my bankroll on such a bet. The reason is pretty simple. You wont ever find another situation where you are getting a better return on your money. It just doesn’t happen unless the outcome is known/rigged.
What are we even doing here if you are not willing to get properly stuck into an opportunity like that. We can spend all day and week looking for 5/10% edges and yet when someone presents an opportunity like this you wouldn’t get stuck in….KC has it at 40% fwiw.
One thing I am always looking out for is opportunities where there is asymmetric risk. Simply where the upside or downside is uneven. You want situations where if you are right you really get paid off.
One other aspect where risk is important in the industry relates to the risks we take with where we place bets and how. There is a risk of differing amounts, with any bet that you place, that you wont get paid or the operator wont pay you. That your funds aren’t safe.
This is a very real risk and something I touched on in Tweet 11 (Bookmakers 1). You have to factor it into every bet you place. The risk isn’t zero. It may be tiny and fluctuate a lot by Bookmaker. BF might be 0.0000001%. Geoff Banks might be 10%……who knows..
Risk and attitude to risk is a very personal choice. Do what you feel most comfortable with. There will be optimal staking plans but they may not suit you. I have said it before but be aggressive if the right opportunity presents itself.
ProPunting 