Square Root Staking Plan
Like many of you, I have come across this idea of square root
betting that one sees from time to time on different staking plan
menus, so I thought it may be interesting to do a year's sample
and see where it ends up.
The guy who popularised it was James
Selvidge in a book called "Money Management".
The central platform of the idea
is not to give back any hard-won profits during an adverse run
So your first question is always
going to be: is it better than flat stakes betting?
Well, because of the way these formulas
tend to work, the profit on turnover (or p.o.t.) or return on
investment (r.o.i.) as others call it (same thing) may not be
as good as flat stake betting BUT the overall profit may be greater.
Using level stakes - through a protracted
series of bets -may well derive a greater p.o.t. but, in fact,
get you a lower overall net profit because the bets are not escalating
as you gain profits.
Square root betting is simply this:
your base bet PLUS the square root of any bank profit but ONLY
while the bank is in profit.
If it falls below your starting
point, the bet is always reverted to the base bet level whatever
you decided it would be..... e.g. 1% or 2% of your starting bank
and stays there until the bank is in profit again.
Okay - so now you understand the
basics, let's see how it would have worked out in a twelve month
betting trial. The method I have used to run this test is a high
% success method called PFII which we have been playing with for
a couple of years.
In 2011 it had just 49 bets for
22 wins (44.9% strike rate) and 35 placings (71.4% strike rate),
so it is not the method of choice for most because it generates
only limited action. (I prefer winning action to losing action
-no great surprise there.)
At level stakes ($20 on a $2000
bank -1% of the bank as the base bet) it returned a profit in
2011 of $666.40 or, a profit on turnover of 67.8%.
So how would those same 49 bets
have worked out if I had been using the square root staking?
With square root staking (base staking
level $20 on a $2000 bank) on the same horses during 2011, the
result is somewhat different.
The overall profit is $1268.70 or,
a profit on increased turnover, of 55.6%.
The workout for this Staking Plan is available to download in
.pdf format from http://www.racerate.com/Square_Root_Demo.pdf
So there you have it. The square
root system on a method like this would take you a bit of extra
time each year on race days where there is more than one selection.
plan can make up for plainly poor selections.