The Effects Of Compounding When Betting
There are many different strategies to consider when you are betting. Some prefer flat stakes, some use the Fibonacci method, others work on their own systems. In today’s guide, we’re going to explore compound betting and its effects. Let’s get started with some of the basics before moving onto highlighting some of the benefits of using this system.
What is Compounding?
The fundamental principle of compounding is that people aim to a specific, small amount – typically between 1-5% – of their bankroll, on a regular basis. It means that punters will be able to place bets that are likely to win, and gives them a lot of flexibility. It also allows their bets to stay the same. It’s worth pointing out that compounding is not just a system of gambling – it is also used in the banking industry. Compounding interest on your savings, for example, involves adding investment earnings to the initial investment. It means that there is a larger base to accumulate income in the future, it can grow faster, and, ultimately, grow exponentially.
How do you Use this System?
Let’s say you have a bankroll of £100, and you want to try and target a profit of 2% every single day. Let’s also assume that you are in the middle of a lucky streak, and you will win every single bet you place. So, you will find a wager you like the look of that will give you a return of £2. You win, of course, and wake up the next day, looking for another 2% return. This time, however, your bankroll is £102. So, you will be looking for a win that gives you £2.04. Winning that wager gives you a total of £104.4, meaning the next day’s target profit will be £2.09.
Now, of course, this doesn’t sound like much return for a lot of effort. But it doesn’t take long for compounding to kick in and start making a lot more sense. After 36 days of repeating this method, you will have doubled your money already – that’s just over a month.
It doesn’t take a genius to see where things go next. Now, let’s assume that you start with a £500 bank, running the same 2% target as before. After day one’s winnings, your pot will be at £510. On day two, your bankroll will have increased to £520.20. By the time you get to the six month period of daily betting – and winning – your pot will now be well over £642,000.
Of course, these figures are purely hypothetical – good luck getting a bookmaker to accept a single bet as large as you will need to achieve them! It is clear and obvious, however, why so many people think that compounding is a safe and efficient way of turning a profit in gambling. Assuming, of course, that you are prepared to take it slow and steady, and use other tactics to protect from losses.
What are the Differences Between Compounding and Flat Stakes?
Flat stake betting is similar to compounding, with one significant difference. When you use the flat stakes system, you put the same amount of money on each bet. You don’t increase your bet size, or start to chase your losses from the last bet. It’s known to be a safe method, as you are consistently only betting what you can afford.
However, regarding profitability, flat betting has two principal issues. If you are only betting the same amount each time, you will have to take more risks if you want to win big. You can play safe every time, of course, but this gives you another problem – it will take a long, long time to start pulling in the winnings that are worthwhile.
What are the Dangers of Compounding?
As you might realise, there are some inherent risks with compounding. The figures involved can be dazzling, of course, but there are still plenty of risks. There are no guarantees that you will win every time – it is highly unlikely, in fact. Let’s say you start with a bigger stake of, say, £1,000. Even when you are chasing small percentage gains, it still means you will be putting a sizeable amount of money on a favourite at the bookmakers. And if they lose, that means you will be significantly out of pocket.
However, with careful planning and a careful betting strategy – like those you can find here on BettingGods.com – compound betting is a great way to turn great profits.