The key to maximising potential gains while minimising risk is managing your portfolio. The fundamentals of balancing diversification and focusing on the ideal return based on the risk are the same for all portfolio types, whether in sports betting, investing or trading.
It's easy to get carried away in sports betting by the big wins or losses you receive in the short term, as you only win or lose during the game. However, as sports betting works differently from the traditional investing approach, we'll be looking at tips on how to work out the risk involved and when you should diversify. Hopefully, this article can help you create a balanced portfolio and structure for your bets.
Why Should You Manage Risk and Diversify?
When starting your betting journey, you must have started with a small bankroll and try to increase it in any way possible. Once it gets bigger and sports betting becomes a larger form of income, preservation and minimising risks should be more critical. This is because you don't want to lose any of your previous wins and you may want to stabilize the amount you're winning. If the diversification is going well, you should rarely experience large amounts of variance and minimise your risk while still maintaining the money you've won.
Managing Your Risk
There are many factors to consider when managing risks when betting on sports. Firstly, how risky are the bets you're taking? The obvious thing to look at is the odds for your bets – if you're taking 1.5 odds, it's clearly less risky than 5.0 odds in the short term.
However, what's more important is to consider where you're getting the bets from and how confident you are when betting on the market. The easiest example of this is a Trademate bet vs a Tipster bet. Trademate has a massive sample size and a winning edge compared to a tipster you've found on social media, who you're purely relying on trust alone.
Looking at the Risk of Different Betting Systems
Here, we'll be looking at all the risks in every betting system. Note that the risk ratings are based on our experiences. Hopefully, you'll discover some valuable points that you didn't know before when calculating your risk.
Tipsters – Risk: Very High – Returns: Potentially High
There are many reasons why Tipsters are incredibly high risk. First, as we've previously stated, tipsters are likely someone you don't know, which means you're staking your money based on pure trust. Many tipsters lie about their stats and few don't even follow their bets. You also have to consider how easy it is to follow their bets – is it possible to get the same odds as the tipster? You may need to bet in specific bookies, or odds may instantly drop. Missing odds means far less profitable systems.
However, if you've put in the time and effort in finding the right tipsters, it can be extremely rewarding. Once you have a tipster you can trust and have a good sample size; it's possible to readjust the risk level to the system.
Your Own Bets – Risk: High – Returns: Potentially High
It's challenging to rank the risk and returns for this section as it's purely based on your skills. However, there are still risks involved in it. For example, where did you retrieve the data from which you are making your selections? There are so many sites for data and stats; how they present these data can translate to different results. Knowledge also plays a part in your bets – there are many ways to win a bet through analysis.
Diversification
Now that you have a better image of all the involved risks let's find out how you should diversify based on risk. It's entirely based on your situation.
For example, if your betting system is already at max stakes and you cannot get more liability down, that's a good time to diversify. Also, if you think your risk is too low, you can increase your risk and try to increase your winnings.
It's all based on your risk tolerance when deciding how much of your portfolio you should allocate to each system. We suggest the higher your bankroll, the lower risk tolerance you should have. You shouldn't jump straight in with a new tipster and high stakes if you have a massive portfolio, but allocate a tiny fraction such as 5/10%. Over-diversification can also become a problem. You'll need to track all your betting systems and find out that only a few betting systems offer more opportunities than others.
We recommend having 3-6 betting systems within your sports betting portfolio. This way, all your systems won't go through lousy variance at once and still maintain low enough risk and good returns. You can mix it up with having a Trademate, having two of your systems and using two tipsters that you trust, or something similar, depending on your conditions and experience.
