Why chasing losses will quickly blow up your betting bank

If you’ve been betting seriously (or at least trying to) for any length of time, you’ll have found that there’s much more to being successful than just backing winners. Of all the other factors that go into successful punting, staking is perhaps the most important. The most successful punters are successful in no small part because they manage their bank and avoid chasing losses.

Stake too much, and you’ll soon have a losing streak where you’ll blow up your bank and be out of the game. Stake too little and when you are winning, the profits will be too small.

Chasing losses

One of the worst things you can do, and a trap many new players fall into, is chasing losses.

One dangerous type of loss chasing involves simply having more bets. You’re losing, so you start looking for other betting opportunities to find a win.

Soon you’re betting on races or games which you’d already looked at and decided weren’t good propositions… just to find a win.

The reality? Your original, considered analysis will be more relevant, and your lower-quality bets will be just that. You’ll end up losing even more.

We’ve all been there, but truckloading the favourite in the last race of the day won’t save you every time!

Another type of chasing – more directly related to staking – is to keep increasing your bet size to cover your losses.

Basically, you bet to win a certain amount with each bet. If you win you bet the same again. If you lose, your next stake is bigger as you need to make it to the next stage as well as cover your previous losses.

In essence, it’s what’s called a Martingale approach. It’s been around forever and many have been convinced it’s the path to riches.

But as they’ve found, it’s not.

Chasing losses in action…

We’re going to use some real-life figures to illustrate just how quickly this method of chasing losses can come unstuck.

We’ve plucked out a series of bets from our Alpha Racing membership. This is a real set of results – they are the bets Alfie had between May 1st and June 22nd 2022.

A large part of why we’re using them is they’re such a great set of results. In this time, using his own staking method, Alfie won 46.4 units.

If you started with 100 units, you’d have 146.4 units in the bank at the end of the period. That’s a fantastic result – as we said, that’s why this is such a good example.

Alfie stakes intelligently… he uses a proportional system where he bets to collect five units, based on his rated price. This ensures each bet is staked individually, no matter how much he’s recently won or lost. He doesn’t chase losses – he treats each bet the same whether he’s winning or losing. Which makes sense. The horses running in your next race don’t know or care if your last bet won or lost!

So what if we decided to instead chase losses?

To illustrate this, we’ve shown a martingale-style staking system as well. In this approach, we’re betting to increase the bank by just 1 unit, or 1% with each bet we have. If the bet loses, we have to stake more to make up for what we lost and keep us on track for our 1% bank growth.

For a while, this works fine. It gets a bit hairy at times, like on June 4th when we have a losing streak of 8 bets and have to stake 37 units (of our 115-unit bank) to keep us on track. But we have a win, so all is good.

And by the 15th of June, we’re riding high with a 171-unit bank, compared to 158 units under Alfie’s staking.

But then…

We have a 10-bet losing streak. Even in this exceptional run of results, variance is such that 10 of our bets in a row lost. That can easily happen… and it does, often. All punters will encounter it.

But unfortunately for the loss chasers, it wipes out the bank completely.

In the space of 10 bets their bank is down to just 30 units. They need to stake 101 units on the next bet (a $2.50 shot) to keep track with their approach. But they can’t… they only have 30 units left. They’ve wiped out the bank.

You can check out the full set of data right here.

That’s how quickly things can go wrong when you’re chasing losses.

So you’ve been warned… stake smart!