New blog post by Martin Futter! Betfait Trading - What size bank should I have? Let's Calculate!
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Bankroll management is imperative if you want to become a profitable trader on the Betfair Exchange. Whether you are a football trader, horse racing trader or trade something else, one thing that decide your trading fate is how well you handle your money.
One question we get asked all the time is - What size should my bankroll be?
Ask a Betfair trader of any level, amateur, semi-pro and pro and you will probably get a different answer to the question. Ask 100 random traders and they may all throw out different figures because the truth is the answer is different for everyone.
This is a bit of an 'How long is a piece of string' question but in this article I want to go through a formula to work out the answer to this question.
To work out 'How big your bankroll should be' we have to start with 4 key questions:
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Do you have any money you can put aside for trading, that can be written off from the rest of your money?
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What stake size are you comfortable with using to trade with?
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How much money do you have in savings?
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What stage are you at in your Betfair trading journey.
So let's go through these and give some examples:
- Do you have any money you can put aside for trading, that can be written off from the rest of your money?
If the answer to this question is a straight 'NO' then your trading bank size should be ZERO.
If you cannot put money aside that is not needed for bills or spending of any kind, then you should start just by paper trading (practising without putting any money on).
- What stake size are you comfortable with using to trade with?
By this we are referring to a financial figure. Are you comfortable trading with a £50-£100 stake or are you comfortable with a £10 stake?
How do you work this out? Well when you place a trade which amount of money gives you little anxiety. If even £2 makes you feel really anxious and nervous then even that small amount is too much. You are not ready for it.
When you trade from within your comfort zone you will do better than when you trade from a position of fear.
- How much money do you have in savings?
This is more a case of how many months of bills do you have saved up before trading? If you are looking to turn pro this becomes more important.
Obviously the more the better in this case, we don't want to have to dip into our bankroll too soon when trading.
- What stage are you at in your Betfair trading journey?
How far along the journey are you? As a rule of thumb the further along you are the larger your bankroll can be.
OK so we have the answers to the questions now let's align these with some example of Betfair traders and what their bankrolls should be:
Amateur Trader - Bankroll size should be very low, perhaps £0-£500 depending on what they can afford. Stakes used per trade should be between £0-£25 depending on comfort and total bankroll. Life savings aren't relevant although they should start saving if their ambition is to turn pro.
Semi-Pro Trader - Medium bankroll size, perhaps £500-£2500. Stakes used per trade should be between £10-£50. Life savings not essential as you have other income but 1-3 months would be good.
Pro Trader - Higher bankroll size, perhaps £2500-£10000+. Stakes used per trade £50-£200+ dependant on relevance to total bankroll. Life savings of 6 months+ is essential.
Although, these are rough estimations they can be used as a starting point and applied to you personally as a Betfair trader.If you want to learn further about bankroll management we have written a couple of key articles:
https://betfairtradingcommunity.com/en/blog/road-trading-riches-compound-interest
Hopefully this guide has helped you! If you have any questions just ask: [email protected]
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