Managing your portfolio is key to maximizing potential gains while minimizing risk. The general fundamentals of balancing diversification and focusing on the best risk-adjusted returns are the same in all types of portfolios, whether that be in sports betting, trading or investing. However, with sports betting being the less traditional approach to investing your money, throughout this article I will give examples and tips of how I work out the risk involved and when to diversify. It’s very easy in sports betting to get carried away by the large winnings or losses in the short term as after all, you only win or lose in this game. But hopefully, this can help you build a balanced portfolio and structure to your Sports Betting.

Why Manage Risk and Why Diversify?

When you start your betting journey, I expect you’ll just have a small bankroll and try to increase it any way you can. Once it starts getting larger and sports betting is a larger form of income for you, preservation and avoiding risk will become more important as you don’t want to lose all your previous winnings, and you may also want to somewhat stabilise the amount of returns you are getting and limit variance. Diversification, if done well, can mean you rarely experience large amounts of variance and limit your risk, while still maintaining profits.

Managing Your Risk

There are multiple factors to take into account when managing risk in sports betting. Firstly and simply, how risky are the bets you are placing? The obvious point here is what type of odds are your bets, if you are taking 1.5 odds there’s obviously less risk in the short term to 5.0 odds. However, it’s more important to take into account where you are getting the bets from and how certain you are of the edge on the market. The easiest example for this would be a Trademate bet vs a Tipster bet. Trademate has a humongous sample size and a proven edge compared to a tipster you have found on social media, who you are purely trusting has an edge.

When analysing your risk, you also have to take into account opportunity cost. While you may find one system of yours is very low risk, experiences little variance swings and is producing a consistent profit, it could still be consistently outperformed by another system. Let’s say the first example was your Trademate bets and the second a Tipster you found on Twitter. The Tipster you found on Twitter has outperformed you by a fair bit for the last three months in a row, however, his sample size is still way smaller. Here you somewhat take more risk by not following him because he’s consistently outperforming you. This is where diversification comes in and adjusting your bankrolls according to risk. Not following the Tipster at all may be too risky but you don’t want to be overexposed and risk all your money based on trusting someone from Twitter. In this sort of scenario, you’d want to lean towards the safe side on the lines of a 70/30 split favouring the safer option. However, it’s really based on your own risk tolerance and I’ll go into that more in the diversification section.

Analysing Risk for Different Betting Systems

In this section, I will go through all the risks in each type of betting system. Hopefully, there are some helpful points that you didn’t take into account when calculating your risk. Note the risk ratings are purely my opinion based on my experiences, I have a large sample size of all of the below but my risk tolerance may be different from yours. The risk numbers may be high but that is somewhat the nature of sports betting, compared to investing in say stocks, currencies or other assets. Whereas the numbers for potential returns are much higher in sports betting. Also, please note skill is somewhat a factor, some people will be better at making their own bets than others and some better at utilising Trademate software and so on.

Trademate - Risk 5/10 - Returns 6/10 - RAR 7/10

Trademate is a great platform to easily find positive edge bets. The sample size is simply unmatched by other systems, the edge is proven, meaning the risk is low. The risk is still 5/10 because in the short term there’s still a lot of risk involved. It also takes some practice to fully optimise your betting within Trademate. However, once you’ve got the hang of it and put time into placing bets, it’s fairly low risk over a large sample size. The great thing is there’s plenty of content to consistently improve your Trademate skills and make the risk even lower. The returns are high but fairly low in the grand scheme of Sports Betting, making it a fairly safe option. Whenever the returns are higher than the risk it’s a positive and 7/10 risk-adjusted returns are very good.

Tipsters - Risk 9/10 - Returns 8/10 - RAR 5/10

There’s a lot of reasons for the shockingly high risk on Tipsters. Firstly as stated before, it’s likely someone you don’t know, so you are purely staking your money based on trust. So many tipsters lie about their stats and some don’t even follow their own bets. Social media can be full of scammers and people telling you how to get rich gambling so it’s hard to separate the real from the fake. You also have to take into account how easy it is to follow their bets, can you get the same odds as the tipster? It may require specific bookies or odds may drop instantly. Missing odds can make the system far less profitable.

On the other hand, if you put time into finding the best tipsters it can be very rewarding. I’d also say the risk stated above is prior to finding a Tipster, once you have one you trust and have a good sample size, you can readjust the risk level to the system.

Here are some tips for finding and using the best tipsters:

1. Making sure their followers are real. Try to avoid tipsters with very low amounts of followers or follower interactions.
2. Try to find a way to confirm the stats through a site that has verified them. If the tipster in question does not have a P/L sheet that’s an instant red flag. Furthermore, if they do but it’s not a good sample size it’s best to avoid them. You’re looking for a long-term and large sample size with good returns. It’s best if you’ve seen the tipster’s followers confirm the bets posted so you know the stats are true.
3. Always start with low stakes. It’s very hard to trust tipsters, so start with low stakes or even just watch for the first few weeks. You can always raise your stakes once you trust the tipster.
4. As risk-adjusted returns go, Horse racing and Greyhound Tipsters tend to be better than Sports Tipsters. If you are taking all the risks involved with following a Tipster, then you need high returns to justify the risk. From my experience Horse Racing and Greyhound Tipsters yield the higher ROI. Mainly due to the odds involved. That’s not to say there aren’t fantastic sports-based Tipsters out there.
5. Ask other punters for recommendations. If you have friends that can tell you a tipster is legit or should be avoided, this can save you a lot of time and money.
6. Track all their bets yourself. The person you can trust the most is yourself. If they’re a football tipster on markets like 1x2, Totals or Asian Handicap, spend some time checking whether they are beating the non-vig closing prices at sharp bookies like Pinnacle Sports. If they are not beating the market, it most likely means they will be a loser long term.
7. Another red-flag to look out for is tipsters who are affiliated with bookmakers. That means they are getting paid everytime someone clicks on their links and signs up with a bookmaker. It could also mean they are earning through your losses via loss-revenue scheme. Yes, a lot of tipsters are only tipsters so they can make money from your losses!

The main difficulty surrounding Tipsters is simply finding ones you can trust. Once you’ve done so, there’s definitely a lot of Tipsters with fantastic returns out there!

Your own bets - Risk 8/10 - Returns 8/10 - RAR 7/10

It’s very hard to definitively label the risk and returns for this section as it’s very skill-based. However, there’s risk involved regardless of skill. For example, where did you get the data you are making your selections from. There are so many sites for stats and data, while most true there, how they present the data can give completely different results. Meaning you have to trust your data source.

Skill also includes knowledge, there are many ways to gain an edge through analysis. However, be cautious, if your edge is not on the market closing lines nor data based then you’ll want to be low stakes until there’s a large sample.

When placing your own bets you also start with a sample size of 0 and only your own judgment alongside the data you have to try and gain an edge. The only reason I have this as a slightly lower risk than tipsters is it’s easier to trust yourself than someone over social media. But making your own system of betting isn’t easy and most will never be profitable so if there was a difficulty rating this would definitely be the highest. If successful your potential is down to you and there are many ways to make some very profitable betting systems. You are also guaranteed to get the odds compared to a tipster.

Automated Betting Systems/Bots - Risk 10/10 - Returns 6/10 - RAR 3/10

Over the last few years, I’ve used a lot of automated betting systems. Some were fantastic and others awful. This is definitely the riskiest type of betting system. It has all the risk involved with a tipster (assuming you didn’t code your own, then I’d include that in the section above) as you are simply trusting the stats and returns you are supposedly going to get. Similarly, I recommend following the same tips when choosing to use these services or not.

You’ll also notice it’s the worst risk-adjusted returns of them all. This is due to the risk being so much higher than the potential returns. While some automated systems yield high returns due to the large sample size they can accomplish as they rarely miss odds. You tend to experience huge variance swings with bots and they are especially risky in the short term.

The huge bonus is that automated systems require little to no work at all and if time is money then in theory the returns should be even higher for this one. That’s the main if not the only reason people add these into their portfolio.

Diversification

Now you have a better understanding of all the risks involved, it’s now time to know when and how best to diversify based on risk. Deciding when to diversify is based on your personal situation. For example, if you have a betting system where you are already at max stakes and you can’t get any more liability down, that would be a key time to diversify. Also if you feel your risk is too low, you may want to add a riskier system to your portfolio to try and increase your profits.

When it comes to deciding how much of your portfolio to allocate to each system it’s based on your risk tolerance. Generally speaking, I’d suggest higher the bankroll you have the lower risk tolerance you should have. If you have a very large portfolio you don’t want to jump straight in with a new tipster on high stakes, allocate something small like 10/20%. Over-diversification can also be a problem, firstly it will be greatly time-consuming tracking all your betting systems. Not only that but it’s very unlikely you’ll ever find a large amount of very profitable betting systems, meaning some will be clearly outperforming others, then it comes back to the opportunity cost of not being higher stakes on those.

Within my personal sports betting portfolio, I try to keep it between 3-6 betting systems. I feel this hits the sweet spot of never having all my systems go through bad variance at once but still maintaining a low enough risk and high enough returns. I use Trademate, have two betting systems of my own and use two tipsters I trust. Obviously, I’m further along my betting journey than some reading this, but hopefully, you can work towards building something similar.

Key Takes

1. Not managing your risk and diversifying accordingly is the quickest way of going bust in your portfolio. Even if not bust, a really bad variance swing is enough to put some people off gambling. Diversification can help you avoid those swings.
2. Trademate or other value betting systems that have a proven edge over a long period will give the best risk-adjusted returns. The only exception to this is if you personally are able to make your own profitable betting systems.
3. Do a lot of research before following a tipster or automated betting system. Over the years I’ve watched tons of Tipsters come and go and make up stats on the spot to try and sell you things.
4. Find a level of risk tolerance that suits you. If you’re constantly stressed about variance and results then you may want lower risk and if you want higher returns you may want to take on more risk.
5. The size of your bankroll/portfolio should correlate to the amount of risk you are taking. Lower the size, the more risk you can take, and vice versa.
6. Try and really way up risk to reward when deciding to add something to your portfolio. You may find something with fantastic returns but aren’t taking into account huge potential for big drawdowns. Or opposite, a low risk system but not taking into account your opportunity cost.
7. Gambling becomes so much easier for you when you stay within your risk tolerance! The mental side of gambling for some is the toughest part, nothing is more stressful than constantly going through large variance swings.