In this latest article in our Form Forum series, PPM editor Brian Blackwell and The Optimist discuss key aspects of staking and money management.

BB: You can pick lots of winners in this game, and still end up losing, and the reason is bad money management. This is the subject I'd like us to talk about. How do we bet our selections in a sane, logical way that can give us the prospect of winding up winners? I guess we always start with level stakes. It's the approach that is supposed to be the great leveler. What do you think?

TO: There will always be an argument for level staking. While I can understand it appeals to some people as perfectly logical, the only real advantage I can see that it has, is in testing a system or a method to see whether it works, before any modifications are applied. It's a good "rule of thumb". We all know the old maxim that goes "if it doesn't work on level stakes, it won't work at all". Now frankly, I don't believe that any more. I am also totally against arguments which say that a good progressive staking plan cannot improve a method.

BB: The bit about testing systems is probably right. The downside to level stakes, I think, is that you are putting the same amount on a 6 / 4 chance as you are on, say, a 10/1 chance, and yet one of them, on price, has far less chance of winning than the other. In staking, I think the punter has to afford himself a lot more leeway than being locked down to the same dollar bet on each selection.

TO: To my mind there are two fundamental approaches to staking. To some extent I touch on these in this month's Plan of the Month. You need a different approach to your multiple betting from that which you apply to your singles. Arguably, you cannot afford to be putting out as much on risky multiples (although some might argue that your coverage is far greater). This seems to me to be cut and dried, although I do recall the Australian legendary guru Don Scott refocusing all of his betting on to the multiple sector, not too long before his death.

BB: Sure, multiple betting needs a lot of thought. Readers should take a look at the article on Dutching in this issue for further examination of this area of betting.

TO: Getting back to those fundamental approaches, Brian, I want to return to single bets. I know a couple of people who make money on place betting. They are in the "little for a lot" category that turns up in the article I mentioned above. They apply the same principles that apply to stockbroking. They attack the TAB place markets. One of them tells me that he cannot wait until there is a single TAB operating. He says that although he will probably lose an edge now and then, the pools will be enormous and you won’t shake them by putting in your 25 grand. That sort of money would stress me out, but this guy is looking to make five per cent, maybe 10 per cent.

BB: I think there is money to be made backing for the place but only if you try an all-up situation. Somewhere along the line, caution has to be thrown to the wind with place betting. You have to try to multiply your returns, otherwise your betting is like a slow leaking tap. Drip, drip and so on.

TO: Further to this fundamental approach thing I keep hammering, the fellow that I was talking about and his companion tell me that they can make, in a good month, the equivalent of a top superannuation annual net return. They take the view that what they are investing in is far less risky than the stock market, because they know a lot more about their investments and all of theirs are invested on the "do it yourself" principle: you put it in and you take it out. The taxes have been paid and it's all yours.

BB: Sounds good to me. Different things work for different people. There are some professional punters who have THOUSANDS of bets every day. They lay out large amounts of cash each day and work on gaining a profit, any profit. They're not worrying about how much profit, as long as they get a profit.

TO: My personal favourite, so far as basic staking is concerned, has always been the 1/2 per cent or 1 per cent of the highest point the bank reaches. We won't go over that one again, but I could see a strong argument if you were betting place, and your selections were made at the highest professional level of competence, for raising the bar even as high as 10 per cent. Call me naive if you like, but I just cannot conceive a situation where I would go more than, say, three unplaced "certainties". Another word, of course, that pokes its ugly head up at this point is "'value". You have to know what you're doing and you have to be patient. Where do you stand on patience?

BB: These days I am very patient, especially when it comes to big bets. I might bet up to $200 to nail a good win from a longshot, but that's about as high as I'll go on the everyday bets, but as far as long-range betting goes, I do lift the stakes in search of big windfall returns. In the last five years I've had such success long-range that the wins have more than accounted for all my profits. But I think you may be referring to patience as it is required on a daily basis. The tendency to overbet, the tendency to bet horses you never intended to bet when you set out for the day, and so on.

TO: Oddly enough, Brian, I reckon patience is a much harder thing to manage with the multiples than with the individual win or place, or for that matter with each way bets. Talking to people over the years, I have the distinct impression that they do not dare allow a trifecta or a double to go past. It might be the big one!

BB: A lot of this gets down to planning your staking, and sticking with it, no matter what approach you might take. I think trifecta betting needs a lot of thought. You can't just go thrashing about taking a trifecta in every race. You really should zero in on one race, maybe two, and throw your lot in on them. But, of course, you need patience and you need temperament. Just like some people don't know when to stop drinking, some punters don't know when to stop betting.

TO: Just running a bit further with patience, one of the most depressing parts of our job, and I know you feel the same, is the mail we get from people who expect to make their fortunes between now and the first Tuesday in November. They don't get it, in more ways than one. They think it's easy. Lotto is easy. Powerball is easy. Lotteries are easy. Poker machines are easy. In all of those, you just pay your money and you take your chance. That chance is next to nothing. Racing is hard work and staking is every bit as challenging and difficult as selecting. But the chances are good.

BB: Yes, betting is a tough business. It's like boxing, though. You can win one or two rounds and then get flattened in the next. Or outpointed over 10 rounds. So you need constant vigilance, and you need a plan, some sort of basic money management to control your betting, and to help you achieve a goal. What you choose to use in this endeavour is the trickiest part. Do you settle for level stakes? Maybe you'll try a percentage of stake plan? Perhaps you like target betting, or a progression plan? There are many cries of derision about progression plans, but what's wrong with a plan that guarantees you'll break square at any point if you land, say, a 5/2 winner? That seems like a sensible plan to me. Level stakes cannot guarantee anything like that.

TO: One of the good things about staking is that you don't need to be constantly seeking brand new concepts. Whatever else staking is or isn't, it relies on fundamental, proven principles of mathematics to see it through. So if you have a good staking plan, or better still three on four of them, you can usually modify them to work effectively with new systems or betting methods. Have you got any old favourites hidden away in your cupboard?

BB: Well, we have certainly touched on many over the years in this magazine. I rather like a simple progression plan that is tailored to get you out of trouble should you strike a winner at a certain price, as I've mentioned earlier. The old 6 Point Divisor Plan is another useful one for the bloke who wants to try something different.

TO: To tie this up, let me pose the question for both of us to answer. So far a's the spring is concerned, let's imagine a novice punter comes to us and seriously asks for the best advice we could offer for spring staking. Naturally, they want to make as much money as possible, but they don't think that it grows on trees. They know they have to put in the spadework and they are prepared to do that. I'll go first and you can round this off.

I reckon that my first piece of advice would be that the punter has to physically limit his bets. He has to restrict them very seriously to the ones that he believes offer him the maximum opportunity of a nice return.

This doesn't mean that he shouldn't take risks. Any multiple bet is going to be a bigger risk than a single win or place bet. Even if more horses are involved in each leg this idea holds, because of the spread of multiple units. So, I'd say: work out in advance precisely where you would like to be after the Melbourne Cup. Then map out your (hopeful) path. Even look at the races that you are likely to bet on in advance, for example the Craiglee, the Epsom, the Turnbull, the Caulfield Cup, etc, etc. Know where you're going!

BB: I’d suggest that the punter bet only on the Group 1 races and backs the first two favourites. Run them in separate banks. Any profits from a bet is split between them and added to the individual banks. Bet 10 per cent of your bank, whatever it is, each race. This will give you a lot of fun and very likely some decent profit.

TO: My second strong advice would probably be that you must be consistent. Rome wasn't built in the proverbial day, and with a few exceptions punting fortunes are not made on a single Saturday afternoon.

The third piece of advice I'd come up with would be to remain professional, with very clear investment and return targets in your mind. If I'm allowed four pieces of advice, then I'd use the fourth one to remind our novice yet again that patience is not just a virtue, it's utterly vital, and that wild staking plans are like fool's gold.

By The Optimist and Brian Blackwell