The Staking Machine

Perhaps the Lay Kelly Staking Plan is the most difficult for the non mathematician to comprehend. But whether you understand the logic behind it or not, TSM will still allow you use it.

The Lay Kelly Staking Plan is calculated using several formulas. The first step is to calculate the liability for the next bet.

Liability = ((Expectation * (Current Odds - 1)) / Divisor) * Current Bankroll

Expectation = If one bet has an expected value of 5% (meaning that for every £10,000 we bet we would expect to win £500)
Current Odds = The Odds of the current bet.
Divisor = The number used to divide the total by. This will allow you to use smaller stakes.
Current Bank Roll – This refers to your current betting bank to which all your bets are calculated for.

Once the liability has been calculated the stake is rather easier, simply being
Stake = Liability / (Current Odds -1)

This leaves the question of how do you calculate your expectation/ edge. The expectation can only be calculated when you are confident you know your expected strike rate and the average odds that you will use.

Expectation = (StrikeRate * Profit) - ((1 - StrikeRate) * Liability)

The following formulas show how we calculate each part of the above formula.
Strike Rate = Expected Strike Rate
For arguments sake we will use 85%
Strike Rate = 0.85

Profit = Stake - (Stake * Commission)
When calculating the expectation a stake of 1 unit should be used or £1. For arguments sake a commission of 5% has been used.
Profit = 1 – (1 * 5%)
Profit = 0.95

Liability = (AverageOdds - 1) * Stake
For arguments sake we will assume are average odds are a low 3.75
Liability = (3.75 – 1) * 1
Liability = 2.75

Put the above into the initial formula of
Expectation = (StrikeRate * Profit) - ((1 - StrikeRate) * Liability)

Expectation = (0.85 * 0.95) – ((1 – 0.85) * 2.75)
Expectation = 0.8075 - 0.412
Expectation = 0.395
Expectation = 39.5%

Now lets look at an example of this using TSM.
Firstly we go to the Staking Plan Settings Page and calculate our Edge.

We click on ‘Click To Calculate Layers Edge’ and the edge is calculated as 39.5%. We then choose our Lay Kelly Staking Plan Settings.

In the following example we have used a rolling current bank. This means each stake is calculated in real time from the current bank rather than against a fixed bank . Incidentally a fixed bank will produce fixed stakes.

A divisor of 2 is used and a small start bank of £100 is used.

The first stake we use is £19.75. The TSM will calculate this for you but if you want to follow it the calculation to use is as follows.

Liability = ((Expectation * (CurrentOdds - 1)) / Divisor) * CurrentBankroll
59.25 = ((0.395 * (4 – 1) / 2) * 100

Stake = Liability / (Current Odds -1)
19.75 = 59.25 / (4 – 1)

The profit shown takes into account 5% commission.
The next stake is now calculated based on the current bank of 118.76. To calculate the next stake we need to know the current odds to use. The next bet will have odds of 2.8
The same procedure as before is followed.

Liability = ((Expectation * (CurrentOdds - 1)) / Divisor) * CurrentBankroll
42.22 = ((0.395 * (2.8 – 1) / 2) * 118.76
Stake = Liability / (Current Odds -1)
23.45 = 42.22 / (2.8 – 1)

Lets now look at a run of 10 bets.

Not the greatest example to show you as 10 bets cannot do any staking plan justice but still none the less shows you how stakes will vary.

Now lets have a look at the same set of results but using a divisor of 4 instead of 2.

Interesting........

One feature that needs to be mentioned is the ability to load any set of data into TSM and then let the software calculate your average odds and strike rate from the data and calculate the edge for your bets. This feature can be found under Staking Plan Settings. One click will calculate your layers edge leaving you to with no work what so ever !