The real stake on a long-range bet is your money plus the months

§1The money is not at risk so much as gone

An ordinary phrase for betting is money at risk, which suggests a coin still in the air. For a long-range market a better phrase is money committed: the stake leaves your account, it cannot be recalled at the price you paid, and it will not return until the event settles. Whether it comes back larger or not at all, it is unavailable for the whole of that period in a way that a match-market stake is not.

Two consequences follow directly.

This is why a long-range position is best compared to things that also lock money up for a period — a fixed-term deposit, a loan, an inventory purchase — and not to a coin toss. It is a commitment of capital with an uncertain return, and the uncertainty is not the only cost.

§2A price is not a rate, and turning one into the other

A decimal price can be converted into an implied probability in one step: one divided by the price. The arithmetic is exact and requires no model.

What that conversion does not give you is a rate of return on the capital, because the capital was not available for the whole period in the same way. If a stake is committed for nine months, the return on the capital has to be considered against nine months of unavailability — which is why comparing a long-range price to a short-horizon one by price alone is an error of units.

§3One season, one bet

The most common way a long-range book goes wrong is not by any single position being too large. It is by several positions being the same position.

Futures on one competition share almost everything: the same squads, the same schedule, the same injuries, the same structural announcements. A title position, a top-scorer position and a promotion position in one league can all move together on a single piece of news. Held together, they are not three independent bets with three independent chances; they are one view of one season expressed three times, at three margins.

The rule of thumb that follows is not a staking system, it is a counting rule: before adding a position, ask how many of the facts that would settle it are already load-bearing for something you hold. If the answer is most of them, the position is not new.

§4Sizing for a horizon rather than for a price

Sizing a match bet is usually discussed in units of a bankroll. Sizing a long-range bet has a different primary constraint, because the money is unavailable and the position cannot be adjusted: the question is not how confident you are, but how long you are prepared to have that amount unavailable and to watch it do nothing.

A workable way to think about it is to size against the horizon first and the price second. If an amount would be uncomfortable to have locked up for nine months regardless of how the position looked, that amount is too large for the horizon no matter what the price is — because the trouble will not come from the outcome, it will come from the nine months.

• Horizon first
• Price second
• Count correlated positions
• Leave the middle alone

This is the point at which long-range betting stops being about markets and becomes about whether the position is compatible with your life for a season. There is no market answer to that question, and no page on this site can give one.

§5Writing your own rule, in one sentence

The version of this advice that survives contact with a bad week is a single sentence, written before the position is placed, covering three things: what would make the position wrong, what you will do if that happens, and what you will do if nothing happens for three months. The third clause is the one people leave out and the one that ends up mattering, because "nothing happened" is the most likely state of a long-range position at any given moment.

If the honest answer to the third clause is "I would probably do something", the position is larger than the horizon can carry.¹

§6The honest conclusion

A long-range price is paid for with three things: the stake, the margin built into the offer, and the months the capital is unavailable. Only the first is visible on a bet slip. This page exists because the third is the one that does the most damage relative to how little it is discussed — not as a loss, but as a cost of holding that accrues whether or not the position turns out well.

1. 1No staking scheme is proposed anywhere on this site. The page describes what a long horizon does to the cost of holding a position, and deliberately stops short of telling a reader how much money to risk.