Need Help with Money Management

[Mike at A+]

Most of us have learned the hard way that money management is just as important as handicapping, maybe even more so. I have compiled several years worth of bet statistics in chronological order and I'm trying to write a program that will plow through a month's worth of bets and assign different bet amounts with the goal of maximizing profit. I started with the initial assumption of a $1,000 bankroll and a bet amount equal to 3% of current bankroll. I've tried tweaking the 3% upward or downward depending on the success or failure of the previous bet(s) and the perceived strength of my selection.

Rather than driving myself crazy with hundreds of iterations using algorithmically determined bet amounts, I thought I'd ask if any money management devotees can shed some light on this issue.

Thanks!

[DJofSD]

Search the messages on this board using "Ziemba" or "Kelly".

The topic of optimal wagering will open a can of worms.

Dave might give some input too.

[positive4th]

Most of us have learned the hard way that money management is just as important as handicapping, maybe even more so. I have compiled several years worth of bet statistics in chronological order and I'm trying to write a program that will plow through a month's worth of bets and assign different bet amounts with the goal of maximizing profit. I started with the initial assumption of a $1,000 bankroll and a bet amount equal to 3% of current bankroll. I've tried tweaking the 3% upward or downward depending on the success or failure of the previous bet(s) and the perceived strength of my selection.

Rather than driving myself crazy with hundreds of iterations using algorithmically determined bet amounts, I thought I'd ask if any money management devotees can shed some light on this issue.

Thanks!

There are a lot of good books and articles out there right now (and some pretty horrible ones, too) about how staking systems will almost inevitably lose on their own in horse racing, b/c the takeout is A) Too high compared to other forms of gambling, and B) Inconsistent in different jurisdictions (check out Woodbine and the New Mexico tracks - - sheesh!!!!)

So, with that being said, I'm fairly convinced that you can't predetermine fluctuating bet amounts with any algorithms or other mathematical set-ups to "automatically" improve or ensure profits. I might be wrong, but it just can't be done IMO - - far too many variables in racing to simply let the computer do the math and just watch the money roll in.

You're very right that $$ mgmt. is extremely important, but I don't think in this case that its a sure road to increased revenues.

[Dave Schwartz]

Here is my two cents worth on the topic:

http://www.horsestreet.com/products/hmi/index.html


Regards,
Dave Schwartz

[RichieP]

Dick Schmidt's chapter on money management in the book "Pace Makes the Race" is the best. Simple, to the point and very effective when carried all the way out. A must read! :)

[SchagFactorToWin]

Date parameters are artificial. I have found that laying a time frame (daily, monthly, etc.) over your results will not show anything that can be used going forward. I base this on the fact that one's results patterns are random (yes, I know about the other thread!)- if you chart your wins as '1' and your losses as '0', then graph the result, you should find the drunkard's walk.

I started my money management system by trying to identify an acceptable losing streak probability. For me, I wanted to find the losing streak that would have less than a 1% chance of occurrence. Using an online streak calculator, I plugged in the number of bets per year (you can use any time frame) and then changed the streak number until it went below 1%. I then added one and divided my bank by that number. That gave me my starting bet size.

In practice (18 months, 1000 races), it has kept me from Gambler's Ruin. However, I have found a different problem- I call it the Bad Tire Syndrome. It may be true that I haven't had a losing streak beyond that calculated at under 1%, but what's hurting me is shorter streaks interspersed with small wins: lose 5, win a small bet, lose 10 win a small bet- so that the air slowly leaks out of the tire (tire being my bank).

[wonatthewire1]

Most of us have learned the hard way that money management is just as important as handicapping, maybe even more so. I have compiled several years worth of bet statistics in chronological order and I'm trying to write a program that will plow through a month's worth of bets and assign different bet amounts with the goal of maximizing profit. I started with the initial assumption of a $1,000 bankroll and a bet amount equal to 3% of current bankroll. I've tried tweaking the 3% upward or downward depending on the success or failure of the previous bet(s) and the perceived strength of my selection.

Rather than driving myself crazy with hundreds of iterations using algorithmically determined bet amounts, I thought I'd ask if any money management devotees can shed some light on this issue.

Thanks!

You didn't specify what types of bets you are making

Win, place, show
Exoctics
Multi-races?

Makes a big difference as well as your hit rate

[Mike at A+]

I am making Win/Place bets (on the same horse) and vary the amount based upon a formula that compares power ratings of the top and second selection. The Win part of the bet is the same amount as the place part. My ROI has been about +6% over a 1,600 race sample in 8 months and my hit rate is around 35%. What I'm looking for is a method of adjusting my bet amounts using a combination of my current method further enhanced by some other factor(s) that uses the outcome of immediately preceding bets in the sample. In other words, if I lose 5 bets in a row what should I do with the 6th. bet? The bottom line is that I'd like to apply some formula that tells me what percent of my current bankroll to bet on a particular race. My degree is in Math with heavy emphasis on Probability and Statistics so I've been able to program some of the ideas I've already had but I'm not seeing any results that excite me on a consistent basis.

[Mike at A+]

Actually I just read what I posted and realized that I may have made a glaring error regarding the "immediately preceding bets". As a young student of probability I learned the concept of "mutually exclusive" events. The most common one is the coin flip. If you flip 10 heads in a row, the probability of a tail on the next flip is still 50%. If I'm cashing at a 35% clip, the fact that I lost 5 races in a row doesn't make my chances of hitting the 6th. race any better than 35%. Knowing when to bet small and knowing when to send it in doesn't have anything to do with the success or failure of past races. But I sense that money management goes a little deeper than that.

[Mike at A+]

Oh, a few more points:

1.) I don't consider any races where my top choice has morning line odds of less than 4/1.

2.) My bet amount isn't influenced by odds and is determined exclusively using the method described above (power rating difference between top and second selection).

[Robert Goren]

There are two things to remember about money management.

1) Most people bet way too much of their bank roll on an event because they over estimate their skill level.
2) No money management system ever devised can turn a loser into a winner for very long.

[Mike at A+]

There are two things to remember about money management.

1) Most people bet way too much of their bank roll on an event because they over estimate their skill level.
2) No money management system ever devised can turn a loser into a winner for very long.
You are probably right on both counts. After giving my initial posts much thought, I am leaning toward the notion that increasing one's ROI using "money management" is not possible. Betting more on your winners and less on your losers will certainly increase your bottom line but there is no foolproof way to deterimne in advance where the winning bets will be. A nearly infinite number of mathematical models can be studied containing strings of bets on races that have already been run to support one's theories on money management but success still boils down to making larger winning bets and smaller losing bets. Whether you increase or decrease your bet amount after a win or string of wins (or a loss or string of losses), that next race has absolutely nothing to do with the success or failure of previous bets.

[Dave Schwartz]

No money management system ever devised can turn a loser into a winner for very long.

After giving my initial posts much thought, I am leaning toward the notion that increasing one's ROI using "money management" is not possible.

The first statement is true. The second false.

[markgoldie]

You are probably right on both counts. After giving my initial posts much thought, I am leaning toward the notion that increasing one's ROI using "money management" is not possible. Betting more on your winners and less on your losers will certainly increase your bottom line but there is no foolproof way to deterimne in advance where the winning bets will be. A nearly infinite number of mathematical models can be studied containing strings of bets on races that have already been run to support one's theories on money management but success still boils down to making larger winning bets and smaller losing bets. Whether you increase or decrease your bet amount after a win or string of wins (or a loss or string of losses), that next race has absolutely nothing to do with the success or failure of previous bets.
Exactly.

Spend your time in deconstructing the resuilts of your wagers. As far as what you have said, I would concentrate on your ML stipulation of 4-1, since I have no idea of the power-rating program you are using.

But on the ML front:

(1) Run a correlation of ML odds at each track where you bet in relation to actual odds at off time. I think you'll find that at some tracks, the ML is very inefficient in predicting betting-odds' order.

(2) Run a track-to-track analysis of actual received odds, adjusting to post-time field size.

(3) Rather than a 4-1 ML cutoff, look at odds' position of your selection on the ML as a possible way to find a better results' alternative. For ex., a 4-1 ML could mean anywhere from a second to 4th choice (it is even possible, though unlikely, that in a very large field it could mean the favorite). Here, you want to look at results of your selections when they are simply not the ML favorite, and then extend it to when they are not the first or second selection. Refine this further as track-specific.

(4) Realize that whale programs are dictating the win odds at most tracks these days. Consider a project where you attempt to "deconstruct" the action of these betting programs. This can be achieved with a ballpark accuracy and I say that because I have done so. Once accomplished, a good strategy is to bet your selection when you have good reason to believe the whales will not come down on your pick. This, of course, means that you would not necessarily pay attention to the ML at all, because betting contrary to the whales should give you reasonable enough odds.

In short, spend your time refining your method of play and forget these up and down betting systems based on prior results.

[lansdale]

Most of us have learned the hard way that money management is just as important as handicapping, maybe even more so. I have compiled several years worth of bet statistics in chronological order and I'm trying to write a program that will plow through a month's worth of bets and assign different bet amounts with the goal of maximizing profit. I started with the initial assumption of a $1,000 bankroll and a bet amount equal to 3% of current bankroll. I've tried tweaking the 3% upward or downward depending on the success or failure of the previous bet(s) and the perceived strength of my selection.

Rather than driving myself crazy with hundreds of iterations using algorithmically determined bet amounts, I thought I'd ask if any money management devotees can shed some light on this issue.

Thanks!

Hi Mike,

The most obvious think I wanted to mention in response to your post is the Law of Independent Trials. You seem to remember this further down the thread, in mentioning race outcomes being mutually exclusive, but it's an important point which many seem not to grasp. Your bets have no memory. You might want to Google articles on the 'Hot Hand Fallacy' and 'Gambler's Fallacy' for more on this subject.

Kelly betting has been proven superior to all other methods, and has been used by some in horseracing, most outstandingly William Benter and Alan Woods, to make a fortune. Many complain of the 'rough ride' of Kelly, but this just means they're already wagering too large a proportion of their net worth. It's also possible to bet fractional Kelly, which was the practice of Benter and Woods.

The real problem with Kelly is that it requires a much more accurate estimate of one's advantage (assuming there is one), than most players (even winning players) are able to provide. As one gambling mathematician put it to me, 'there's no such things as an 'average' Kelly bet - the advantage for each bet has to be estimated separately'. This was exactly what Benter was able to do with logit modelling.

Many successful players simply flat-bet, which is an option, although less profitable than a proportional betting scheme. One thing you might consider, if you have power ratings, is to see how they stack up against a large sample of races (Benter and others have found in the range of 2k-2.5k to be acceptable) and see if you have an edge. I think you would also benefit from thinking in terms of ROI rather than win %.

Best of luck,

lansdale

[Dave Schwartz]

Personally, I know of not one single, seriously successful player who uses Kelly.

I do know of a few people who use a Kelly-like system to size their wagers but not a single one that sizes the bet relative to bankroll. It is a recipe for disaster.

This has been discussed ad nauseum here for a decade.

[Mike at A+]

The first statement is true. The second false.
I tend to disagree because you can always randomize the order of races in your sample and come up with a different ROI using the same betting scheme. I didn't mean to imply that you CAN'T improve an ROI using money management techniques. I meant that you can improve OR degrade an ROI if the larger bets happen to fall on losers.

[Dave Schwartz]

You may disagree, but after 30+ years of proving how it works I am convinced. So are many of the other 11,000 people who have used it.

Try this exercise:

1. Imagine that you have a 30% hit rate at an average mutuel of $8.00. What is your ROI?


2. Imagine that instead of betting straight win bets, you parlay instead. What is you hit rate for a parlay?

3. Using the parlay, what is your average mutuel?


4. Using the parlay avg mutuel and hit rate what is your ROI?

[highnote]

Hi Dave,

I tried doing the exercise, but am not quite sure how it is to be done.

What is the sequence of wins and losses for the parlay? Do you win one and lose one? Do you win 10 in a row and lose 10 in a row? Is it random where you win 30 out of 100 per your strike rate below?

js



You may disagree, but after 30+ years of proving how it works I am convinced. So are many of the other 11,000 people who have used it.

Try this exercise:

1. Imagine that you have a 30% hit rate at an average mutuel of $8.00. What is your ROI?


2. Imagine that instead of betting straight win bets, you parlay instead. What is you hit rate for a parlay?

3. Using the parlay, what is your average mutuel?


4. Using the parlay avg mutuel and hit rate what is your ROI?

[Mike at A+]

You may disagree, but after 30+ years of proving how it works I am convinced. SO are many of the other 11,000 people who have used it.

Try this exercise:

1. Imagine that you have a 30% hit rate at an average mutuel of $8.00. What is your ROI?
In a 10 race sample you'd hit 3 races and collect $24 for a $20 investment so your ROI is 20%.


2. Imagine that instead of betting straight win bets, you parlay instead. What is you hit rate for a parlay?
If you're talking about a 2 race parlay, your hit rate can be anywhere between 0% (if there are no consecutive winners) and 22.22% if all 3 winners are in consecutive races. For example:
1.) W-L-W-L-W-L-L-L-L-L yields a 0% hit rate,
2.) W-W-L-W-L-L-L-L-L-L yields a 11.11% hit rate and
3.) W-W-W-L-L-L-L-L-L-L yields a 22.22% hit rate.

In case (1), you bet $18 and lose it all (-100% ROI)
In case (2), you bet $18 and collect $32 (+77.78% ROI)
In case (3), you bet $18 and collect $64 (+255.56% ROI)

There's a total of 120 ways to put 3 W's in 10 slots.
A.) There are 56 ways to do it where no 2 W's are next to each other.
B.) There are 56 ways to do it where exactly 2 W's are side by side.
C.) There are 8 ways to do it where all 3W's are side by side.

So, in 120 ten race samples you'd hit 72 parlays (0 in case A, 56 in case B and 16 in case C). There are 9 parlay bets in each of those 10 race samples costing an investment of $2 x 9 x 120 = $2,160. Each winning parlay pays $32 resulting in a total payout of $32 x 72 = $2,304 or a +6.67% ROI.

3. Using the parlay, what is your average mutuel?
$2,304 / 1,080 = $2.13

4. Using the parlay avg mutuel and hit rate what is your ROI? +6.67% as opposed to +20% using flat bets. (unless of course I screwed up the math).

[Dave Schwartz]

A parlay is one race to another. Period. Two races.

Yes, you did screw up the math.


Try this exercise:

1. Imagine that you have a 30% hit rate at an average mutuel of $8.00. What is your ROI?

20%


2. Imagine that instead of betting straight win bets, you parlay instead. What is you hit rate for a parlay?

30% x 30% = 9%


3. Using the parlay, what is your average mutuel?

$2 becomes $8.00 which is bet back to become $32.00.


4. Using the parlay avg mutuel and hit rate what is your ROI?

So, you are now winning 9% with a $32.00 mutuel. What is your ROI now?

[Mike at A+]

I'm looking at the problem as a string of parlay bets as opposed to one isolated bet. If there are 10 races and you make parlays in races 1-9 you have 9 parlay bets: 1-2, 2-3, 3-4 .... 9-10. If you lose the second half of a parlay bet, your probability of hitting the next one is zero because you've lost the first half.

[highnote]

I'm at the Spaaaa today, so will work on this later. Intuitively, if the ROI on one race is 20% then the ROI on two races must be higher. No?

[Mike at A+]

With straight bets on those same two races, there are 4 different outcomes:

W-W (30% x 30% = 9%)
W-L (30% x 70% = 21%)
L-W (70% x 30% = 21%)
L-L (70% x 70% = 49%)

So yes, when you win your parlay your ROI is better than flat bets but when you lose your parlay it's still possible to end up with a +100% ROI by having one winner.

[thaskalos]

A parlay is one race to another. Period. Two races.

Yes, you did screw up the math.


Try this exercise:

1. Imagine that you have a 30% hit rate at an average mutuel of $8.00. What is your ROI?

20%


2. Imagine that instead of betting straight win bets, you parlay instead. What is you hit rate for a parlay?

30% x 30% = 9%


3. Using the parlay, what is your average mutuel?

$2 becomes $8.00 which is bet back to become $32.00.


4. Using the parlay avg mutuel and hit rate what is your ROI?

So, you are now winning 9% with a $32.00 mutuel. What is your ROI now?The ROI more than doubles (44%) with the parlays Dave...but the betting opportunities are reduced dramatically.

Factor in the low win % of the parlay, as far as losing streaks and the need for a larger bankroll is concerned...and the bankroll grows at a slower rate than with the win bets, IMO.

[Dave Schwartz]

The effect is that parlaying exaggerates your advantage or disadvantage.

My point was that you CAN change your ROI with a betting strategy but you cannot turn a loser into a winner or a winner into a loser.

[wonatthewire1]

Hi Mike,

Saw your response to my question about type of bet just now and see that you have some things going with it.

One other question, as I don't know how you play, but have you considered looking at getting a higher hit rate? One way that could work out for you would be to bet two horses per race but only you can tell based on your records and criteria.

To give an example spread out over the last week, I've won 10 of 19 bets for a hit rate of 52.6% and an average winning mutual of 9.1-1

That might help you to skinnny down the issue somewhat. I can't really speak to percentage of bankroll as I don't work under the constraint of one. I use flat bet amounts and increase over time with relatively short sessions (usually 1 to 2 hours). Beyond that time frame, I get really restless! With the above example, my longest session has been just under 2 hours and the shortest one about 15 minutes. I work with pulling a set number of odds points out per session, keep betting after it is reached and walk away with the first loss after reaching my target

Best of luck with your work

[Mike at A+]

The effect is that parlaying exaggerates your advantage or disadvantage.

My point was that you CAN change your ROI with a betting strategy but you cannot turn a loser into a winner or a winner into a loser.
OK, I finally see what you're saying. It basically boils down to the fact that numbers larger than 1 get larger when squared. Numbers less than 1 get smaller when squared. Your method works even better with a 3 horse parlay.

In a 1,000 bet sample using the same numbers, you'd hit 27 parlays each paying $128 returning $3,456 for a $2,000 investment and a +72.8 ROI. Flat bets would cost $4,000, you'd hit 600 at $8 each returning $4,800 and you'd still have the same +20% ROI.

A 4 horse parlay would hit 81 times out of 10,000 and produce a +107.4% ROI.

One final observation. You're probably better off betting doubles, pick-3's and pick-4's to avoid the takeout on multiple races.

[thaskalos]

The effect is that parlaying exaggerates your advantage or disadvantage.

My point was that you CAN change your ROI with a betting strategy but you cannot turn a loser into a winner or a winner into a loser.With a betting strategy, you cannot turn a loser into a winner...but you can easily turn a winner into a loser.

[DeltaLover]

It is common among horseplayers when referring to their betting systems to define performance by ROI complementing it most of the times with their winning (hit rate) percent.

Setting aside the complexities of ROI calculation and sample selection that seem to be underestimated by many, I have to notice that the standard deviation of the betting model is almost never mentioned while it is the equally important for it.

To make it more concrete let’s consider the following example:

An expert horse bettor has a betting model that based in his simulations has a 1.04 ROI (per $1) and is associated with a $0.25 standard deviation (per bet) while it has an opinion about a race (selection rate) about 30% of the time.

If this player follows 5 racetracks per day he will find approximately 15 bets per day. Let’s assume that he plays his model for a period of four weeks.

Assuming five racing days per week he will bet in total 300 races. Let’s also assume that he uses a flat bet of $500 per race.

After 300 races the total amount of his bets is
300 * $500 = $150,000

Based in his 1.04 ROI he expects to win: $6,000

Since he bets $500 / race his SD is 500 * 0.25 = $125 / race

The standard deviation of his expectation for the sequence of 300 races is going to be:

125 / SQRT(300) = 125 / 17.3 = $7.2 / race

So for the 300 races sample we expect him to be:


Loosing from 20 – 3*7.3 = -1.6 /race or -480
Winning to 20 + 3*7.3 = 41.6 / race or +12,480

( three standard deviations of the mean contain almost the total population, that’s why we need to multiply the SD times 3)


It is easy to see that it is quite possible for a winning strategy to loose even after a sequence of 300 races.


Now doing the same calculations for ten months (3,000) we have the following results:

3,000 * $500 = $1,500,000
Expected : + 60,000
SD = 125 / SQRT(3000) = $2.28 / race

Min: 20 – 3 * 2.28 = 13.16 or TOTAL $39,480
Max: 20 + 3 * 2.28 = 26.84 or TOTAL $80,520

So the same strategy in a sequence of 3,000 races will present a profit with pretty high certainty (over 95%)!

Please note that the winning frequency or the longest lossing is nowhere mentioned since it is irrelevant to the calculations...

[Dave Schwartz]

With a betting strategy, you cannot turn a loser into a winner...but you can easily turn a winner into a loser.

Not true.

Consider the casino... Tell me how you can turn that 5.26% advantage into a disadvantage. Because, if you can, we can be partners and take them on.

Think about it... If the casino can be made to lose then the player wins.

You cannot turn an advantage into a disadvantage with a wagering strategy!

[thaskalos]

Not true.

Consider the casino... Tell me how you can turn that 5.26% advantage into a disadvantage. Because, if you can, we can be partners and take them on.

Think about it... If the casino can be made to lose then the player wins.

You cannot turn an advantage into a disadvantage with a wagering strategy!Dave,

I know what you are trying to say, but you are not saying it properly.

We were not discussing the roulette, we were talking about horseracing.

When you say that a betting strategy cannot make a winner into a loser...you are wrong.

There are betting strategies out there that can easily negate a player's positive ROI.

You yourself said that the "full kelly" wagering strategy is a "recipe for disaster".

Wouldn't a player using the full kelly, and sizing his bets relative to bankroll, eventually "tap out", positive ROI or not?

"Due columns", "progressive systems", etc...they all can turn a positive ROI into sure defeat, because they cause a rapid increase in the bet sizes, relative to bankroll.

Heck...half the horseplayers alive claim that they would be long term winners if their "betting strategies" were not so faulty...:)

[Dave Schwartz]

Mathematically, you cannot turn a loser into a winner. Since winning is just the other side of losing, you cannot turn a winner into a loser with a money management strategy. That is fact.

Can you overbet your bankroll? Of course. That can cause you to (theoretically) go broke more often than you should, but (theoretically) that is compensated for by occasional huge returns.

The point is that you cannot turn a winning proposition into a losing one with a wagering strategy.

Horse racing or roulette - it doesn't matter.

[Robert Goren]

The problem with "Kelly" when it comes to horse racing is numbers you plug into it. Small % points make a huge difference with "Kelly". Unlike blackjack where you know the % of the outcome, in horse racing you don't have that good of numbers. The other thing about "Kelly" is that a lot of people don't know the formula. They use the bastardization form the Poundstone book Fortunes Formula. That formula is not "Kelly". In fact it is really even close.

[CincyHorseplayer]

I think most bettors don't know what to expect from themselves or state what they are or are not willing to do.The emphasis seems to be on churn and automaton processes instead of taking each instance as individual.It's pretty easy as Dave pointed out to find an ROI based on average odds.But somewhere in the course of betting and the emotional attachment to either ROI or hit %,different decisions will be made.This is where a betting strategy keeps one in the middle and having the best of things than being at the mercy of topsy turvyness.Let's say you draw a line in the sand and say you'll never bet a horse at under 2-1 odds.Your hit rate might suffer but your ROI just went up.But did the hit rate dip so much that the losing streaks will be unbearable?Where do you think that average mutuel will sit?If it sits at 7/2(9.50 as an example) and you have a 32% hit rate,you have a 52% ROI.You've made your decision making easier by eliminating low priced horses and are playing into a positive expectation outcome.Is that type of wagering strategy able to make a winner a loser?I don't think so.

And with exotics I rarely if ever hear about anybody come up with any fairly accurate payoff projections.It can be charted though,based strictly on average payoffs on bets,not mutuels,which is highly individualistic.I play exactas a ton,it's one of my 3 main bets.I divide my payoffs into A,B,and C columns.The breaking points on each are subjective.But basically payoff A is over X amount of dollars,then divide $$ by hits to get an average payoff etc etc.Payoff B between x minimum and under payoff A bottom.Payoff C is merely the average of all tickets cashed under say 3% of bankroll.You then make payoff arrays based on hit % and cash %.If you make 20 bets a week and have a 25% hit rate that's 5 hits.You scroll out all the payoff arrays,5-0-0,4-1-0,3-2-0 etc.Then you have a composite ROI for each hit ratio bracket.You know the average ROI range for a certain hit % bracket.

To make a long story short I rarely ever hear about the expectations of exotic bets other than real vanilla numbers.But if you don't know,how can you realize the possibilities??

Again betting strategies to me aren't simply fun with numbers wagering % per bet etc.It's positive expectation plays based on experience.If you don't know what to expect how can you blindly plug in a progressive wagering strategy??I mean sure of course at first you have to take that leap to get a body of work to learn from.But beyond that phase one has to play to some kind of handicapping and/or mathematical strength and point of view.

[xfile]

Progression systems have a bad reputation but there is a form of this bet used by football bettors that is interesting. Pick the 3 best games (or in our case races). Your 3 best bets of the day = A, B, C. You double up on a loss and quit when ahead (after a win) or quit after bet C. Tomorrow is another day. So you either stop betting when you win (and you will make a profit) or call it a day after the 3rd bet. This limits any huge losses but still gives the advantage of the progression. If you take these 3 a day and be patient and forget the 'action' bets you will most likely make a nice roi. And going after overlays is the plan as well. Not 3 horses at 2-1.

[RaceBookJoe]

Progression systems have a bad reputation but there is a form of this bet used by football bettors that is interesting. Pick the 3 best games (or in our case races). Your 3 best bets of the day = A, B, C. You double up on a loss and quit when ahead (after a win) or quit after bet C. Tomorrow is another day. So you either stop betting when you win (and you will make a profit) or call it a day after the 3rd bet. This limits any huge losses but still gives the advantage of the progression. If you take these 3 a day and be patient and forget the 'action' bets you will most likely make a nice roi. And going after overlays is the plan as well. Not 3 horses at 2-1.


Progression systems biggest problem is that most players not only progress way too much, but way too much in comparison to their bankroll. The key to money management is having a large reserve and shooting for smaller and steadier gains. You need a large bankroll, divide that bankroll into sub-banks, and then play a small percentage of that sub-bank. I have used a wagering plan for years that has only crapped out on a sub-bank once for me, but i am a cautious player.

The other thing i want to say is this : if your selection process is terrible, no wagering plan can help you. rbj

[Dave Schwartz]

From my HorseMarket Investing sales pitch:


So what promises can I make? First of all I promise you that this is not a "something-for-nothing" approach to wagering. If you are a player that loses consistently because you are incapable of showing a flat-bet profit, I promise you that you will continue to lose.

It continues:

If you are not willing to begin keeping records of your wagers then you probably lack the commitment necessary for wagering success. If you expect this strategy to overcome an unprofitable selection method, you will be disappointed because no money management strategy can do that. Now the good news. If you are capable of showing even a marginal flat-bet profit, Horse Market Investing will make you tough to beat. Very tough. If you are capable of showing a strong, consistent advantage, HMI will make you virtually unbeatable.

[xfile]

Progression systems biggest problem is that most players not only progress way too much, but way too much in comparison to their bankroll. The key to money management is having a large reserve and shooting for smaller and steadier gains. You need a large bankroll, divide that bankroll into sub-banks, and then play a small percentage of that sub-bank. I have used a wagering plan for years that has only crapped out on a sub-bank once for me, but i am a cautious player.

The other thing i want to say is this : if your selection process is terrible, no wagering plan can help you. rbj

A, B, C wagers = 1%, 2%, 3% = the worse case is a 6% loss per series ($1,000 bank loses $60 worse case). I find focusing on overlays much more rewarding than finding a 2-1 winner. I patienly wait for my spot.

[Robert Fischer]

sorry if i repeat things from this thread - (they are installing a new highspeed set up)


I would suggest learning money management by


Pick a wager type that you use
Be able to make a rough low Estimate of your Hit% for that wager type for a given race
Be able to Plug that hit percentage into the (max consecutive loss formula) -[use Excel] - to get a ballpark idea of the most races you will probably lose in a row @ that hit% for several thousand races =ROUND(LN(3000)/-LN((1-.HIT%)),0)

Divide your the amount of bankroll in play by/ the answer from (max consecutive formula) =equals

The usefulness of the above exercise can range from simply getting to know a type of wager you use and how it works with your hit% and your bankroll(can be worked out for each different wager you bet) and simply using that insight to your advantage
or some may use that kind of math for each wager in Excel before playing on a computer ADW.


tip-
I have found that although my Total Bankroll may be for example $1000, I may start to lose confidence if my bankroll dips to a certain amount (e.g. $600). If this is true for you as well, you may want to use the difference as your Total Bankroll in the wagersize equation.

[therussmeister]

Actually I just read what I posted and realized that I may have made a glaring error regarding the "immediately preceding bets". As a young student of probability I learned the concept of "mutually exclusive" events. The most common one is the coin flip. If you flip 10 heads in a row, the probability of a tail on the next flip is still 50%. If I'm cashing at a 35% clip, the fact that I lost 5 races in a row doesn't make my chances of hitting the 6th. race any better than 35%. Knowing when to bet small and knowing when to send it in doesn't have anything to do with the success or failure of past races. But I sense that money management goes a little deeper than that.

Is horse racing "mutually exclusive" events? Not necessarily. You don't specify your handicapping strategy, but there can be changes that occur (such as a change in track bias) that would alter your win percentage if you don't adjust your handicapping.

[TrifectaMike]

Here's a different approach to money management.

Let's assume you play win and exactas, or any combination of wagers.

Firstly, you decide the amount you'd like to invest in the race. Let's say that is INV

Secondly, you would like to maximize your profit on the race in question subject to your INV investment.

Now, how can we accomplish this?

We set up an equation:

W1 thru Wn amount to bet on each win bet
E1 thru En amount to bet on each exacta bet
INV total amount to bet on the race

f(w,e) = W1 times W1(odds) + W2 times W2(odds) + ... + Wn times W(odds) + E1 times E1)odds) + E2 times E2(odds) + ... + En times En(odds)

Next step. We would like to maximize f(w,e) with following constraint:

W1 + W2 .... +Wn + E1 + E2 ... En less than or equal to INV

You can actually have additional constraints.

Let's make this more understable with an example.

Race J:

We would like to bet the 4 and 7 horse to win, and the 4-7, 7-4 exacta.
We also would like to invest $26 dollars in the race.

The odds 4 3-1, 7 5-1, 4-7 13-1, 7-4 18-1.

The question is; How much do we bet to win on the 4,7 and how much do we bet on the 4-7, 7-4 exacta.

Here's our function to maximize:

f(w,e) = 3 times W1 + 5 times W2 + 13 times E1 + 18 times E2

Constraint

W1 + W2 + E1 + E2 less than or equal to $26

You can impose more than one constraint. Maybe you would like to bet half your money on the win side and half on the exactas. So, additional constraints would be:

W1 + W2 less than equal to $13
E1 + E2 less than equal to $13

This is a problem which can be solved via the Simplex Method, which is available as software or calculators.

Mike

[Capper Al]

I'm jumping in late to this conversation, but the best money management system that I ever read is in Ten Steps to Winning by the late Danny Holmes. A capper would need to fit their wagering some way to a method similar to Danny's.

One should also keep in mind what we are betting against as much as betting on. The facts will always be as follows (from memory):

Favorites hit 1 out 3 times
Even money or less favorite finishes first or second over 50%
Favorites' ROI is around .90 which beats the takeout of 15 to 20%
The average handicapper hits 1 out of 4 winners which almost cuts the fair play randomness of 1 out of 8 in half. This makes it look like we know what we are doing. And we do, but it is nearly impossible for most of us to make a profit.
An expert handicapper hits 30% plus
Randomly selected horses will return .78 on the dollar