Money Management

[onegoodday]

So i was reading the succesful bettors thread,and saw the topic of money management come up a little bit.What are some effective strategies for money managements?I can honestly and thankfully say this hasn't been a real problem yet for me...but just wondering what are some good effective strategies?Im sure there are a thousand ways to skin a cat but just wondering what some of your guys strategies are when it comes to bankroll,because i know there is plenty of success and insightful opinion here on pace advantage:ThmbUp:

-Onegoodday

[lamboguy]

half a rough idea how big a sized pool that you are going to bet into and don't overbet the amount that it takes to move the odds. try to bet as early as possible. and if you have a starting bank whatever amount, try not to exceed 4% of it on any one given event, no matter how much you think you are taking advantage of your odds. that is going to be your insurance policy every time

[Dahoss2002]

just bet more on the winners than u bet on the losers :jump:

[PaceAdvantage]

half a rough idea how big a sized pool that you are going to bet into and don't overbet the amount that it takes to move the odds. try to bet as early as possible. and if you have a starting bank whatever amount, try not to exceed 4% of it on any one given event, no matter how much you think you are taking advantage of your odds. that is going to be your insurance policy every timeUnless your win% is very high and very well documented, most would say 4% of bankroll is a massively high number for an upper limit.

1/2 to 1% is more like what you should be wagering as a percentage of bankroll.

[pondman]

What are some effective strategies for money managements?

I bet to win only. My bets are flat and consistent. It works for me to keep the same amount throughout a meet. I should say I'm a conservative player betting fewer horses but making larger bets (+$100).

I think most handicappers make the mistake of betting more on a short prices and not enough on longshots. Therefore they have $50 on a 3/5 and lose, and $2 on a 10-1 shot and win. I keep it consistent. If I'm betting $100, I stay with $100 throughout a seasonal meet. With my own methodology, I turns out that any horse at less than 7-2 (it's closer to 2.25-1 but I like a cushion) is a push. So I try to avoid betting these.

[dansan]

why bother even betting on 3/5 pass?

[turninforhome10]

Being able to sit on your hands when your gonna gamble and not invest. I do this all the time to my ruination most often. You'll find 2 or three horses in the later part of the card that look solid. As you are sitting and waiting for the races in question you start looking for little action wagers and the next thing you know 1/2 of your bankroll is gone and the horse you really like at 9/5 is now overlayed at 5/2 and you limp in with a paltry wager only. At the end of the day you hit your 2 or 3 plays and find yourself even. Discipline with your money is the hardest thing to learn IMHO. Remember you can beat a race but you cant beat the races. Small profits over time is the only way to beat this game as chasing the big one is hard for most players with limited funds.

[classhandicapper]

I think most handicappers make the mistake of betting more on a short prices and not enough on longshots. Therefore they have $50 on a 3/5 and lose, and $2 on a 10-1 shot and win.

I spent a lot of years doing things like that.

In theory, you should be able to bet more on higher probability outcomes because your potential for going bust is a lot lower. But in practice I've found that most of my actual edge is on the longer priced horses.

I still have a problem keeping my bets flat enough.

If I raise my bet too much, I tend to back off on some the the longer priced lower probability horses (psychological issue).

If I lower my bet, I feel like I'm not betting enough on some of the really good ones at 3-1 or 4-1 etc..

It's tough for me to find the balance. So I wind up splitting it between price and action bets again and go round and round in circles.

[Dave Schwartz]

just bet more on the winners than u bet on the losers

HorseMarket Investing (http://store.thehorsehandicappingauthority.com/products/HorseMarket-Investing-with--Seminar-Video.html) actually does this.


Dave Schwartz
Who rarely sends people to
his products on this forum

[pondman]

In theory, you should be able to bet more on higher probability outcomes because your potential for going bust is a lot lower. But in practice I've found that most of my actual edge is on the longer priced horses.


I think it has more to do with your track preferences and the conditions of a race. I stick with shippers. And I'll play maidens and grass races in S. California. I do this because these races give most handicappers trouble, and the crowd rarely gets it right.

When I began getting serious with the accounting, I found I could play less by avoiding anything under 4-1, and have a lot less stress in my life and make about the same amount of money, if I waited and slammed a 10-1 shot. It's an arguement that ROI is important. It's easier to explain to my wife that we have a 10-1 shot on Sunday, rather than we have 15 horses at GG to bet this week.

[Robert Goren]

I think most people over bet their bankrolls by quite a bit. My theory is that they look at their ROI and sucess rate to much. I think you should start by looking at your failure rate and how many losses you can handle in say a 10 bets, 20 bets 50 bets, 100 bets and 1,000 bets. Don't get greedy! Greed and the rush to get "rich" quick is ruin of most gamblers. You just can't rush a limited backroll.

[thaskalos]

Unless your win% is very high and very well documented, most would say 4% of bankroll is a massively high number for an upper limit.

1/2 to 1% is more like what you should be wagering as a percentage of bankroll.
If you are a win-bettor, then betting 1% of your bankroll on the outcome of any one race should be the maximum you should consider...unless you are betting on more than one horse in a race.

As far as increasing your bets as your bankroll gets larger...I would do that on a MONTHLY basis.

I would keep my bets level for a whole month...and then I would re-calculate the proper bet size for the next month.

This provides a sefeguard against the "up and down" wagers which result when you try betting a % of your bakroll on every bet...or every day.

[cj]

If you are a win-bettor, then betting 1% of your bankroll on the outcome of any one race should be the maximum you should consider...unless you are betting on more than one horse in a race.


I think it depends on the odds and how often you expect to cash. If someone only plays horses in the 3 or 4 to 1 range, 1% is probably too small. If they are playing a bunch of longshots, it is too big.

[therussmeister]

In theory, you should be able to bet more on higher probability outcomes because your potential for going bust is a lot lower. But in practice I've found that most of my actual edge is on the longer priced horses.

I do bet more on higher probability outcomes, and I like it. My bet size is based on probability and, of course, bankroll size. One of the best things about this is I have to come up with a number; I can't just say "I like the 3, I think I'll bet it." I must quantify my opinion and must say something like, "I think the 3 has a 35% chance of winning."

This, I believe, is very important in improving my handicapping. Stating a vague opinion - such as I like the 3 - is not very useful in evaluating and improving your handicapping accuracy. A concrete opinion (35% chance of winning) can be measured for accuracy and adjusted as necessary.

[trying2win]

Remember you can beat a race but you cant beat the races. Small profits over time is the only way to beat this game

Huh! Aren't you contradicting yourself? Why are you betting then, if you say you can't beat the races?

T2W

----------------------------------------------------------------------------
~"Adopt the pace of nature: her secret is patience."

--Ralph Waldo Emerson

[toussaud]

lol

i would get laughed off this forum if i told you how much i wager percentage per race. but i have a very high threshold for loss and i am would rather wager a lot on a few races than a little on a lot. i only make 6-7 wagers a week but when i wager i go all in so to speak. i can go days without making a wager utnil i really really like something. that's just how i'm wired.

i have found that when i really know i made a good wager, even when i lose (a chunk of money) i don't feel bad afterwards. to me that's better than wagering 1% of my money on a race i'm iffy about just to be wagering.

[windoor]

I’ll jump in with the 1% crowd, and may be considered a ½% if you count my back-up bank (s).

My wager for a new play (not a test bank) usually starts at $20 to win with a $2000 supporting bank. The maximum I will wager for a win is $200. For some reason I get out of my comfort zone for any more and I think the racing Gods punish me for being greedy.

I say banks as I play a number of spot/angle play and each has it’s own supporting bank, and is designed to shut down if at any time it loses 50 units from a previous high.

If it is a well known play that I have been using for a long time, I will let it run through the losing streak as needed. If it’s a relatively new one, I may tweak it some, to get it to work again, or it might go into the very large trash pile of plays that have proven to be losers over time.

Surviving the losing streak is a hard lesson to learn, but I don’t believe you can be successful until you understand it, and can deal with it without going broke.

Regards,

Windoor.

[speculus]

HorseMarket Investing (http://store.thehorsehandicappingauthority.com/products/HorseMarket-Investing-with--Seminar-Video.html) actually does this.


Dave Schwartz
Who rarely sends people to
his products on this forum

I am using a two-pronged money management system at present which I have named Spec-HMI. The aggressive part is my own original formula, the defensive part is Dave's HMI mentioned above.

I believe it gives me the best of both worlds: during a winning streak, it bets more and more aggressively, and during a losing run, it takes shelter behind HMI's conservative defense.

It asks me the bet % only for the first bet, and later works out on its own how much I should bet on successive bets, taking into account my Win-Loss performance.

I believe my way outperforms HMI handsomely, and have already submitted my logic and argument to Dave, who has said he would work on it when he gets a little free.

I am now waiting for Dave to check it out and start marketing so that I will start getting a cut from its sales!:cool:

[Robert Goren]

I believe when you first start out betting a system or method, You should bet as you reach a level not a fixed %. let say you start with a $100. you should bet $ 2 until you reach $250, then you should bet $3 until you either reach $450 or fall back to $100. If you reach $450 then you should $4 If you fall back to $100 then you should go back to betting $2 until you reach $250 again. These number will vary depending on what your fail rate is. Those numbers set for an estimate fail rate of between 85% and 90%. or win rate % of 10 to 15 %. It doesn't matter much what the ROI is as long as it is positive. Nothing will turn a negative ROI into a winner. The better the ROI, the faster you move through the levels. This would go until the size of your wagers begin to have a visible effect on the payoffs, at which point you have to start considering pool sizes, but is something worry about later.

[pondman]

Small profits over time is the only way to beat this game as chasing the big one is hard for most players with limited funds.

This isn't true for me. The low odds might provide a little entertainment if out with friends, but they don't move my bankroll either way. My bankroll would sits flat if I played low odds horses, until I hit a longer shot. I personally don't have long losing streak. I'll lose 5 or 6 in a row. But I'll also get winning streaks.

I think it has more to do with my style and type of play. I have a much narrower focus than most, and restrict my play based on conditions rather than a rating.

It's the longer plays which increase my bankroll-- not short prices.

[pondman]

I believe when you first start out betting a system or method, You should bet as you reach a level not a fixed %. let say you start with a $100. you should bet $ 2 until you reach $250, then you should bet $3 until you either reach $450 or fall back to $100. If you reach $450 then you should $4 If you fall back to $100 then you should go back to betting $2 until you reach $250 again. .

This is actually what a flat better will do.

When I have observed a track for awhile and have a good idea how it plays (they are all different and have their gems and sucker bets), I'll approach it with 20 X the bet, usually a total of $2000. I'll make the same type of bet. They may be 20 races on the grass, maiden races, or shippers (better yet a maiden on grass being shipped to GG from SA with a layoff. Now that's a hot one.) Eventually I'll raise the bets but they remain consistent for 20 races. In theory this would make my bets 5% of my bankroll. But it's a virtual bankroll. By the time I hit the 20 race I'm usually so far ahead that I don't see it as 5% of my bankroll.

[DeltaLover]

The bankroll of any horse (or other) gambler who places consecutive bets has an growth rate (which can be also expressed as ROI and can be positive or negative) and the standard deviation of it.

Money management cannot affect neither the growth rate not the standard deviation of any betting strategy....

It is clearly a bettor's fallacy the theory that a conservative approach based on very infrequent bets is always superior to a looser approach that tends to place more money in action.

Of course here we have to clarify the fact that our objective should not be to last longer or to maximize our 'strike' rate. Our purpose is to extract the maximum amount in the shorter time out of the pools (always based in our edge) or eventually get broke (if we have a negative expectation strategy).

The optimal bet sizing is pretty well explained by Kelly's Criterion although we can never be sure about an overlay's advantage ( not only because we cannot be sure about our probability's estimates but additionally to it we can never be sure about the final odds of any bet before it is ran) which means that its application is more subjective and empirical rather than objective and analytical.

More than these in my opinion there is absolutely nothing wrong with a gambler who operates on a mini bankroll of let's say $1,000 that risks it all in few (three – four) bets. Such a small bankroll really leaves very little flexibility when it comes to sizing a bet and has pretty small real potential in absolute value, so small that makes it perfectly reasonable for the gambler to try to take his risks trying to get his bankroll to a level where he can apply a Kelly-like approach. A bankroll of $1,000 out of where we make $12 bets certainly might be good for recreational reasons but it is really slow in progress (either positive or negative).... Also the fact that living expenses represent a significant percentage of such a small bankroll is another good factor that cries for 'fast' betting... Meaning if you keep betting with it for a couple of weeks your living and handicapping expenses will probably surpass the total of your bankroll....

In general the lower a bankroll the higher the risk we can take and the more aggressive a gambler can bet and vice verse.

[Robert Goren]

Almost everyone who risk too much of his bankroll too often will ended up working a second job to build up a new bankroll. The math will catch up to them sooner or later, usually sooner. The simulcast centers are filled with people who been doing that for years. They are there for a while, then they hit the inevitable losing streak and they are gone until they have saved up enough money to come back. They have been repeat same cycle for 20, 30 and in some cases 50 years. A lot of them would actual show a profit if they managed their money better.

[Robert Goren]

Goren's universal law of gambling.

There will be a losing streak.

[DeltaLover]

Almost everyone who risk too much of his bankroll too often will ended up working a second job to build up a new bankroll. The math will catch up to them sooner or later, usually sooner. The simulcast centers are filled with people who been doing that for years. They are there for a while, then they hit the inevitable losing streak and they are gone until they have saved up enough money to come back. They have been repeat same cycle for 20, 30 and in some cases 50 years. A lot of them would actual show a profit if they managed their money better.


Sure you are right.... The catch here though is that this happens exactly because that for the vast majority of the bettors horse racing represents a negative expectation investment that eventually will consume even the largest bankroll on earth.... Money management makes nothing to increase or decrease the expectation....

[Elliott Sidewater]

This is a great discussion. As a practical matter, Delta Lover's suggestion that a bettor could subdivide his bankroll and bet a larger percentage of the smaller bankroll not only agrees with the tenets of risk management, it also is a practical solution that buffers the bettor psychologically. Nothing more to add other than a huge BRAVO to Delta Lover. Well stated and explained!

[Uncle Salty]

I am primarily a win bettor and my prime win bets are 2% of my bankroll, going up or down .5% based on the price or how much of an edge I think I have. I almost always just bet one win bet on a days card, maybe two if I see something I really, really like.

I also allow myself some fun bets for action, mostly $.10 supers on maiden claimers and an overlaid exacta or two, but these will total to no more than my win bet amount for the whole day.

If found this method to work well and it keeps me out of trouble.

[thaskalos]

More than these in my opinion there is absolutely nothing wrong with a gambler who operates on a mini bankroll of let's say $1,000 that risks it all in few (three – four) bets. Such a small bankroll really leaves very little flexibility when it comes to sizing a bet and has pretty small real potential in absolute value, so small that makes it perfectly reasonable for the gambler to try to take his risks trying to get his bankroll to a level where he can apply a Kelly-like approach. A bankroll of $1,000 out of where we make $12 bets certainly might be good for recreational reasons but it is really slow in progress (either positive or negative).... Also the fact that living expenses represent a significant percentage of such a small bankroll is another good factor that cries for 'fast' betting... Meaning if you keep betting with it for a couple of weeks your living and handicapping expenses will probably surpass the total of your bankroll....

In general the lower a bankroll the higher the risk we can take and the more aggressive a gambler can bet and vice verse.
I could never understand the reasoning behind being overly aggressive with one's bankroll...regardless of its size.

Discipline and patience are revered virtues in this game (and rightly so) and nothing exudes indiscipline and impatience more, than a player who overbets his bankroll.

IMO...even a "mini" bankroll of $1,000 should be treated with respect, because - in capable hands - it has the potential for great growth over time.

So what if our operating expenses "represent a significant percentage of such a small bankroll"; that's still not a valid reason to engage in "fast" betting, IMO.

The more reasonable approach would be to pay our operating expenses "out-of-pocket"...and let the "mini" bankroll grow, albeit slowly, over time.

The person who is undisciplined with a small bankroll is fooling himself if he thinks that his discipline will magically appear when he acquires a large bankroll. It takes WORK to develop good habits...at the track and in life itself.

Building a "small" bankroll over time not only instills discipline and patience in a player...it also creates in him the self-confidence he so badly needs in his pursuit of race track profits.

Maybe it is "a slow progress"...but again, SO WHAT!

Responsible horseplaying is a MARATHON, not a sprint...and we should all learn to PACE ourselves accordingly.

[TrifectaMike]

Sure you are right.... The catch here though is that this happens exactly because that for the vast majority of the bettors horse racing represents a negative expectation investment that eventually will consume even the largest bankroll on earth.... Money management makes nothing to increase or decrease the expectation....

I have to disagree with your response to Robert's post (There will be losing streaks). The occurrence of streaks is an extremely complex subject matter. To study the subject adequately one would need to study Recurrent Events and Renewal Theory, and have a working knowledge of probability-generating functions and solutions of recurrence equations. There are few math types that specialize in this area.

Fortunately, there some approximations available.

The reason I mention the above is because wining/losing streaks have absolutely nothing to do with positive/negative expectations.

Mike (Dr Beav)

[thaskalos]

This is a great discussion. As a practical matter, Delta Lover's suggestion that a bettor could subdivide his bankroll and bet a larger percentage of the smaller bankroll not only agrees with the tenets of risk management, it also is a practical solution that buffers the bettor psychologically. Nothing more to add other than a huge BRAVO to Delta Lover. Well stated and explained!
Hi Elliott,

Correct me if I am wrong, but, IMO, nowhere in DeltaLover's post was it suggested that the bettor should "subdivide his bankroll and bet a larger percentage of a smaller bankroll".

What he seems to be suggesting is that a player who is operating with a "mini" bankroll of only $1,000 would be "perfectly reasonable" if he wagered it all on three or four bets...in an attempt to get that bankroll to an acceptable level as quickly as possible.

[TrifectaMike]

I could never understand the reasoning behind being overly aggressive with one's bankroll...regardless of its size.

Discipline and patience are revered virtues in this game (and rightly so) and nothing exudes indiscipline and impatience more, than a player who overbets his bankroll.

IMO...even a "mini" bankroll of $1,000 should be treated with respect, because - in capable hands - it has the potential for great growth over time.

So what if our operating expenses "represent a significant percentage of such a small bankroll"; that's still not a valid reason to engage in "fast" betting, IMO.

The more reasonable approach would be to pay our operating expenses "out-of-pocket"...and let the "mini" bankroll grow, albeit slowly, over time.

The person who is undisciplined with a small bankroll is fooling himself if he thinks that his discipline will magically appear when he acquires a large bankroll. It takes WORK to develop good habits...at the track and in life itself.

Building a "small" bankroll over time not only instills discipline and patience in a player...it also creates in him the self-confidence he so badly needs in his pursuit of race track profits.

Maybe it is "a slow progress"...but again, SO WHAT!

Responsible horseplaying is a MARATHON, not a sprint...and we should all learn to PACE ourselves accordingly.

I agree with all of the above, if you have a positive long term expectation. However, if you do not have a long term positive expectation bold session play is optimal.

Mike (Dr Beav)

[thaskalos]

Sure you are right.... The catch here though is that this happens exactly because that for the vast majority of the bettors horse racing represents a negative expectation investment that eventually will consume even the largest bankroll on earth.... Money management makes nothing to increase or decrease the expectation....
Isn't this yet another reason to start with a "mini" bankroll?

[thaskalos]

I agree with all of the above, if you have a positive long term expectation. However, if you do not have a long term positive expectation bold session play is optimal.

Mike (Dr Beav)
Yes, Mike...

But DeltaLover clearly assumes that there is a positive long-term expectation...

Otherwise...why the rush to build a bankroll to satisfy the "Kelly-like" approach?

[TrifectaMike]

Yes, Mike...

But DeltaLover clearly assumes that there is a positive long-term expectation...

Otherwise...why the rush to build a bankroll to satisfy the "Kelly-like" approach?

Thask,

We are in agreement.

Mike (Dr Beav)

[thaskalos]

Thask,

We are in agreement.

Mike (Dr Beav)
Finally...:)

[DigitalDownsJoe]

Patience is the key to a successful gambler. Number one rule, dont bet just for action, if you dont feel good about a race, PASS. If you feel you dont have any type of edge or arent getting good value, PASS. I never spend more then 1% on any type of bet on anything. It will kill you on sports..poker..racing of any type. This should include all your wagers from a race..If you bet 20 to WP on a horse, your backroll should be atleast 4 grand not 2..Just my opinion. I dont think this should ever be increased..1% of your bankroll on a race is more then enough..

When I say bankroll, I mean the money you have put aside and are able to lose. Not what you have in your bank account :)

[Elliott Sidewater]

Yes, you're right, I realize now that I put my own interpretation on post #22, thinking that DL saying that $12 out of $1000 is too small and $250 is OK was somehow in concert with my own thinking. On second thought, not so fast. I was thinking more along the lines of my own comfort zone in that situation, which is probably in the 5 to 8 percent neighborhood. If one had a number of backup bankrolls, subdivided from a larger bankroll, then this is reasonable risk ratio in my opinion. On the other hand, if the backup bankrolls only exist in vivid imagination rather than reality (as in, "I can put together another bankroll if I need it, but I won't"), then all bets are off except possibly the needed trip to a psychologist. Behind all this is the assumption that the player has a positive expectation before important money is deployed. This was probably the best advice that Doc Sartin ever dispensed - five consecutive profitable 20 race cycles before important money goes into play. Only a small percentage of the clients realized that the money management advice and what he had to say about the psychology of winning were far more important than fractional velocities, turn times, and energy quotients.

[thaskalos]

Yes, you're right, I realize now that I put my own interpretation on post #22, thinking that DL saying that $12 out of $1000 is too small and $250 is OK was somehow in concert with my own thinking. On second thought, not so fast. I was thinking more along the lines of my own comfort zone in that situation, which is probably in the 5 to 8 percent neighborhood. If one had a number of backup bankrolls, subdivided from a larger bankroll, then this is reasonable risk ratio in my opinion. On the other hand, if the backup bankrolls only exist in vivid imagination rather than reality (as in, "I can put together another bankroll if I need it, but I won't"), then all bets are off except possibly the needed trip to a psychologist. Behind all this is the assumption that the player has a positive expectation before important money is deployed. This was probably the best advice that Doc Sartin ever dispensed - five consecutive profitable 20 race cycles before important money goes into play. Only a small percentage of the clients realized that the money management advice and what he had to say about the psychology of winning were far more important than fractional velocities, turn times, and energy quotients.
I find myself in complete agreement...and I am incapable of adding even a single word. :ThmbUp:

[DeltaLover]

Let's assume that we have a bettor who is an average winner of $100 per betting day while his standard deviation is $1,000 (per day).

Having such a profile this player should except a three times his standard deviation swings to be quite reasonable. This means that he can very will end up loosing $3,000 during a specific day while still he is having a winning strategy..

Now let's assume that this winning player is betting for 50 days.

He is expecting to win:

50 X $100 = $5,000

Most likely he will not win this exact amount, he will either win more or less than this amount.

The standard deviation of the amount expected to win is inversely proportional to the square root of the number of the days:

SQRT(50) = 7.07

or SD of sample = $1,000 / 7.7 = $141.1

Following the times three SD rule as before we can conclude that the behavior of this strategy could statistically range between the following limits:


100 – 3 * 141 = - $323 / day
100 + 3 * 141 = + $523 / day

So the expert handicapper who is able to win at a $100 / day rate with a $1,000 SD can actually go through a stretch of 50 betting races still being behind by $16,150


For this player to assure that he at least be even he will need a sample SD of $33 /day or 900 betting days since

SQRT(900) = 30
and
1,000 / 30 = 33.33
and
100 – 3 * 33.33 = 0

Based in this analysis it is easy to understand how random the results of any strategy can be and how deceiving any conclusions we can derive from (relatively) small sample.

This is not to advice that the best necessary strategy is to become very aggressive with a small starting bankroll, just to prove that the impact of any money management approach is clearly a fallacy.

[TrifectaMike]

Let's assume that we have a bettor who is an average winner of $100 per betting day while his standard deviation is $1,000 (per day).

Having such a profile this player should except a three times his standard deviation swings to be quite reasonable. This means that he can very will end up loosing $3,000 during a specific day while still he is having a winning strategy..

Now let's assume that this winning player is betting for 50 days.

He is expecting to win:

50 X $100 = $5,000

Most likely he will not win this exact amount, he will either win more or less than this amount.

The standard deviation of the amount expected to win is inversely proportional to the square root of the number of the days:

SQRT(50) = 7.07

or SD of sample = $1,000 / 7.7 = $141.1

Following the times three SD rule as before we can conclude that the behavior of this strategy could statistically range between the following limits:


100 – 3 * 141 = - $323 / day
100 + 3 * 141 = + $523 / day

So the expert handicapper who is able to win at a $100 / day rate with a $1,000 SD can actually go through a stretch of 50 betting races still being behind by $16,150


For this player to assure that he at least be even he will need a sample SD of $33 /day or 900 betting days since

SQRT(900) = 30
and
1,000 / 30 = 33.33
and
100 – 3 * 33.33 = 0

Based in this analysis it is easy to understand how random the results of any strategy can be and how deceiving any conclusions we can derive from (relatively) small sample.

This is not to advice that the best necessary strategy is to become very aggressive with a small starting bankroll, just to prove that the impact of any money management approach is clearly a fallacy.

Based on your ssumption, I agree with your very nice analysis. However, I find this puzzling: just to prove that the impact of any money management approach is clearly a fallacy.

Possibly I am misinterpreting what it means. Can you clarify this for me?

Mike (Dr Beav)

[Elliott Sidewater]

Bear with me a moment - what you didn't discuss was the size of this mythical player's bankroll and clearly

a) it was large because about 1/3 of the days he would be winning or losing over $1000
b) he was betting a lot of money per day because the 2 sigma days were losses of over $2000 per day. Not knowing what the amount bet per day was (missing info), I'd be tempted to conclude that the player was either a big win bettor or betting superexotics on a smaller scale and chasing with bigger bets when he got behind.

In my mind this does not invalidate the concept or importance of money management, it simply shows that

a) you need a big bankroll to bet big and
b) it will take a long time playing to get a good handle on your ROI

I think what you did show is that the bankroll needed to be over $16,000 to begin with and that a good chunk of it would be put into play every day. We were discussing bankroll sizing, maximum percentage or amount to bet per race, and risk appetite but I think your post veered in a different direction,

Respectfully,
Elliott

[TrifectaMike]

Since, we basically touched on the subject of streaks. (This should be relevant fto Jamey since he is striving for 50% winners).

If we take a sequence of 5 coins flips, any combination of flips has the same probability of occurence...HTHTH, HHHHH, TTTTT, HTHHT all have equal probability.

I propose that I can break anyone's bank by playing a game of H, T combinations.

The Game:

You choose a five flip sequence, and I select a five flip sequence. Since, you go first, I have the option of selecting the same sequence, which means you have to make another choice.



REMEMBER EACH SEQUENCE HAS THE SAME PROBABILITY OF OCCURENCE!

Mike (DR Beav)

[Elliott Sidewater]

Mike, that would be cheating. You could still break the bank by betting that Obama will actually propose cutting spending by spending more now in order to spend less later - it doesn't make sense but someone somewhere will reject the idea on the basis of common sense, and LOSE to you. Your other option is betting that the NFL opener will have a higher Nielsen rating than the President's speech. That one is not as much of a lock, because the White House may influence Nielsen to report a lie:D

Elliott

[DeltaLover]

Possibly I am misinterpreting what it means. Can you clarify this for me?

Mike (Dr Beav)

Mike I will try my best....

First of all the definition of money management is not clear to me.

Betting with patience placing very few bets per day certainly is not MM it is a strategical decision same exactly thing applies to a loose approach that tries to discover overlays in every race run in every track available.

Spreading to more than one horses per race again is not MM as it is not betting a single one.

A long parlay of consecutive bets again is not MM since all it does is just to accelerate the results of a Betting Strategy .

The best definition of MM that comes to my mind is Kelly's or any similar approach which has to do with the sizing of our bet in correlation to the amount of the overlay we are getting and our bankroll.

More than this, a positive expectation strategy will always end up a winner assuming a big enough sample and of course the opposite is truth.

Streaks have absolutely no impact in the final result assuming we have an strategy consisting only from overlays. If our Betting Strategy is focusing to 30-1 shots we can very well exceed 100 consecutive races with not even one winner at all, this is completely expected .

The concept of MM is to me as I stated before a consists a gamblers fallacy and all of us have discovered it very early in our betting careers as we did with martingale type of bets....

Again what really counts in any Betting Strategy is simply its expectation and standard deviation...

More than this if we will flat bet, partial or fully parlay, bet exotics or straight, bet once or 100 times per day have nothing to do with the final results.

[DeltaLover]

Bear with me a moment - what you didn't discuss was the size of this mythical player's bankroll and clearly

a) it was large because about 1/3 of the days he would be winning or losing over $1000
b) he was betting a lot of money per day because the 2 sigma days were losses of over $2000 per day. Not knowing what the amount bet per day was (missing info), I'd be tempted to conclude that the player was either a big win bettor or betting superexotics on a smaller scale and chasing with bigger bets when he got behind.

In my mind this does not invalidate the concept or importance of money management, it simply shows that

a) you need a big bankroll to bet big and
b) it will take a long time playing to get a good handle on your ROI

I think what you did show is that the bankroll needed to be over $16,000 to begin with and that a good chunk of it would be put into play every day. We were discussing bankroll sizing, maximum percentage or amount to bet per race, and risk appetite but I think your post veered in a different direction,

Respectfully,
Elliott


The size of the bankroll depends upon the following factors:

1)The overall expectation of the strategy
2)The Standard Deviation of the strategy
3)Our accepted risk or ruin

If we want to minimize the risk ruin we will need a very large bankroll, this is why for realistic reasons we should always try to keep low but not very close to 0, a value of 3 % is pretty good for the described above strategy.

The higher risk of ruin we are willing to accept the less initial capital is required.

[Robert Goren]

The acceptable risk of ruin is lower for a large bankroll than it is for a smaller one because of the difficulty of replacing it. Eventually the risk of ruin should virtually disappear, if no other reason than that the size of wagers begin to adversely effect the odds to point where increasing the size of the wager only decreases profitability. A positive ROI should determine whether or not to make a bet, the risk of ruin(which can vary from wager to wager) should determine how much to wager. The risk of ruin is not how many losing bets you can make in a row without going broke. Two factors go into to determine the risk of ruin. They are frequency of failure and the speed of recovery of capital after a failed wager or series of failed wagers.
There is no such a thing as sure thing. The NFL game having higher ratings than the president's is very highly likely, but not a sure thing. There is some very, very small chance that something could happen to NBC ability to broadcast it to all or parts of the country. I have seen that kind of thing happen several times including a preseason NFL game this year in my area.

[TrifectaMike]

The size of the bankroll depends upon the following factors:

1)The overall expectation of the strategy
2)The Standard Deviation of the strategy
3)Our accepted risk or ruin

If we want to minimize the risk ruin we will need a very large bankroll, this is why for realistic reasons we should always try to keep low but not very close to 0, a value of 3 % is pretty good for the described above strategy.

The higher risk of ruin we are willing to accept the less initial capital is required.

Thank you for your response to my question. I now have a much better understanding of your position. It was clear and concise.

The most critical factor in avoiding ruin in a positive expectation game is the variance of the net gain. Obviously having a large bankroll will attentuate the
effect of the variance, but not at the same rate.

In many situations the best remedy to the net gain variance "problem" is to bet an additional horse, which can dramatically reduce the probability of ruin.

Mike (Dr Beav)