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Originally Posted by Jeff P
If you ask me, it can be very much worth your while to treat a very small starting bankroll as if it were a very large sum of money (the last bankroll you'll ever be able to scrape together) provided you have the mental capacity to actually do that.
Hear me out.
Profits = (edge) x (handle)
If you have an edge and can size each bet as a small pct of bankroll (.015 to .025 depending on strength of play) and recalculate size of bank after the results of each play becomes known...
In THEORY you can make it work just like compound interest. If we replace handle in the above equation with an ever growing bet size repeated across 1000's of plays over the next few years...
Profits becomes a VERY large number.
But almost everyone who tries this will very quickly discover real life and theory can be two entirely different things.
You see most players have absolutely no understanding of the incredible amount of discipline it takes to make something like this work - to actually grow a small bankroll into a large one.
Sometime during 2001 after conceptualizing the gist of what I just posted as something attainable (as theory) I promised myself that before I could look myself in the mirror and call myself any kind of horseplayer I would first have to prove it to myself by actually growing a small bankroll into a large one in real life.
I had several failed attempts at this during 2001-2002. Looking back, the reason I failed was that in each case I treated my bankroll as if it were expendable... which ultimately proved to be the case.
I would make a few dozen plays at 2 pct of $300.00. I might have a good run or a bad run... it didn't matter. Eventually I would grow bored with the idea of $5.00 and $8.00 win bets. Where was the thrill? I'd react to that by overbetting my bankroll... $30.00 or $40.00 to win on horses I thought were overlayed. Funny thing though - as soon as I would hit a losing streak my bank would evaporate. I actually blew through several banks in 2002. God, it's a good thing I had a job at the time.
In late 2003 the software shop I was working for had too many eggs in one basket. The Marine Corps opted to award a defense contract to a competitor rather than renew with us. The owners of my co. had no choice but to lay a bunch of us developers off.
I had an early version of what would soon evolve into JCapper and decided to take a serious run at playing full time. I began flat betting to win on horses I viewed as overlays. I had ups and downs. But overall my approach was working. I was winning money. Enough to cover living expenses and then some. But that was about it. I wasn't growing a bankroll.
In May of 2004 I decided come hell or high water I was finally going to muster the discipline to grow a tiny bankroll into a large one. Either that or die trying. I made a $250.00 deposit at Pinnacle and was determined to treat it as if it were all the money I had left in the world.
I began making bets on horses I thought were overlaid at .015 to .025 of bankroll. I actually based the pct on strength of play. A few weeks in and my $250.00 had grown to almost $400.00.
I can't tell you how much I wanted to scrap the whole idea. Here I was supposedly playing horses for a living while making $3 to $8 win bets.
But I kept on. Somehow I convinced myself that money wasn't the objective. Discipline was. Because I KNEW deep down that my theory about growing a bankroll had to be correct. And the only thing that had stopped me from making it work in the past had been, well... me.
IF I could somehow muster the discipline now, I could carry my edge into the long run - and grow this tiny bankroll into something I could be proud of.
Several months and 1000's of plays later my $250.00 had grown to almost 4k. Was I was over the hump? Not hardly. 4k isn't what you'd call a security blanket.
As I played I discovered that a pct of bankroll approach presented a set of challenges I hadn't envisioned. I've already mentioned the importance of discipline. But it goes much further than that. No matter how good of a player you might be, most of the overlays you find yourself betting are overlays in the first place because the public ignores them (at least to some degree.) And if you study racing data you know that higher odds horses have lower win rates than lower odds horses. This is true no matter how good of a handicapper you might be. So betting overlays (at least mine) will eventually lead to losing streaks of unknown (beforehand) duration. You have to understand going in that as a player you can do everything right and lose 30 (or more) bets in succession.
You have to be psychologically equipped beforehand to handle this. If not, stop reading this post right now. Treat horses as a hobby only from now on and forget about even trying to grow a tiny bankroll into a large one.
If you are practicing a pct of bankroll approach when this happens your bankroll WILL shrink. If you plot changes in the size of your bank from live play on a graph (vertical axis = $$ and horizontal axis = time) you will see a lot of ups and downs. But if you have an edge the general trend as you carry an edge into the long run despite the ups and downs will be bankroll growth.
BTW, the degree to which bankroll growth is possible using a pct of bankroll approach dwarfs what is possible using flat betting. The trade off though is that flat betting as an approach is far far easier to put into practice.
Regardless, you have to be emotionless during both losing and winning streaks. Because emotion can cause you to do things that are incredibly stupid.
I realized something while I was making this work. And this will always be true. True for the rest of my life - or at least as long as I choose to play professionally. No matter how much money I might win or have - the ONLY thing separating me from the path I have found and worked so hard to get on is a couple weeks of blown discipline. A lapse in discipline will ALWAYS have the ability to evaporate a bankroll and cause me to have to go back to work.
Overbetting a bankroll WILL lead to ruin. Count on it.
Yet for the first time in my life I found that I had grown a tiny bankroll to the point to where betting a pct of it was easily covering my living expenses.
I kept on. Research I did in the summer of 2005 found me improving my selection process - significantly. Fewer plays. But plays of a much higher quality. By year's end, even though I took money off the table several times, and was making regular withdrawals to cover living expenses, my tiny $250.00 starting bank was now well into 5 figures.
2006 saw a completely different set of challenges which I overcame. 2007 even more.
This post is already way too long. So maybe it's time to wrap things up.
Profits = (edge) x (handle)
If you can change handle to a pct of bank repeated 1000's of times, you can (in theory) make the whole thing work like compound interest. Carrying an edge into the long run is doable. But it takes an incredible amount of discipline. I'm really proud of the fact that I've actually done this.
One of the keys (at least for me) when it came to mustering the needed discipline was the ability to treat my starting bank with respect... as if it were the last $250.00 I had to my name. For me, this was the difference maker between all of my previous attempts and the one that finally took off. It was the only way (for me) to give a starting bank the respect it actually deserves.
Thanks for reading,
-jp
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I hope nobody minds me resurrecting my new favorite post on the site
I think it's worth another look anyway. I've been looking for something like this. Excellent thread idea, too.
This is about the same exact bankroll building procedure I'm in the process of attempting myself - starting on November 18th with a $50 deposit into a new account to go along with $180 left over in an old account. Now that I'm confident in my handicapping approach, I'm making 2% of bankroll win bets based on my Monday morning bankroll. I suppose if I go on a losing streak towards the beginning of the week I'll have to scale down before the next Monday, but I don't ever ratchet the bets up before the next Monday.
I hope my story will proceed half as well as Jeff P's.
