The only one absolute truth toward profitability

[traynor]

Originally Posted by DeltaLover

I completely disagree...

The size of bankroll is directly correlated with ROI.

Two of the reasons why this is happening:

- The risk you should be willing to take while deciding about the size of your bets is disproportional to the size of the bankroll. The smaller your bankroll is the more risk you can take and vice versa. Based in this principle a smaller bankroll is more likely to experience higher ROI fluctuations. In other words it is much easier to show a 100 ROI if your starting bankroll is only $50 which you will risk them all in a couple of bets than do the same with a $50K bankroll

- As a bankroll grows it reaches an asymptotic resistance in its growth since it is restricted by the pool size. Take for example a strategy suggesting a 2% bet of the total bankroll. There is a limit which signifies a maximum possible bet, beyond this the overlay becomes an underlay thus decreasing ROI.

There is no meaningful correlation between ROI--as the result of some specific activity--and bankroll size. Believing that a "larger bankroll" equates to "larger ROI" is conceptually impoverished.

[DeltaLover]

Originally Posted by traynor

Believing that a "larger bankroll" equates to "larger ROI" is conceptually impoverished.

Traynor,

I really do not understand where you found this correlation. If anything I am saying exactly the opposite. I think there is some kind of a misunderstanding here...

[Greyfox]

Traynor is right.

Let us take for example 2 bettors.

Player A- makes $2 bets on the exact same horses as

Player B - who keeps increasing his wagers as his bankroll grows (assuming it does.)

For every bet, both men have the same identical R.O.I at the end of the day.

Player A naturally has made a lot less money, but then his investments are lower.

Even if Player B increases his wagers to the point that it causes a diminishing return in the pools, where overlays become underlays, Player A will also receive diminishing returns as he is making the same bets with his $2.

[raybo]

Originally Posted by DeltaLover

I completely disagree...

The size of bankroll is directly correlated with ROI.

Two of the reasons why this is happening:

- The risk you should be willing to take while deciding about the size of your bets is disproportional to the size of the bankroll. The smaller your bankroll is the more risk you can take and vice versa. Based in this principle a smaller bankroll is more likely to experience higher ROI fluctuations. In other words it is much easier to show a 100 ROI if your starting bankroll is only $50 which you will risk them all in a couple of bets than do the same with a $50K bankroll

- As a bankroll grows it reaches an asymptotic resistance in its growth since it is restricted by the pool size. Take for example a strategy suggesting a 2% bet of the total bankroll. There is a limit which signifies a maximum possible bet, beyond this the overlay becomes an underlay thus decreasing ROI.

If you note, I was disagreeing with that portion of his post. Bankroll can have a direct affect on ROI, I just listed one of those effects. I agree with yours also. But, many players cannot do what they need to do unless there bankroll is healthy, when it is low they change thir method of play, away from what it needs to be. It's a confidence thing, with a healthy bankroll they feel more confident in their wagering, with a low one, they start running scared.

[raybo]

Originally Posted by traynor

There is no meaningful correlation between ROI--as the result of some specific activity--and bankroll size. Believing that a "larger bankroll" equates to "larger ROI" is conceptually impoverished.

In your opinion.

[DeltaLover]

Originally Posted by Greyfox

Traynor is right.

Let us take for example 2 bettors.

Player A- makes $2 bets on the exact same horses as

Player B - who keeps increasing his wagers as his bankroll grows (assuming it does.)

For every bet, both men have the same identical R.O.I at the end of the day.

Player A naturally has made a lot less money, but then his investments are lower.

Even if Player B increases his wagers to the point that it causes a diminishing return in the pools, where overlays become underlays, Player A will also receive diminishing returns as he is making the same bets with his $2.

Gray,

the point I am trying to make is that the absolute size of your bankroll should affect the relative size of your bets.

Betting $50 if your 'bank' is $100 is not the same as betting $5,000 when your roll is $10,000, thus it is much easier to show a high ROI with small bets rather than larger. It is much easier to risk $50 to make $1,000 than 5,000 to make $100,000. This is why what really counts is not ROI but PNL. You do not bet horses to maximize ROI but to make money instead.

I will be much more impressed by someone claiming a $100K winnings per year (even if his ROI was negative) than some one (like some of our fellow posters here) bragging about a 1.30 ROI that made for him $7K per year.

As the bankroll and bets are going up the game becomes exponentially more difficult. Chances are that a $500K / year player who ends up his year loosing $10K is a much better player than a $50K who ends up breaking even or showing a small profit.

[Greyfox]

Originally Posted by DeltaLover

Gray,

the point I am trying to make is that the absolute size of your bankroll should affect the relative size of your bets.

Betting $50 if your 'bank' is $100 is not the same as betting $5,000 when your roll is $10,000, thus it is much easier to show a high ROI with small bets rather than larger. It is much easier to risk $50 to make $1,000 than 5,000 to make $100,000. This is why what really counts is not ROI but PNL. You do not bet horses to maximize ROI but to make money instead.

I will be much more impressed by someone claiming a $100K winnings per year (even if his ROI was negative) than some one (like some of our fellow posters here) bragging about a 1.30 ROI that made for him $7K per year.

As the bankroll and bets are going up the game becomes exponentially more difficult. Chances are that a $500K / year player who ends up his year loosing $10K is a much better player than a $50K who ends up breaking even or showing a small profit.

That may be the point you were trying to make, but that's not quite what you said.

You said: "The size of bankroll is directly correlated with ROI."
Traynor replied that there is no meaningful correlation between size of bankroll and R.O.I.

I happen to agree with Traynor on that.

For example, supposing that I tell you my ROI last year was 1.08.

Now you tell me what the size of my bankroll was??

You can't because ROI has little to do with bankroll.

[DeltaLover]

Originally Posted by Greyfox

You said: "The size of bankroll is directly correlated with ROI."

OK.. I see...

But I do not mean directly proportional I mean correlated.

Now I realize that I could have state it in a better way...

I apologize for the weak expression...

The point is that bankroll size is affecting ROI ...

[Greyfox]

Originally Posted by DeltaLover

OK.. I see... I do not mean directly proportional I mean correlated.

Now I realize that I could have state it in a better way... I apologize for it...

The point is that bankroll size is affecting ROI ...

A bigger bankroll can bring you back bigger returns, or conversely bigger losses. The only way a bigger bankroll can affect ROI is that the guy with more bucks is more likely to have more opportunity for cover bets.

But the Rate of Investment % = $ returned from bets/$ on bets X 100.

ROI is a ratio and it is always proportional.

[thaskalos]

Originally Posted by raybo

If you note, I was disagreeing with that portion of his post. Bankroll can have a direct affect on ROI, I just listed one of those effects. I agree with yours also. But, many players cannot do what they need to do unless there bankroll is healthy, when it is low they change thir method of play, away from what it needs to be. It's a confidence thing, with a healthy bankroll they feel more confident in their wagering, with a low one, they start running scared.

I understand what you are saying...but it gets a little more complicated than that.

The player's confidence level should be depended upon the skill of the player...not on the size of his bankroll. A bigger bankroll is terribly misplaced in incompetent hands.

The undercapitalized player plays scared...but the overcapitalized player often gets careless -- which is just as bad.

If a player has doubts about his own ability...then he should set up a bankroll which is adequate for his style of play -- while playing at the lowest monetary level. If the bankroll increases...then the wagers increase proportionately. And, most importantly...the player's confidence increases as well.

If the player discovers that he cannot increase his wagers in accordance with his increased skill and confidence level...then he doesn't have what it takes, psychologically, to become a serious bettor. There is nothing wrong with that.

In any case...the player should EARN the right to gamble with a bigger bankroll.

[DeltaLover]

Originally Posted by Greyfox

ROI is a ratio and it is always proportional.

I do not think that anyone is saying anything different here...

The whole point is that starting with a small bankroll it is more possible to show a larger ROI (for the reasons enumerated before)

Originally Posted by Greyfox

The only way a bigger bankroll can affect ROI is that the guy with more bucks is more likely to have more opportunity for cover bets.

I disagree.

A larger bankroll:

1) Has more visible limits its ROI potential by the pool size.


2) Requires more conservative handling than a smaller one.

[baconswitchfarm]

The volume of play is more important than the actual bankroll. If a guy has a roi of 1.08 betting 40k a year well ok. Do it betting 4million a year and I am impressed. But I have never met a pro bettor that thought he was over capitalized.

[Greyfox]

Originally Posted by baconswitchfarm

But I have never met a pro bettor that thought he was over capitalized.

Right. I haven't ever met any bettor who thought he was over capitalized.

[raybo]

The point is, most players are not overcapitalized, and will tend to change their betting method in order to compensate. So, if they have a sound betting strategy but, for whatever reason, their bankroll declines dramatically, they tend to jump ship and abandon their sound betting strategy.

[Robert Fischer]

your ROI might be the same regardless of bankroll size, but for a given wager-type, your growth-rate will slow as your bankroll increases beyond a certain point, because of pool size.

A larger bankroll will allow lower percentage wagers with potentially higher ROI to be a greater part of even a more conservative style of play. This will offset some of the growth rate issues to some extent.