Taking a risk

A recent article on money management stirred up a lot of good quality discussion in the RX posting forum. However, one important factor wasn't discussed and is rarely mentioned except by a select few.

Read the rest of Wild Bill's latest column by going to the RX home page at www.therx.com

Charlie

When that mother of all losing streaks hits, it is indeed a very big indicator of your Risk management ability, but more importantly how you handle this destined dreaded occurance. Very good article Bill. Thank you.

I thought this was a good follow-up article, even if lacking in the real meat.

I also suspect many bettors are unaware of the real level of risk to which they expose themselves. I note that OMT bets 1-5% of bankroll, and mostly in the lower range, depending upon his perceived advantage. As someone who is achieving 55%+ winners he seems to be betting appropriately, especially as he resizes his bets after a 20% bankroll shift either up or down. I wonder if this is seat of the pants or mathematically calculated.

So the real question is how do you assess your risk of ruin? I know how to calculate advantage based upon your "perceived" win rate but the other factor in the equation is the variance or standard deviation, which is the mathematical expression for winning and/or losing streaks.

In a two outcome situation I think the Kelly criterion I mentioned earlier is a good guide. http://forum.therx.com/eve/ubb.x?a=tpc&s=100090022&f=988094022&m=463107271&r=670100371#670100371

However in a multiple outcome situations, such as the Superbowl winner, knowing the mathematical advantage and the variance are critical in determining the ideal bet size.

The ideal bet size is that which maximizes bankroll growth without being excessive and thereby mathematically ensuring ruin. Overbetting the bankroll ensures ruin because of the variance (losing streaks).

Thanks WildBill

The thing that has yet to be mentioned is the varying sports and or bets in differing sports. BAseball and hockey are not even related to fotball and basketball. Just as golf in itself has elements that are common in all sports. Then there are futures and series bets. And finally props.

Both articles give the basics, but all in all have the underlying presumption that bets are being made at a standardized vig, i.e. spread based sports. Be that standardized vig be -110, -107, or a variance that has yet to be determined.

Baseball and hockey can in no way be talked about in the same sentance as football and basketball in terms of money management. I do not bet hockey at all for the most part, but I do know that it is ML based for the most part, but like the RL in bases, there can be a puckline with odds that can be played. But there are also ties, so that definately creeps in, and why I don't bet the sport. Hockey and socccer are actually pretty closeley related, and soccer should be included as a lot of non Americans do bet it as their staple.

But it is possible to bet both baseball and hockey, and soccer and take absolutley no risks whatsoever. These days are surely few and far between, but when there are no restrictions put on teams then the risk variant drops dramatically.

But in these pinoeering times there is also less risk in the spread based sports as well. Although the winning is sometime harder. Because not only does a side have to win, it has to win by such and such a degree.

But if you focus on certain paramters, and certain spread levels you can lower your risk even in these sports. You just need to keep your eyes open.

While there is no secret formula, there are rules that can be followed. the rules are pretty simpe, yet less than 5% belive in them , and even less than that will follow them.

At least I am glad that Wild Bill didn't use percentages to outline posible success rates. Because you can't. Even in the spread based sports if you vary bet sizes.

With the fringe bets like futures and series bets and props, they also have to have their own moneymanagement angle. Even for flat bettors, the bet sizes in these areas most likely will not be the same as a straight wager. I am also sure most bettors looking to win long term won't bet props at all, especially at some of the holds they are priced at.

But future bets and series bets are viable anevues now, especially with many places lowering the holds in thoe areas. Used to be futures were on a 30 cent line, and for that reason, and the fact that your money was in "escrow" for months, made many bettors stay away. But in these days those future bets, if made correctly originally can open up a whole new world of no risk betting. Including hedging, and out and out no risk middling.

On the flip side so does series betting. If you pay attention, you can get the odds for the first two games, and that gives you a huge advantage, since then you can calculate what odds you need in game three, and determine potential value from that. That is if you can coreeltate, and to tell you the truth a lot of these books can't, and that is why a lot of them don't offer series betting, and when they do it is pretty limited. Why? Because it is pretty easilly beatable by anyone with a brain.

Obviously all these examples assume risk. but minimizing this risk is the first step to winning, understanding that you aren't going to get rich is the second step. But the most important thing to remember is that long term isn't a season or two, especailly if you bet everyday, and don't plan on stopping. Long term means as long as you plan on doing it, the sooner you get into a steady routine the better. That is the irony, 95% of the people don't last long enough to find that routine.

Money Management is just one of the many factors needed for this business. But if I had to prioritize, WP or winning percentage is #1, by far. It is a lot easier to make money hitting 55% with average money management than 50% with perfect money management. This is one of the most bottom lines businesses that exists. The ultimate cash and carry. Let me put it to you this way, how many hours per day does a professional bettor spend handicapping, and how much time does he spend determining amount wagered, or money management? Do not get me wrong, I adhere to it, maybe went a bit overboard with 8% on Lithuania over USA, but there are two solid guidelines I use. 98% of my positions are 5% and below. When I am on, or streaking hot, many are in the 3-5% range. When I am cold, 3% to 1/2% is normal. Number two, remember the movie Marathon Man with Dustin Hoffman? Nothing better than finding a new tooth to drill because the old one is not sensitive enough anymore. That is how painful losing is. Bad Nazi guy keeps asking, "Is it safe?" Your bankroll is in serious jeopardy if you have the mindset of a 100 meter sprinter. Run the marathon, you may trip and fall on your face, I do and after 25+ years it still rattles me. But I get up, dust myself off, and start jogging. Nice and slow, to regain my winning pace and get my bearings. When I am winning, I get that loss back by picking up the pace. Simple, but very effective. But as stated previously, better have that capping down, and hit that winning%, or you will spend too much time on your face. Best Wishes...OF

OF

one of the few times I have to disagree with your base statement.

It isn't about winning, it is about NOT LOSING.

If I hit 50% and never lose, am I not further ahead than someone who hits 55%, or any percentage for that matter other than 100%?

Also percenatges are all relative, and the only way to determine their magnitude is to have a flat bet outline. Over say 5000 plays someone who bets flat and hits 53% will make more money that someone who hits 58% over 500 plays. Assuming they bet the same size bets.

On the flip side someone could hit 1 of 20 and make more than both of them, assuming that that sole winner was a huge huge bet.

So percentages are only as good as the vacuum in which they exist.

Again, this is all assuming a vig that is negative.

And why baseball is a whole different animal. And even in bases you have break even points. So a guy in bases could have a VERY modest win percentage and show vast profits. Also on the flip side there, someone could be hitting 60% or better and be losing money if he is betting all -150 faves every game.

To me, it is all about volume. The more bets made, the less the restriction of hitting a decent win percentage becomes. In spread based sports anyways. But the key in those sports is that you do have to pick more winners than losers.

But if a guy bet every game in the NFL season, every side and every total, that is 512 bets in the regular season. If he made flat bets and was laying -107 every bet he only needs to hit 52% to make some money. That is a record of 266-246, and at -107 at a nickle a game he would show a $1300 profit. Do that every single season and you will be light years ahead of others.


But one guy could bet $1500 in the first game, win, and be further ahead than the grinder afer just one game, but in the end who will be further ahead?