Money Management...Any Ideas?
 

I've been a member for about a month now; and after many hours of trial and error, I feel like I'm on the right track.

I have a paceline selection method, and a contender selection method that are working very well. I also have the wagering decisions taken care of.

The final piece of the process is a betting plan. I did listen to the audio explaining one particular plan; but that was when the focus was more on selecting winners. The plan in the audio calls for betting 10% of your bankroll per race. I have to believe, in the "wagercapping" era, that is way too bold.

I was thinking of betting 5% of bankroll split 50/50 on 2 horses. At the end of the week, I will check my bankroll balance; and adjust my bet size according to that.

I'm sure there are better ways to handle the money management issue; and I am curious to find out what some of you are doing.

Hi Jeff,

I think you are on the right track, however if you are wagercapping, I would recommend no more than 2-3% of your bankroll in a race. As far as betting 50/50 or something else (like 60/40), I suggest looking over your records over time to see how your first and second choices perform. I think 50/50 is a good jumping off point if you are betting 2 horses to win. I think a weekly adjustment is good as well (to either increase/decrease amount bet or to pay yourself a dividend).

I'm sure some others will have some great advice on the subject. Best of luck in your wagercapping.

Jim

Jeff,

I echo Jim's advice about the 2% of bankroll range. With a modest $500 bankroll, 2% is $10 which you can easily split $5 / $5 or $6 / $4 for starters. This is presuming you are betting into Win pools, which I'd say is the right place to start to get a feel for your win rate, number of losses in a row and a typical ROI%. If you don't need the money from the bankroll, you can let it grow (presumably) until you discover a bet size comfort level. The reason for 2% is that for any given bet it feels like such a small amount (e.g. $10 out of $500) that if you play perfectly and still lose 4 in a row it's no big deal, because you will later win 4 in a row. 20 bets at $10 / bet is $200 or 40% of your bankroll in play, so you still are making use of your bankroll reasonably fully. The 'unused' portion always provides an emotional cushion.

While collecting real money info (and info on your emotional experience), you can track what your hit rate would be on horizontal wagers like DD, Pick 3s, perhaps Pick 4s (i.e. comprising serial Win bets), then Exacta pools requiring the Place horse, which should most often also be within your top 5 Contenders.

I'd recommend tracking several hundred real Win Bets in cycles of 20 bets until your worst cycle is breakeven or a slight loss but no 2 consecutive cycles averaged produce less than a small positive. If your experience at this point is happier than these worst cases, consider opening another bankroll for Exacta wagers if your paper tracking shows you know how to identify the Place horse. For now, I'd suggest holding back on Trifecta or Superfecta pools because this requires including dodgier horses, some of which may not be part of your normal Top 5 Contenders, thus require a bit more latitude in contender selection.

Actually, if you are serious about long-term success, consider starting today at visualizing yourself as a 'professional', one for whom it is normal to expect a long-term predictable hit rate and double-digit positive ROI, and to bet decent sums in a given wager (e.g. $100 bet size). Keep your actual bet size small (e.g. $10) until it feels so normal to win (per your 20 race cycle records) that upping the amount to $12 is unnoticeable (then $15, then $20, etc) In a year, the amount will be $100 because it was small, comfortable increments all along, AND about 2% of a growing bankroll.

If you find you have made an ROI of, say, 60% on a given day or cycle (it happens :)), consider looking at this as a surplus distribution which the short-term chaotic racing gods sometimes dispense. Mentally put this 'surplus' aside for those other days or cycles when the distribution according to your normal method is 0% or -20%. This absolutely happens and is normal. If over 200 races you determine that you make 20 cents on the dollar (just an example), those days when you make 50 cents provide you with 30 cents insurance against the next losing day of -10 cents on the dollar. Etc.

After a couple of hundred races and reviewing your strategy and emotional responses to winning and losing bets, I would recommend getting and studying a serious money management and bet sizing method described by Dave Schwartz in his Horse Market Investing materials. Links to this can be found in the Library here: http://paceandcap.com/forums/showthread.php?t=7104

Very best wishes!

Ted

Huey.....Huey....Huey...
 

Jeff,

A good starting point would be to study Huey Mahls findings and studies... absorb it, put into practice, emulate whatever you can from this genius when it comes to money management (FU issue3 is a good starting point....) a majority of the good money managers out there that have become succesfull have studied and applied some of Huey's concepts in one form or another.

It will help you find your comfort zone and advantage level over the public when it comes to betting the horses...

Be an ok handicapper, a so-so record keeper, but an above average money manager and I will be looking at a winner...:)


Long Live Huey!!!


Jess

Some comments
 

Hi Jeff,

I think all the advice in this thread is useful, and many players (including pros) have proceeded according to the methods described. Maybe worth mentioning that there are Kelly-derived betting techniques (if fact Seattle Snake mentions Huey Mahl, whose adaptation of Kelly is one of them) that outperform flat-betting by an order of magnitude, but this is still early days for you, and you have the right idea in trying to establish the range of your hit rate, before thinking about more complex betting techniques.

And BTW, I would respectfully disagree with Ted about using any of Dave Schwartz's money management material or software. Dave is a bright guy and a very knowledgeable handicapper, but also an ace salesman, who, at times, is willing to expound upon subjects he doesn't understand. Money management is one of them. As Dave would be the first to tell you, he has no training in higher mathematics (nor do I). However, I've had the benefit of working with and learning from math professors, finance professors, and people with backgrounds in financial engineering who describe these techniques as 'snake oil' and nonsense.

Cheers,

B Jennet

Plug in your win and loss series, the mutuels and a hypothetical bankroll and starting bet size into the HMI Excel sheet, compare alternate scenarios, compare to full or fractional Kelly (on the sheet itself) and see if it is worthwhile.

Admission is the price of the product. Either take someone else's word for it or you be the judge. You get to choose.

I like it.

Ted

At the risk of stating the obvious, you could check out the bookstore to see if anything tickles your fancy.

http://paceandcap.com/forums/showthread.php?t=7097

Math and handicapping
 

Hi Ted,

I don't want to get into this subject to heavily - I think most people here, and most handicappers, in general, are going to bet the way they want, and don't take money management too seriously. But for those who do, I'll elaborate a little on Dave's software, which is based on a modified progression.

There is no mathematical validity supporting the use of progressions in gambling, and they've been thoroughly debunked by every respected authority. Those interested can take check out Richard A. Epstein's recently revised edition of 'The Theory of Gambling and Statistical Logic' for more detail.

Cheers,

B. Jennet

FWIW: http://www.paceadvantage.com/forum/s...3&postcount=39

Not sure I look forward to Dick's prediction about hating betting after 19 years full-time...maybe I'll need a part-time job.

Ted

Correct me if I'm wrong, but I always understood that what is debunked is the notion of a progression method (e.g. 'martingale') turning a flat bet loss series into a positive return. Schwartz' HMI (including 'Opponent Method') makes no claim to do so, and even acknowledges that truth. His methods seek to improve on any flat-bet profit and smooth out the wild fluctuations which come with full Kelly proportion betting (and outperform various fractional Kellys).

The HMI spreadsheet template accepts a series of bets (which presumably show a flat bet profit) and proposes fluctuating bet sizes (i.e. modified following Wins and Losses) and compares the resulting bankroll growth to flat-bet, full and fractional Kelly. I confess I have not made use of it in the past 2 years, but my recollection is that HMI outperforms flat betting, and even Kelly varieties.

It sure helps to have a flat-bet profitable method (otherwise I presume HMI merely mitigates your losses), and also a fairly high hit rate (e.g. >= 50%)

I will plug in my last 50 bets and see what it says.

Ted

More on progressions
 

Hi Ted,

Any system that makes wagers dependent on previous outcomes, and especially immediately previous outcomes - that treats them as anything other than independent events, i.e. Bernouilli trials, is in effect, a type of progression, and thus false. What's especially harmful about them is that they play into gambler's deluded belief in streaks, e.g. the 'Hot Hand' fallacy - that one should win the next race because one has won the previous race, and the 'Gambler's Fallacy' - that one should lose the next race because one has won the previous race.

Therefore, I know Dave's betting system can't outperform Kelly. And BTW, if it could, there are many people on Wall Street and in the gambling world, who have already made a great deal of money using Kelly, and spend much of their time thinking about issues like this, who would love to have something that could outperform it.

Re the notion of 'testing' a betting system, I think it's worth a mention that, unlike most areas of handicapping, money management is strictly based on mathematics, the truths of which are frequently counterintuitive, so it may be advisable for those of us without higher level math skills to be cautious about the conclusions we draw. In the case of HMI, I'm sure you know that 1000 races would be closer to what would really constitute a valid sample for testing. Also, for any betting system, the hit-rate should be irrelevant - only your edge matters.

About the record-keeping part of the software, it all makes perfect sense to me, and I wouldn't disagree with anything Dick said. About hating the races, I take his point - most pro blackjack players acknowledge the tedium of the game, but they're in it for the freedom, the travel, and the need to work only about 500 hours per annum. But I get the sense that most poker players, sports bettors, and horseplayers really love what they do.

Cheers,

B Jennet