[Ted Craven]

The Beginner's Column continued - Part 2 of 3

First and foremost, you must absolutely, positively WRITE DOWN EVERY BET YOU MAKE!!! Every damn bet, even the action bets for $2, or the Pick-6 ticket you split with two buddies when there is a big carryover. If you are not willing to do this, all attempts at money management or professional level play are doomed to failure before you even begin, only if you are willing to make this commitment, should you attempt to play the races on anything but a recreational level.

STEP 1 - Divide your bank into 5 segments of $200 each. Don't worry if you don't have $1,000 to start with, $800 can be pretend. Or in your savings account. Your spouse never need know that it just became a part of your bankroll. From now on, all profits and losses will be expressed in terms of segments of bank. (A quick tip of the hat to Dave Schwartz of Thorobrain for this idea). (Ed. Note: Known in modern times as 'Horse Market Investing, HMI - by Dave Schwartz'. 'Segments of bank' = 'session play')

STEP 2 - Start by betting 5% of bank (5% of $200 is 10 bucks a race) to win only. Split each bet by either dutching to the true odds, or use a 60-40 split. 60-40 seems to work well for most people, and it is a lot less work.

You have no choices to make. Every bet is exactly 5% of bank, split between two horses to and bet win. You may not make any other bets, nor can you bet less. If you are uncomfortable with the bet, you are allowed to pass the race, but not vary the bet in any fashion. Keep it up until you have doubled your bank.

STEP 3 - Take a $100 profit and put it in the bank. You now have $900 in there. Start betting 7.5% of your by now $300 bankroll (that's $22.50 a race. Round down to $22). Continue betting to win only, splitting your bet 60-40. Play at this level until you again double your bank.

STEP 4 - Put another $200 in the old bank and start playing at 10% of your now $400 bankroll. At this point, I used to say: Continue This Forever. Instead, let's look at using those segments.

STEP 5 - Whenever you attain the goal you set for yourself, or you start to sweat when you make your bets, stop and take stock. I use the goal of tripling my in-action bankroll. After I triple a segment of my betting bankroll, I then (in theory only) put it all into the bank and draw out 1/5th, using it as my new betting bankroll. I then play until I triple this.

Example: I start with $1,000. $800 stays in the bank, and I put $200 in action. When I run that $200 up to $600 (no matter how long it takes - you can do it in 3 races or 300), I deposit it into the bank, giving me a total of $1400. My new bankroll is $280, and I will play until it reaches $840. Now I have a grand total of $1,940 and I start a new bankroll of $392.

The reason for all this nonsense with segments is that once in a while, you may lose your entire in-action bankroll. So you say shucks, draw out a second segment and continue as before. Most handicappers who show a at least a 20% R.0.I. will win at least 80% of their segments. This allows for rapid expansion of the bank, yet still provides a much needed psychological cushion. I truly believe that it is almost impossible to go broke and lose all 5 segments juggling your funds in this manner, always assuming you continue to show a flat bet profit. If you are not showing a profit, no money management scheme on earth can save you.

STEP 6 - You reach the point where even the starting bet for a segment is too large for comfort, or is making your track's toteboard go tilt. Drop your bet down to the maximum you feel you can handle, and keep it there. In other words, flat bet. Once you have reached the top, be it self imposed or pari-mutuely imposed, your best strategy is to bet the most money you can in every race you play, so long as you continue to show a positive return.

There are several safeguards built into this plan. If you are showing even a minimal profit, it is almost impossible to go broke betting 5% split between two horses. It may take months to double that first bankroll, but what's the hurry? You're winning; many of you for the first time. Once we start betting 10%, unless we are very proficient indeed, there is the real possibility that we might lose an entire in-action bankroll once a year or so. The segments take care of that, and also stop the growth of the bank from getting out of hand should you get hot.

One of the, real problems handicappers encounter is success. Your bank can grow out of your comfort zone with amazing rapidity when K-Gen or ENERGY! start clicking for you. I recently took a $1,000 bank to over $11,000 in less than 9 days. I can tell you right now that at the end, I was in no way prepared to bet $1,100 a race, so I put a cap on my betting and flat bet no more than $500 a race. I knew I had reached the top when I found I couldn't sit down after making a bet.

What about exactas, or place and show betting? Well, you can still do them. I make almost half my overall profits in the place and show pools. What you do is setup separate banks for each different type of bet. Want to run some three race piggyback show parlays for a while? Fine, do it. Only use a separate bank, preferably with segments (especially if you parlay, you need segments).

Same thing with exotics. Love the daily double? Fine, start a daily double bank out of profits. If you lose all five segments, I trust you have the intelligence to stop making those bets for a year of so. Want exacta action? Sure thing. Just make the exactas pay for themselves. Save up and start an exacta bank. Again, segments are a really good idea with exactas, which tend to be up and down a bunch.

continued next post...

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