Author Topic: Money Management - philosophical discussion  (Read 2608 times)

Sputnik

  • Veteran Member
  • ****
  • Posts: 430
  • Thanked: 355 times
Money Management - philosophical discussion
« on: November 02, 2014, 07:13:12 PM »
- - - - - - - - - -

Math Professor Posted 03/20/06

- - - - - - - - - - 

Someone quoted John Patrick as saying I don't win much but I don't lose much either.
Now he was critical of this statement but there is a reason for it.

We who have lived with gambling all our lives understand the relationship between what we win and what we lose.

The Equation is simple enough .
Magnitude of profit is usually a function of magnitude of wagering.

One of the most common failures in gambling is progressive betting.
Several small wins are satisfying but  when the next small win does not happen and it turns into a progression which often recovers the day but sometimes results in ruination.

Giving up on a progression is hard because losing can mean the erosion of several days work.

The gambling flaw is inherent in this.
Christopher Pawlicki highlighted this fact.
The equation for winning small returns often calls for a progression .
The progression  ultimately however snatches away the prevous wins.

 For example 20 + 20 +20 +20 +20 has been achieved with 50 + 100 + 80 + 120 + 100  The final destructive act is a 100  that does not recover .
Even without a progression 100 absorbs the 5  sets of 20 + wins.

 I call this the 20/100 flaw.

20 is therefore 20% of 100.
A good result by any standards.

In order to control the erosion of previous wins the ratio of win to wager
needs to be as close to parity as possible.

 Say 80 + 80 +80 +80 + 80  with 100 + 100 + 100 + 100 + 100

If the 100 goes then we still have nearly 4 days work intact.
We can walk away and get them again another day.
Not many gamblers can achieve 80%.

This is the flaw.

There must be plenty of gamblers here who understand this but any replies should be better than 3 and out .
The math does not work.

- - - - - - - - - -

JOHN PATRICK Posted 03/20/06

- - - - - - - - - -

excellent point but go back to your opening paragraph and it is not clear ............You said      "he was critical of this statement ................"

I THINK you meant he was CRITIZIED  for this statement ...............

and you're right..................there were a couple of people who laughed at it as meaning I was content with small wins..........adn that ALL I wanted to do was lose a little each day.........

I am glad you picked up on what I really meant by saying that (naturally) I would like to win more, but I am more interested in holding losses down.........

and THAT point that you made about people who do NOT gamble every day , not realizing this is the total and complete point I try to embellish in their minds every day............

Someone else (I think it was Rick K., a few days ago), also touched on that fact .................how really hard it is to win..........and that you HAVE to somehow, someway, condition yourself to win small to ensure you don't lose big ..........to be able to stay alive in this journey called gambling..........

 You showed the SERIES you use ..........

 What is the LOSS LIMIT and WIN GOAL you advise...........(percentage wise)

- - - - - - - - - -

Math Professor Posted 03/20/06

- - - - - - - - - -

" What is the LOSS LIMIT and WIN GOAL you advise...........(percentage wise)"

Well that is my question to everyone ! 
What I am doing here is highlighting the problem we have with the percentage we go for.

The greater the difference between the amount we wager and the amount we accept ,as a win ,the more of a problem we have.
Lets say (as you have stated) that 5% is a professional aspiration. So we wager 100 for 5 .

That might seem reasonable but look at the result say over 5 days.
+ 5 +5 +5 +5 +5 = 25 . that's great we are winning 5 each day and we haven't lost. Now on day six we wager 100 and bust out !

We are now - 75 !   

We were going up and down with our 100.
But then we hit a bad spell and it eroded to 0.

The problem here is that we often have to go down to nearly zero
to make the continuous flow of 5's.

if our 5 day win was +60 +30 +20 + 120 +40  and this can be achieved with 100 and the 100 busts after 5 days we have .
won +170.  (270 - 100) .

 I often work on 100 or 70 from 200. That is I am prepared to lose 200 for these great returns and if I can manufacture 70 od chips every day with a wager of 200 chips then I am going to survive if the cumulative value exceeds 100 after bust out.

What I would like to know from yourself is what your wager is in relation
to what you accept for that session and how do you overcome this flaw.

This is where Pawlicki is making the case that the crash will come and steal away your cumulative gains. Its the problem that haunts all gamblers.
Gamblers ruin.



 
The following users thanked this post: kav

kav

  • www.Roulette30.com
  • Administrator
  • Hero Member
  • *****
  • Posts: 1600
  • Thanked: 651 times
  • Gender: Male
Re: Money Management - philosophical discussion
« Reply #1 on: November 04, 2014, 12:01:42 PM »
Hello Sputnik,

This is a very interesting discussion (probably from an old forum now lost). And it shows that you have done your homework and then some.

Since the post is general and philosophical in nature, I will give you a general answer.

I am of the opinion that one should be prepared to risk much in order to win little. And do this repeatedly.

To give an example: Someone who starts an attack with 300 units bankroll and ends the attack when in profit by a single unit. This guy, could do this again and again and again. It is most probable that he will not face a loss after 5 or 10 or 20 attacks.

Now a system comes to mind and the discussion will become less philosophical and more about a system, but I can't stand the temptation, so I will post it in the Roulette Systems board: Betting on 35 numbers
« Last Edit: May 01, 2016, 10:09:04 AM by kav »
 
The following users thanked this post: Reyth

Sputnik

  • Veteran Member
  • ****
  • Posts: 430
  • Thanked: 355 times
Re: Money Management - philosophical discussion
« Reply #2 on: November 04, 2014, 04:52:25 PM »
Thanks for you comments Kav ...
This is the best solution i find regarding this topic - Brett Mortons Money Management Method - from the book "Playing to win".

I find Brett Morton's "Fund Management" being very clever.
Does not just sett a limit for stop loss with win goal - it also show when to push for jackpot (push for more).
It also has built in safety net that catch before it is to late (avoid to lose it all back).

With all the necessary componets to define a present session.
When to start when to quit when to push or be catch by a safety net before its to late.

PROGRESS UP THE LADDER - PLAY AND PUSH OR FALL INTO SAFETY NETS



Now what amount make me happy - i would say for example 50 Euro, that would feel ok or great.
So that should be my Happy-Point,,, the first win-target.

Loss-Limit should not be more then my Happy-Point so now i have the Loss-Limit of 50 Euro.
That was easy to set up does guide lines based upon this money management strategy.

50 Loss-Limit
50 Happy-Point

This is how Brett Morton does it.
But nothing prevent us to set higher loss-limit and lower Happy-Point.

Now when or if i reach Happy-Point and want to continue to next win target Gold-Top - then i can't lose it all as there is a Bottom Line Target - "safety net" - that stops me from losing it all.
I set the BTL (bottom line target) 10 Euro as i want as much money i can get to continue for next win target and in the same time not go home with a empty wallet.

50 Loss-Limit
10 Bottom-Line-Target
50 Happy-Point

That would mean i would have 40 to fight with to reach my secound win-target (Gold-Top).
And if i would lose it all back, then i would stop with +10 as my safety net (Bottom-Line-Target).

50 Loss-Limit
10 Bottom-Line-Target
50 Happy-Point

Now i don't want to rush things so i aim for 70 as Gold-Top - the second win target.

50 Loss-Limit
10 Bottom-Line Target
50 Happy-Point
70 Gold-Top

Lets assume i win and don't stopp at Happy-Point or stopp at Gold-Top and continue for Jackpot.
Then i can only use the money between Happy-Point and Gold-Top to grind out profits (that would be 20).
Then Happy-Point is my secound safety net.

50 Loss-Limit
10 Bottom-Line-Target
50 Happy-Point
70 Gold-Top
?? Jackpot

You can adjust this strategy as you feel like.
Brett Morton say that you should have Loss-Limit around the same amount as Happy-Point.
But he also say he stop playing many times before he reach first win-target.
Bottom-Line-Target you can set to minimum so you have more money to fight whit as you play for next win target.

So when you walk into the casino or at home you make up your money management plan.

Loss-Limit
Bottom-Line-Target
Happy-Point
Gold-Top
Jackpot

Now you can look at the image again and you will understand.

Above is one example and i agree with you Kav that we should set low win-targets.
But they can not be lower then giving us a spreed to push for more.

« Last Edit: November 04, 2014, 04:54:36 PM by Sputnik »
 
The following users thanked this post: kav, Reyth

Sputnik

  • Veteran Member
  • ****
  • Posts: 430
  • Thanked: 355 times
Re: Money Management - philosophical discussion
« Reply #3 on: November 04, 2014, 05:03:56 PM »

There is one more solution that comes from John Patrick's Money Management.

You set loss-limit and win-goal.
He recommend around 10 to 20% (a very low win-target)

For example:

200 Session Money
100 Loss Limit
40   Win Target

Then if you reach 40 you split the win-target into half and put 20 + your session money into your pocket (now you can not give it all back)
Then you continue to ride your play with the 20 left to try to win more (push)

Sound good, but i have one issue with this.
40 is 20% of my session money, but is 40% of my loss-limit of 100 and the 100 is the money i actually play with.
So the money management method does not work, my opinion.
 

Reyth

  • Global Moderator
  • Hero Member
  • *****
  • Posts: 3161
  • Thanked: 898 times
Re: Money Management - philosophical discussion
« Reply #4 on: April 30, 2016, 08:44:24 PM »
I wonder if we use this system with a progression like Pales & Harry suggest, that it would really increase our win rate. :D

That is, when we hit our loss target, we quit betting.  Then we start betting again but with a larger unit size.

So, I think this model can be improved by adding a "third dimension" which is multiple sessions. ;) :D
 
The following users thanked this post: kav

kav

  • www.Roulette30.com
  • Administrator
  • Hero Member
  • *****
  • Posts: 1600
  • Thanked: 651 times
  • Gender: Male
Re: Money Management - philosophical discussion
« Reply #5 on: May 01, 2016, 10:10:01 AM »
This is a great thread. Thanks for bringing that up Reyth.
 

UK-21

  • New
  • **
  • Posts: 115
  • Thanked: 39 times
  • Gender: Male
Re: Money Management - philosophical discussion
« Reply #6 on: May 01, 2016, 10:32:50 AM »

There is one more solution that comes from John Patrick's Money Management.

You set loss-limit and win-goal.
He recommend around 10 to 20% (a very low win-target)

For example:

200 Session Money
100 Loss Limit
40   Win Target

Then if you reach 40 you split the win-target into half and put 20 + your session money into your pocket (now you can not give it all back)
Then you continue to ride your play with the 20 left to try to win more (push)

Sound good, but i have one issue with this.
40 is 20% of my session money, but is 40% of my loss-limit of 100 and the 100 is the money i actually play with.
So the money management method does not work, my opinion.

It just assumes that you're going to walk away if/when you lose half of your starting pot (of 200).

Take the percentages out of the consideration, and simply use units, and your dilemma disappears. ;)
« Last Edit: May 01, 2016, 10:39:18 AM by UK-21 »
 

Harryj

  • Veteran Member
  • ****
  • Posts: 353
  • Thanked: 156 times
  • Gender: Male
Re: Money Management - philosophical discussion
« Reply #7 on: May 01, 2016, 11:14:33 AM »
  The point that Pales and myself constantly make. Is that money management must be part of the progression AND the final arbiter of the amount the punter will lose in any session.  This is a basic factor in "risk management" !

    The differential between the cost of failure or success MUST be carefully calculated. BOTH for for each "bet" or "game" AND for the final result ! ie. Profit or loss targets must be considered for each play as well as the session.

     If these two "risk factors' are not carefully balanced. The daily results will not balance into a regular profit.  Too many players try to force a win with "weight of money". Rather than accepting small losses as a part of doing business. No business man expects every decision to be an absolute success. He understands that each new idea involves the risk of failure. Risk management involves handling these failures with the minimum of cost.

      Harry

 
The following users thanked this post: kav

Sheridan44

  • Mature Member
  • ***
  • Posts: 235
  • Thanked: 200 times
  • Gender: Male
Re: Money Management - philosophical discussion
« Reply #8 on: June 10, 2016, 11:59:17 AM »
I have imagined using a "sliding scale" with win goals and loss limits. If I was having an exceptional session, I wouldn't put a ceiling on the WG, as long as my LL (and wagering) adjusted proportionally with it. Say I have a 200 bank, 40 WG, 100 LL, and I'm up 80, I'd slide the LL up from -100 to -60. Of course this requires a constant auditing of funds, but I want know where I stand at all times and treat it like a business.
 
The following users thanked this post: Sputnik, december, Reyth