Advice > Money Management
Honey - The First and Last Word on Money Management
oft in theologic wars The disputants, I ween, Rail on in utter
ignorance Of what each other mean And prate about an elephant
Not one of them have seen!"
-The Blind Men and The Elephant, by John G. Saxe
Part One - The Best Things In Life Are Free
What is this
thing called money management? Wise "beards" in the casino mumble
thy name. Wiseacres crack sarcastic remarks after losers make vague
references. Wise experienced authors pay homage in their books,
lecturing; "All you need is... money management."
It's all so
confusing. Following long explanations of rules, strategies, expectations,
psychology, in every game involving chance and opportunity, it all
seems to come down to: money management. It is a rare tome indeed
that offers a practical, hands-on approach to demystify and simplify
this all-powerful creature.
of gambling contains published papers, books, and journals containing
the pros and cons of a garden variety of systems and methods, many
chock full of upper-level mathematical formulas meaningful only
to other abstract mathematicians and pure theorists. But to the
person interested in learning what will actually work, who is usually
unfamiliar with the algorithms and nomenclature of calculus and
abstract philosophy, there isn't a great deal out there.
as a counter reaction, there have been authors who simply believe
in debunking the need for any money management at all, claiming
professional gamblers ping-pong between fortune and famine on a
routine basis, and that is to be expected. But how does this help
the majority of people who are truly concerned with elevating their
knowledge, experience and playing skills? They don't possess either
the big bankrolls or the desire to become professionals. They simply
want to better their chances and thus their play, and increase their
bankrolls along the way.
practical plain English, it means survival skills; owning a combination
betting plan, loss or stop limit along with a profit limit (how
much is enough?), and a discipline to adhere to these self-imposed
limits. Through the years, strategies have come and gone. A few
And Your Bird Can Sing
Let's take a
look at a few of the more popular: You just might find yourself
in this grab bag.
and the Great Martingale Systems: These related methods of play
are among the world's oldest betting strategies. The concept is
that when you lose a bet, you double or increase the next bet until
you win all your original money back plus one unit profit. In the
Great Martingale, you double your previous losing bet and add a
unit each time. For example: Following a $5 loss, a $10 bet plus
an additional $5 is bet. If that loses, the bet is doubled and another
$5 is added to make $35. If you lose five bets in a row, and finally
win your sixth, you will have lost $285, won $315 for a total win
of $30. The fallacy in both Martingales lies in the fact that if
is there is a protracted losing streak, the table maximum (sometimes
as low as $200) will prevent you from getting your money back. You
won't be able to bet enough to recover your losses. You can title
this system: The Great Chase.
I used that funny word, unit. Kind of begs the question: What is
a "Unit," for crying out loud? In this sense, a unit refers to the
amount of money you are using as your basic minimum bet size, be
it two dollars, five dollars, ten dollars, one thousand dollars.
This infamous unit size must be dictated by your bankroll, or the
disposable money you can safely afford to lose, if the roof caves
in, all goes wrong, and if every bet you make over an extended period
of time goes down. You would have to be truly unfortunate for this
to happen, and a combination of sensible money management and common
sense should prevent this. You never know.
I believe the
classic advice goes like this: Never bet more than what you can
afford to lose. Scale your unit size accordingly. If your starting
bankroll is $500 your unit size should be $5 or 1/100 of the total.
You do the math for yourself. Generally you never want to risk more
than 2-5% of your bankroll on any one bet. You may win if you do,
but remember, this is gambling, not investment, blue-chip banking.
Anything can and often does go wrong. There's smart gambling, and
there's luck. It's a fool's choice to mistake the two.
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