Advice > Money Management
Honey - The First and Last Word on Money Management
Part Two - Too Many Fish in the Sea
after Jean le Rond D'Alembert, this system postulates that
in any trial or series of events, even though one outcome
may occur more often than another, it would be inevitable
in the long haul, for the other side to catch up, forming
the law of equilibrium.The D'Alembert system is based on
the concept that any two choices must, sooner or later,
equal each other in outcomes. If heads comes up repeatedly,
then tails is "due" to make up the difference and soon.
system, following every losing bet, you add an additional
unit to your bet at the next opportunity. After every winning
bet, one unit is removed. The inherent problem is that the
adherents are taking a short term view of the laws of probability.
Those laws are taking a long term view. The small sample
under consideration by the short-sighted player looking
to recoup quickly doesn't contain enough data to make a
difference. There are variations on this concept, like the
Flexible-D'Alembert, and the Contra-D'Alembert systems,
with many of the same problems.
words concerning "due." It is a very popular notion that
is difficult to dispel. There's morning dew, dog doo, honeydew,
and money due. No team is ever due. Repeat these two words
after me: Anthony Young. As an exciting rookie prospect
for the NY Mets, Young drew a lot of attention. He lost
his first few games, and the words were circulating: He's
due. Solid citizens were betting hard-earned cash on this
thought. He lost a few more games. Hard luck pitcher. When
the losing streak reached 12, there were folks who counted
the days until Young's next start. "He's due!" Bottom line
here was at 23 losses, the Mets traded this now-suffering
head case to, who else? The Chicago Cubs. He proceeded to
lose his first five starts as a Cub. 28 straight loses,
and if you had bet him, you'd be a good candidate for life
beneath the freeway.
there's Oscar's Grind, first noted by casino expert Allan
Wilson. Betting one unit, if it is lost, make the same size
bet. If the second bet wins, the next bet is increased by
one unit unless you win a bet that produces a profit in
excess of one unit. If this happens, reduce the bet so if
you win, you are ahead exactly one unit. Each time this
cycle occurs, you begin a new one. In effect, the outcome
is a slow-death version of the Martingale. House-edge being
what it is, sooner or later, you will encounter a streak
of bad luck, find yourself at the table limit, unable to
make the bet to recoup. No wonder Oscar's grouchy.
there's the Reverse-Martingale. This system dictates that
you leave your winnings in play each time you win until
you hit a predetermined number of wins. Anytime you lose
before you hit that number, you have lost only one unit.
This system is based on minimal losses with the potential
of large wins. Of course, the downside is that if there
is choppy going and you don't establish a stop-win point,
you'll never see daylight.
Contra-d'Alembert starts with a one-unit bet. If this wins,
the bet is increased by one unit. Any loss is followed by
decreasing the bet size one unit or repeated bets at the
table minimum. This system is like the previous: small losses,
occasional big wins, but the same inherent dangers as above.
Reber, writing in his book, The New Gambler's Bible cites
an analysis of these systems run on a computer against a
simple pass line bet for craps. The computer was programmed
to shoot craps by Ken Elliott, who has produced the finest
craps analyzer we know, entitled Craps Sim II. Using a $5
bet, each system was given 100 rolls of the dice, which
corresponds to the typical crap shooter's session.
surprises here, " Reber writes. "All systems cost the player
significant amounts over the straight pass line bet." The
simple pass line bet lost $1.52. Oscar's grind lost $2.60.
The d'Alembert lost $3.57. The Contra-d'Alembert lost $3.91.
The Reverse-Martingale lost $4.86. The Martingale lost $5.26.
is money management?
Beasley, in his book, The Mathematics of Games, writes that,
"Mathematicians know that there is no such thing as the
popular 'law of averages'. Events determined by chance do
not remember previous results so as to even themselves out."
Cards, dice, roulette balls and wheels have no collective
memory. Remember Anthony Young and his dues. For anyone
looking to take an chance using any of these systems betting
against the previous outcome (red/black; pass/don't pass,
banker/player, win/loss, etc.) you might want to rethink
are theorists and gamblers who espouse the view that any
form of money management is akin to restraint of trade barriers,
a personal embargo, or worse, a loss of personal freedom
that challenges the Bill of Rights. They range from the
starry-eyed player with wild dreams of the big score to
even-tempered professionals who routinely plow through fields
of money in huge swings.
latter group may possess the character and skill to withstand
the gnarly twists and turns of this life (in fact many pass
on with little profit to show). Their style precludes any
attention to money management. They will gamble until they
win OR have nothing left. Patience and discipline are not
the operative concepts, and these words will have no meaning
in their lives.
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