Bankroll Management When You’re ON FIRE!!!

 

I preach bankroll management all the time. In my opinion, bankroll management is more important than the bets you make. Proper bankroll management, as followers saw over the past month, can have you turning a profit when you have an otherwise losing record. Managing bankroll is something most bettors do not do properly. When bettors are losing, most get overly emotional and lose total control of their betting. We’ve all experienced being “on tilt”. When “on tilt” our patience and discipline are gone, we press and chase when we should be protecting our bankroll from the ice storm. Due to the extreme emotions that accompany losing, managing bankroll is very difficult for most bettors when they’re cold. The topic of bankroll management during a losing streak is something I will definitely cover at some point in the near term. However as hard as bankroll management is when you are losing, it is even harder when you are winning! You just don’t notice it as much. Why?? Because winning cures all that ails you! Winning can cover up mistakes and egregious errors in bankroll management. I mean, you are winning, who cares?? Does it really matter that you, someone who might normally be a $500/unit bettor, just put $2,000 on some crazy prop bet that has no chance?? Who cares? You are up $15K this week so it’s no big deal. Well, a few weeks from now you will wish you had that $2,000 back. You know what I am talking about all too well, don’t you?!? You won’t be hot forever so being ready and protected for when the inevitable turn comes is VITALLY important. Also, not blowing money on stupid bets because you are hot will make a big difference in your long term ROI. So, what’s the best way to handle bankroll when you’re ON FIRE?!?

There are many valid strategies out there but I will discuss the one that works best for me. First, I should probably define what I consider a “hot streak” in my betting. I don’t bet 6, 8, 10 plays a day. I bet 2 to 4 plays, no more than 1 unit each and then often include a parlay. So, bear that information in mind when I discuss the minimum units I need to achieve to consider myself “hot”. A hot streak for me is when I have a week where I pickup more than 10 units of profit or in a month when I pickup more than 20 units. When either of those MINIMUM situations occur I consider myself “hot”. Any profits beyond those base levels is just that much more heat from the fire. My bankroll management strategy when I’m hot is to continue betting my normal action BUT to now institute a stop-loss. Yes, just like you would when trading a financial instrument. How does a stop-loss work in sports betting?

Once I achieve the 10 unit level of profit in a given week (or 20 units of profit in a given month), I engage 20% and 40% stop losses. What that means is when the 10 units of profit I picked up reaches 8 units or less (20% below my profit of 10 units), I will lower my standard bet from 1 unit down to 0.5 units. If the losing continues and I find myself down to 6 units of profit (now 40% from the 10 units of profit I had), I drop my bets down to 0.25 units. If my profit drops to 5 units (50% of the profit I gained), it’s time for a break. While on break I do some paper betting so I can analyze the performance my action would have had. However with paper betting, like paper trading, I do not have any funds at risk. I use the paper betting to gauge when it is time to get back into the market. Doing it this way ensures I always keep secure half of my betting profits from a hot streak. If I get to 50% of the profit I had, it also forces me to take a break. The time allows my emotions to calm down and I can think clearly again about strategy and betting. Taking a breather from gambling can do wonders for your performance overall! However the average gambler doesn’t want to know a life where they don’t bet on sports every day. You are a book’s FAVORITE CUSTOMER! I posted the quote below to my Algorithms page because I think it is important to remember. The book will always be there to take our bet. We are not required to bet every day. It’s OK to take a break. It’s OK to take a few days off from betting. You’ll find you actually enjoy it! 

The book doesn’t require us to bet everyday and for the most part they do not have a minimum wager. I will gladly bet very lightly when I have an edge but the overall market is a concern. I will gladly pass, multiple days at a time if necessary, when I do not have an edge. I will also gladly press my action aggressively when the market is in my favor and I have the edge. All of which helps to maximize my ROI and ensure I do not bet just because I need action or worse, I am chasing. It’s tough to have discipline in a business that can elicit strong impulses and emotions but if you can control yourself, you can be a danger to the sportsbooks rather than a danger to your own finances!
– The Sharp Plays

What happens if I hit 10 units and keep winning?? I turn my stop-loss into a trailing stop-loss. What that means is as my profit goes up, my 20% and 40% stop losses follow it up. So, let’s say I hit 10 units of profit. Excellent! My stop losses are now activated and set for 8 units and 6 units respectively (with betting as laid out above). However the good news is I keep winning! The day after I achieved my minimum of 10 units of profit to activate my stop losses, I find myself now with 14 units of profit! Well, all that means is now my stop losses are no longer set to 8 units and 6 units but move up to 11.2 and 8.4 units. The same rules as before… if I hit the 20% stop loss, now 11.2 units (14 units – 2.8 units which is 20% of 14 = 11.2), I drop my bets to 0.5 units. If I hit the 40% stop loss, now 8.4 units (14 units – 5.6 units which is 40% of 14 = 8.4), I drop my bets to 0.25 units. If I hit my full exit point of 50%, in this case 7 units (50% of 14 units), then I take a break. As the profits move up, the trailing stop moves up with them. The trailing stop NEVER moves back down. A stop loss and a trailing stop loss will help to secure a large portion of your profits from every hot streak. It is also important NEVER to increase your betting. If you bet 1 unit on every bet, I don’t care if you win 50 units, keep betting 1 unit. When the hot streak is over you can re-assess your per unit bet amount and increase it. However you do not want to start betting the equivalent of 2, 3, 4 units on a single bet when you are hot. All that will do is ensure that when you start losing you are going to give back a lot very quickly!!

Now like any strategy, mine isn’t a perfect strategy but it works for me. However how many of you have had those 10 units of profit, lost those 10 units and then lost another 10 units trying to get back the money. Don’t be ashamed, we’ve ALL been there. Any real gambler who says they haven’t been is simply a liar. If you employ a stop-loss, as I layout above, AND you stick to it… you should never find yourself in the situation of losing all your profit and another 10 units on top. Worst case is if you do find yourself giving up the 10 units of profit and then some… it probably took you over a year to get there due to the low risk (0.25 units/bet). Compared that time period to in the past when you would have lost the 10 units and much more over a couple weeks… OR LESS!

Do everything you can to ensure you secure ever dollar possible when you are winning. Don’t make stupid high risk bets because you have the money and you are “feeling it”. Yes, betting wild is fun and exciting but you will be kicking your own ass in a few weeks when you realize all the money you lost foolishly. You are going to need those dollars safe in the bunker for when the inevitable cold streak arrives. Then when the ice storm is over, you use that money you kept secure to take advantage of your next hot streak!

Good luck in your action!
~ The Sharp Plays