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Track Tracts
Money Management:
Winning the Handicapping Game with Sessions
by Gordon Pine
For most horseplayers,
their "bankroll" is whatever they have in their pocket. You know
you're talking to serious handicappers if they've taken a certain
sum and set it aside as their horse wagering bankroll.
I've always bet with a separate wagering bankroll. For years, I've
played a percentage of my bankroll based on my historical edge,
usually calculated (by quickly looking at my records) before each
race day.
Often, when I'm trying out or tweaking a new method, I will use my
mini-bankroll method, which basically involves starting with a
minuscule amount but applying a Full-Kelly percentage. It combines
the advantage of an insignificant worse-case scenario (losing a $40
bankroll) with a great best-case scenario (a positive-expectation
strategy balloons a bankroll really quickly because the bet size is
so bold, yet still within mathematical reason).
"Most games have
a defined beginning and end where you either win or lose. However,
the horse race wagerer's game either never ends or ends badly, with
the destruction of his bankroll."
But
recently I've been tweaking my money-management strategies a bit.
This is partly due to talking to other players, and partly due to a
couple of things I've been reading. In his interesting booklet
Horse Market Investing, David Schwartz introduced me to the
"session concept." He points out that most games have a defined
beginning and end where you either win or lose. However, the horse
race wagerer's game either never ends or ends badly, with the
destruction of his bankroll. Without a defined end to the game, the
best a handicapper can do is maintain and build his bankroll,
sometimes drawing out money for personal use. But if there's no end
to the game, how can a player really win?
Schwartz' sessions are defined by a goal, such as doubling or
tripling your bankroll. If you reach that goal, you've won the
session, and you reward yourself by withdrawing a portion of the
profits and starting a new session. Aside from the practicality of
this approach � it sets up a method for paying yourself � it's
psychologically sound. Handicapping is tough on the psyche for lots
of reasons. For instance, you almost always lose more events (races)
than you win, and that takes its toll. And handicappers aren't
exactly placed on a social pedestal as devotees of an honored
pastime, despite the fact that chess is easy in comparison. It's a
good ego-boost to set a financial goal at the track and then meet
it. (Note:
Horse Market Investing is about a lot more than
the session concept. You can contact David Schwartz at
www.horsestreet.com
regarding his work.)
Steve Fierro tweaks the session concept in
The Four Quarters of Horse Investing by using a time period
rather than bankroll growth to define his session. I like this idea,
because I like the concept of regular paydays if you've earned them.
As Fierro says, "I have chosen to use calendar months as my
sessions. My game ends every month. A losing month is simple, no
payday... Following a losing month I must get back to the original
bankroll amount and surpass it by a required dollar amount. I then
pay myself. My paycheck for the month is the amount I have won above
the original bankroll for that month... You got it, just like any
normal businessman would do."
As an inveterate tweaker myself, here is what I plan to do. Like
Steve, after each winning month, I will take a payday. Since I'd
like to build my bankroll, I'll take half of any profits above the
original bankroll, after making up for any losses that might have
occurred in the previous months. Then I'll add this tweak, suggested
by handicapper Jim Oddo. If my bankroll doubles during a month,
another rule goes into effect: If I then lose 30% of my profits from
my doubled bankroll, I will take all my profits for the month so far
and restart at my original bankroll size and bet size. I know from
personal experience that this would have mitigated my historical
tendency to quickly run up a bankroll and then give a lot of it
back.
If your bankroll is whatever's in your wallet and your financial
plan consists of trying not to hit the ATM more than once per trip
to the track, then you might consider mapping out a money-management
method for yourself. Consider adding session-concept guidelines that
give you the opportunity to periodically take profits and win the
game you're playing.
NC
Copyright �2003 by
NetCapper Inc. All rights reserved.
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