Question about bankroll management
February 22nd, 2015 at 4:24:32 PM
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Say if I have $50k bankroll and I size my max bet to be 1/200 of that ($250), what should happen to my max bet if my bankroll fluctuates? Say if I drop $10k to $40k, should I resize my max bet to $200? or stay at $250 because the $10k drop is just the negative variance and was already accounted for in the original ROR calculation? Likewise, what if my bankroll increases to $60k? If my max bet should be consistently stay at $250, at what point should I adjust it according to my new bankroll?
February 22nd, 2015 at 4:57:05 PM
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Ideally, you should recalculate your bet whenever your bankroll changes.
February 22nd, 2015 at 10:36:11 PM
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Quote: Dalex64Ideally, you should recalculate your bet whenever your bankroll changes.
This is the part I don't get. According to various resources, the RoR of 200 max bets is about 0.3% in the long run. So in theory there's still a small chance you would go broke with that much bankroll. But if you always adjust your max bet according to your bankroll fluctuation, logically it seems like the risk of ruin is 0%, because there's no way you could lose 200 max bets in one hand, and the next hand you would just adjust your max bet depending on your bankroll fluctuation.
Also looking at the RoR equation (from Carlson's book Blackjack for Blood), it assumes a constant bankroll and consistent betting spread. So I'm wondering when exactly should your adjust your betting according to your bankroll? My guess would be that you should adjust whenever your actual earning meets your EV (to alleviate the "deceiving" effect and positive and negative variances) and that's the way I have been doing it, but I want to hear thoughts from people with more experience with this matter.
February 22nd, 2015 at 11:57:11 PM
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Optimal Kelly means you select the size of your bet based on your bankroll at the time when the bet is placed. This is generally impractical.
Some people evaluate their bankroll and set the bet sizes before every casino trip.
Some people evaluate their bankroll and set the bet sizes before every weekend of casino trips.
Some every few months, some every year.
The smaller your bankroll, the more often you need to reevaluate.
Some people evaluate their bankroll and set the bet sizes before every casino trip.
Some people evaluate their bankroll and set the bet sizes before every weekend of casino trips.
Some every few months, some every year.
The smaller your bankroll, the more often you need to reevaluate.
May the cards fall in your favor.
February 23rd, 2015 at 4:25:34 AM
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Two other complications are a minimum denomination, where in most cases you have to bet to the closest dollar, and minimum bet.
February 23rd, 2015 at 8:51:55 PM
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Ok, I'll try to clear up why you're having a misunderstanding rather than just stating what is correct.
Basically, what you're saying is pretty much right about the RoR figure of .3% being innacurate if you know you're going to resize. So say that the RoR is .3% at the beginning. Say you have lost 20% of your bankroll. You don't "wait for variance to even out" because the new RoR is higher if you keep the bet size the same. RoR was saying what the risk would be at the beginning if you don't resize (someone correct me if I'm wrong) and if you win then RoR will go down and if you lose it will go up.
If you keep the bet size the same you have 160 units. The RoR would change because you've had results, in this case bad.
But yes, by constantly recaculating your bet size, the RoR goes down to virtually 0% as long as you have an edge and the math you're using is accurate. And as others have pointed out, estimates are OK because being exact is impractical.
Basically, what you're saying is pretty much right about the RoR figure of .3% being innacurate if you know you're going to resize. So say that the RoR is .3% at the beginning. Say you have lost 20% of your bankroll. You don't "wait for variance to even out" because the new RoR is higher if you keep the bet size the same. RoR was saying what the risk would be at the beginning if you don't resize (someone correct me if I'm wrong) and if you win then RoR will go down and if you lose it will go up.
If you keep the bet size the same you have 160 units. The RoR would change because you've had results, in this case bad.
But yes, by constantly recaculating your bet size, the RoR goes down to virtually 0% as long as you have an edge and the math you're using is accurate. And as others have pointed out, estimates are OK because being exact is impractical.
February 24th, 2015 at 8:18:10 AM
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To play devils advocate though... From a math perspective, you shouldn't 'have' to re-size. For my disclaimer, I'll tell you that you should do it, but I'm just trying to point out math wise why you don't have to. When you set up your bankroll/unit/max bet, you have an RoR associated with your game plan. For X bankroll, with Y unit, and Z max bet, your RoR is .3% (assuming you know how to count, did all the math correctly, etc). This means if you could see the full timeline of your bankroll, all the ups and downs, variance, etc... That 99.7% of the time this game plan is executed all of the ups/downs/variance would be contained within your allotted bankroll.
The way I see it is a graph. On the X axis is 0 to 1 billion hands. The Y axis is your bankroll. The spikes it takes up and down over time will be inclusive to your Bankroll for 99.7% of all cases. If you're comfortable with that RoR, then you don't "have" to re-size, understanding that yes, the variance will in fact level out as you get closer to the long run.
All that being said, you should re-size... and re-sizing does basically eliminate RoR entirely. But I understand your question, and unfortunately there's no easy answer for it. Do you have to re-size your bankroll? No. Should you? Yes.
The way I see it is a graph. On the X axis is 0 to 1 billion hands. The Y axis is your bankroll. The spikes it takes up and down over time will be inclusive to your Bankroll for 99.7% of all cases. If you're comfortable with that RoR, then you don't "have" to re-size, understanding that yes, the variance will in fact level out as you get closer to the long run.
All that being said, you should re-size... and re-sizing does basically eliminate RoR entirely. But I understand your question, and unfortunately there's no easy answer for it. Do you have to re-size your bankroll? No. Should you? Yes.
Playing it correctly means you've already won.
