Why do you gamble? Is it just for entertainment? If that is the case and you follow the golden rule of wagering “only money that you can afford to lose that is not rent or expenses”, then the $400 you left behind last time at the casino was well spent for an evening of good times and memories. On the other hand, if you prefer to walk away with more cash in your pocket than when you walked in, or at least lose a slower rate when battling the house edges, then you need to know about bankroll management and how it can drastically help your game.
What is a Bankroll?
In simple terms, a bankroll is the total amount of money you plan to gamble with over a pre-established length of time. The funds can be devoted to a short period of time like an afternoon or evening session at the casino, or it can be spread out over the course of a vacation, a month, or even longer. Professional poker players who are just starting out will move to Las Vegas for a year or more, usually bringing a predetermined total with them in the hopes of becoming the next Phil Ivy.
Also, any serious sports gambler will tell you that 1) bankroll management is the key to their success, 2) never increase your stake based on “gut instinct”, and 3) always follow a strict regiment of “units”. That last tip sounds very complicated but managing units is simply the amount of a pro bettor’s smallest wager, which they will then double, triple, or quadruple depending on the value of the line that they’re getting down on. At Las Vegas sportsbooks you’ll often overhear comments like, “that was my 3 unit play today”, or something similar, meaning that it was their strongest possible bet of the day.
In any event, once the size of the total and time frame are established you are ready to manage your bankroll and treat it like the commodity that is. Executing this strategy is the same as managing any other financial investment – it requires a plan and the discipline to stick to that plan, regardless of what comes your way. Discipline is even more vital when you play at online casinos because games are dealt much faster than in real life, which can obviously lead to increased frustration if the losses begin to pile up.
Managing Your Money
What many people fail to understand is that a “plan” should not focus on results, it should focus on execution. It is not enough to start out thinking, “I will just keep going until I am ahead.” Sure that loosely qualifies as a plan but it is technically a recipe for disaster. There are swings that infiltrate every session and before you know it you can find yourself saying, “I’ll just bet enough on this next hand to get ahead for the night”.
Congratulations, you’ve now fallen into the their most insidious trap: chasing losses. When someone starts chasing losses with ever increasing bet sizes, the sad outcome is often depletion or complete eradication of your war chest.
Another faulty plan is, “I have a system,” because it’s one that is not grounded in logical thinking. Here’s the ugly truth: most “systems” encourage placing more chips down when you are winning and then less when you start to lose. The problem with looking for streaks is that while they certainly occur, they have no bearing on the outcome of the next result. Any wager is completely independent of anything that has happened before it, or said another way, “past performance is not indicative of future results”.
A truly sound plan is one that’s based on investment strategy, designed to maximize the Return on Investment (ROI), which is the reward for putting your cash in danger. The amount should always be a percentage of the total value of the bankroll, which is almost always between 1% and 3%. The “three-percenters” are those with a healthy appetite for risk, and 2% is the level where most people should be operating. It is interesting to note that professionals are most often exposing around 1% of their total reserves at any given time, so take that for what it’s worth.
Once you have these parameters finalized you can decide how rigid to maintain your style of play. Say you vow to wager 2% of your total every time, no matter what happens. If you start with $1,000 you will then be risking $20 on all of your action, so if your total rises to $1,200 you would then go up to $24, slowly increasing the size as you continued.
On the other hand, if your balance drops to $800 the sizes should drop to $16. With this system you are immediately adjusting to the hot and cold swings but you are doing it with a plan that ensures you won’t be slashing the amounts so much that when the inevitable hot run returns, you don’t have enough funds to crawl back into the black.
You can also use a flat betting strategy, which some maintain is a better way to go about things, and it’s a lot easier to execute than the aforementioned one. Say you decided to play one session with your $1,000 and only stake $20 each time. That would be 50 bets in total and if you played a game with a low House edge such as blackjack, you could expect to be down no more than 1 bet, or $20, after the 50 were made (on average). That is flat betting and it’s a strategy that will keep you at the tables for a long time since the probability of encountering a losing streak to wipe out the entire thing is extremely small.
Stay Disciplined with Your Bankroll
The above strategies are fine and dandy but they can seem awfully robotic in practice. Casinos are supposed to be fun, and discipline is never “fun”, not to mention that tight governing of a bankroll sounds a lot more like “work”. Which is absolutely true. It is difficult not to give into the temptation of trying to get back from a losing position with a large stake and it’s natural to want to go with your gut and make some crazy decisions to get the blood flowing.
The good news is that you don’t have to operate like a cyborg when managing your funds. Try to restrict those “I have a gut feeling” plays to a maximum of two units and be aware that when putting those chips down it’s knowingly going out of the norms of your otherwise intelligent strategy. As with anything in life, staying disciplined is extremely hard but the results are definitely worth it.