Many bettors refer to money management as the most important thing that separates the winners from the losers. A winning bettor can still go broke if they cannot practice effective money management.
Money management is just what it sounds like. It is the way a bettor manages the money available in his bankroll. Proper money management will help gamblers ride out the inevitable bad streaks.
These bad streaks, as well as winning streaks, are known as variance. Variance is basically the short-term aberrations in a set of results. For example, if someone flips a coin 10,000 times, they can pretty much guarantee it will be heads very close to 5,000 times.
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However, if the coin is only flipped ten times, then maybe it is heads only three times. This is variance. The shorter a run of results is, the more variance comes into play.
Variance is a good thing when a bettor is on a hot streak. It rapidly increases the bankroll. When a losing streak hits though, only those gamblers that practice proper money management can ride them out.
How Does Money Management Work?
Money management works by limiting the exposure of a player’s bankroll to the effects of variance. A player only puts a small percentage of their bankroll on a play, no matter how strong they think the play is.
This is why professional sports bettors laugh at all the suckers that pay for shills’ “expert” picks. Most of these shills give out star ratings with their picks, varying the bet size depending on how strong they think the play is. This is extremely foolish.
Anytime a player varies the amount of money played on different wagers, they increase the winning percentage they need to hit to be a winning player. Successful handicappers always play the same small percentage on every wager they make, no matter how strong they think it is.
What Percentage Is Best for Money Management?
This is a question that is endlessly debated among handicappers of all stripes. It is fairly universally agreed that the highest percentage of a bankroll that should be put on any one contest is 5%.
However, most successful handicappers play a smaller percentage than this. 3% is the most that the majority of professional gamblers place on their games, while tighter players will limit their exposure on any one bet to 2% or even 1% of their bankrolls.
This low percentage keeps players from losing all their bankrolls on one bad losing streak. Even if a player goes on a horrendous losing streak of ten wagers, if they are only betting 1% of their bankroll, then they will only lose 10%.
The Key to Successful Money Management
Discipline is the most important factor in successful money management. Pick one small percentage to play on all wagers, and stick with that number. Most amateur gamblers will get impatient and increase the betting percentage to try and chase their losses. Chasing is the way that amateurs go broke.