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So, after hopefully gaining an understanding of the most difficult part of becoming a successful sports investor, we can move on to part 2.
I know that most people think that if you can handle losing, then the only other thing to master is winning? EHHHHH! (Buzzer Sound) No, the 1A to the #1 factor of handing losses is MONEY MANAGEMENT!
Money management can make a very average handicapper a force to be reckoned with. Again, I go back to Billy Walters or R.A.S. Both will have win% in the upper 50's%. To some people that doesn't seem so well because there are a lot of touts out there claiming to win 80% of their games. Any time you see that just call bullshit and move on. Anyway, what Billy Walters does probably better than anyone is manage his bankroll. He may hit 57% overall, but when he steps up to a larger bet size say 2 units or 5 units...he hits say 63% of those. So his highest winning % is on his BIGGEST PLAYS. THAT'S why books are scared.
For most bettors, it is literally a how to guide on how NOT TO manage your money. You lose a few bets and then CHASE. Blow out the bankroll. You spend 6 months discovering and perfecting the latest underdog method and the minute you start playing it you lose a few games and panic....then double up on the favorite.....then watch the underdog you should have played win....then finally, blow out the bankroll. Or maybe you follow a chase system online that has lost for the first time all year and you think.."now is the time to strike...it has NEVER lost 2 in a row" Of course, if you've ever listened to a single word I've said you know that as soon as those words leave your lips....it's over. For the first time ever the unbeatable chase loses 2 in a row....you blow out your bankroll.
In the casino business and sportsbook, I've seen just about everything. I saw a guy sit down at my table with $500 on night and leave with $100,000 playing $10 blackjack to start. I've also seen a person signing a quit claim deed to his house because he was down $230,000 in the high limit blackjack pit and had no way to pay his marker. Let me tell you so you can be crystal clear. For every 1 GUY OR GIRL WHO TOOK A SMALL AMOUNT OF MONEY AND HIT IT BIG, I HAVE 50 STORIES OF TRAGEDY. Guys who lost their rent, car payments, mortgage payments, and just about anything else of value.
The odds are not in your favor, but you CAN WIN. YES, YOU CAN WIN. It takes amazing discipline and a consistent plan of action. Now that you understand you cant freak out when you lose, step 2 is knowing how to manage your money. Money Management is the ONLY way to win long term.
Did you ever notice how it takes weeks to build your bankroll, but just 1 bad run can wipe out months of winning? That's money management.
For my clients, I have 2 purposes. #1. Make my clients as much money as possible. #2. Fiercely protect my clients money when we are in a bad streak. Bad streaks happen. They happen to me and they'll happen to you. Sometimes it means pulling all your bets DOWN to half of your minimum and ride it out. I'll give you an example. This MLB season, my clients were up 70% in late June so we were on pace to nearly double our bankroll by the All Star break. Guess what, we hit a tough patch and lost back about 22% over a 2 week period. I had a few options, I could panic and raise the bet thinking we are "DUE" to win. I didn't do that. I looked at the situation and said, we're still up 50% (find the positive) and I felt the best thing I could do for my clients is to keep that 50%, drop the bet size back to the beginning to ensure we would keep those profits and move forward. We have.
So, how should you manage your money? There are a lot of ways. I'll cover a few and offer my help.
1. Chasing: Not my favorite because I've seen it ruin more people than help and i don't know any REAL pro's who do. However, I know a lot of people who read this are chasers so here's what I'd recommend. If you're playing a 4 game chase, cut it down to 2 games. Throw out game 1 and play games 2 and 3. Where chasers get so F'd up is they are obsessed with their RECORDS. "my chase is 52-0 on a four game chase" Who gives a shit because when you go 52-1, you'll lose all your winnings from the first 52 wins. KILL YOUR EGO, STOP WITH THE MEANINGLESS RECORD SHIT AND THINK ABOUT MAKING MONEY. So what if you play games 2 and 3 and it turns out you're 22-2. Guess what, a loss on a two game chase won't destroy your bankroll like a 4 game loss. You give me any chase system and I can show you a way to reduce it to no more than 2 games and how to play it safely.
Records can be so over rated. Let me show you, if I told you I had a guy who's record is 26-20 and a guy who's 21-22 which would you choose? 95% would just jump to the guy who's 26-20 because it's a winning record. Can I tell you that records, for the most part don't mean shit? What matters, your record or how much money you have in your account.
In the above example, the last 30 days for PSIC sports we are 26-20 in MLB +3.5 units....in Soccer we are 21-22 (49%) but up just about 8 units. So what would you rather have? I know, you'd rather have someone who was 27-10 and up 100 units....but let's be real. speaking of records, in horse racing, we are 79-200 in the last 90 days. If I told that record to the average sports bettor they'd laugh in my face and ask me how I live with myself...oh but I forgot to mention that the 22% win % also comes with +300 units.....so what's more important, your record or how much money you make. If your honest answer is record, sports investing is going to be tough for you.
You don't often hear a stock broker talk about his record do you? The only thing a broker talks about is HOW MUCH MONEY he's made his clients. THAT'S HOW YOU HAVE TO LOOK AT SPORTS. The games are only a vehicle.
Back on track...
2. Kelly Criterion: A solid method of determining how much money you should wager per bet. To use this, it requires a decent amount of data and some solid discipline. For many people, however, it does lead to bet sizes that can get pretty substantial.
The Labourchere: Almost 7 years ago now, I went on to a covers forum in an effort to help sports bettors. I had been using the labourchere for my clients but I shared it with the world and now, it has changed a lot of peoples idea about how they can manage their money. Then covers quietly banned me for being "competition" to the "Covers Experts" Even so, Many services have also adopted labourchere as it's way to manage money. I still use it every day for my clients, even though in my daily email I convert that labourchere number to a % of bankroll to wager on each play.
PLEASE READ OVER AND OVER UNTIL IT SINKS IN: NO MATTER WHAT MONEY MANAGEMENT YOU USE, ITS ALL JUST A GUIDELINE!
The labourchere is far from perfect and I've seen many people destroy their bankroll using it because of 1 reason. Everyone is looking for a mechanical way to beat sports and IT DOESN'T EXIST. IT DOESN'T EXIST. IT DOESN'T EXIST! Below is an explanation of how the labourchere works. After that I have some thoughts to help you.
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THE LABOURCHERE
The principle is used by Roulette players as it only requires 39% winning to break even and since we hit WAY better than that it is a natural fit with our program. Each day I will provide you with exactly how many units to play and I'll calculate the Labourchere for you, however it's a good idea to have a basic understanding of how it works.
1. We start with a four number line. Lets say you're a $50 player. The line would be
25-25-25-25
Your wager is always the sum of the two outside numbers. (highlighted) As you see above your base bet would be $50. Now lets suppose that we lose our first wager. A losing wager is placed at the end of the line and our new line would be
25-25-25-25-50
Therefore your next wager would be $75 (25+50) as highligted above. Let's suppose that we win our next wager. You cross out those two numbers and create your new line:
X-25-25-25-X
Thus your next wager would be back down to $50. Understand? Your goal is no longer so much to win every game or to focus on the daily ups and downs but our goal it to clear lines. Each 2 times we clear a line we raise our bet which means growing bankrolls and faster profits. After we clear the line above 2 times our next line would be: 30-30-30-30 with a base bet of $60.
The best part about the Labourchere is that you get back all of your losses without doubling and quadroupling your bets. It is a safe and efficent way to maximize our bankrolls while minimizing risk. Please be sure to start small. On the daily email at the start of each season I'll be using a line with a $50 base bet. If your bankroll is small and you are a 20 or 25 player just cut the bet amount listed in the email by half. On the other end....if you have a larger bankroll and are a $100 player or more just take the amount listed in the email and multiply it accordingly.
***OPTIONAL USES***
I've found an equally efficient way to play with the Labourchere. For both MLB and NBA work each game on its
own line:
Game 1 line: 25-25-25-25
Game 2 line: 25-25-25-25
By doing this, you prevent one bad team or back to back bad teams from getting you in an uncomfortable position.
So if you lose game 1 your new line would be: 25-25-25-25-50 but your next wager would only be $50 as
you would move to your game 2 line.
If you have more than one game 1 going at the same time...you play them all at the current wager and adjust your line.
Lets say you have 2 new plays today and your current game 1 line is: 25-25-25-25-50. Play them both for $75 and then adjust your line after the games are completed. So lets say one wins and one loses. Your winner would make the line:
X -25-25-25-X
Then you would add your 75 loser to the end of the line so at the end of the day your game 1 line would be
X-25-25-25-75 or just 25-25-25-75.
Understand?
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The labourchere represents a way for you to recover your losses more safely than chasing, and at the same time you can more safely raise your bet when winning because you don't have to worry about one chase loss wiping you out. However, it's still fairly aggressive and you have to know when to stop adding numbers to the line, and start over to protect your bankroll.
Remember my example from earlier. When my clients and I were enduring a rough spot in July, my labourchere was calling for bets the size of 5% of the bankroll or even 6%. However, it was at a point where I just decide to keep my profits, throw out the line and start back over at 1%. You can't let the METHOD take you down like the titanic. If you're looking at sports investing from a long term investment strategy, then you must know when to take whatever money management method you're using and start over at square 1.
THAT MY FRIENDS IS THE SECOND STEP IN BECOMING A WINNER.
You've had a great 2 weeks and you're up 20 units. The next week starts and you lose your first 2 bets, then using the labourchere you lose 2 more. You've given back 10 units of your 20...what do you do? 95% of you will follow the labourchere or chase or whatever you're doing until you bust your bankroll. BE BETTER THAN THAT! HAVE THE GUTS TO SAY:
I'M STILL UP 10 UNITS OVER THE LAST 2 WEEKS, AND LOWER YOUR BET...NOT RAISE BUT LOWER YOUR BET TO PROTECT YOUR PROFITS.
I know for many of you that seems ultra conservative, but when you can lower your bet in the face of adversity, you'll finally start to understand how great it feels to come OUT OF a losing streak and still be money ahead.
That's when you'll really understand the power of money management! Professionals always know when to pull their bet back or just don't play for a few days.
To your success,
Tod Wilkinson
No comp play today.
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