Ask the Capper: Managing My Bankroll
by Robert Ferringo - 02/27/2008
Marc G. from Texas asks: "I have questions on how to manage my bankroll. What adjustments to my Units should I make when I run into a down streak? How should I adjust my Units once I start winning again? What do I do if my total bankroll reaches a critical point?"
Great questions, and ones we hear often hear at Doc's Sports.
The easy answer is to say to scale back your bet sizes when you go into a funk. But this is a double-edged sword because if you start betting less when you're losing then when you turn it around and start winning you won't be earning as much of a return as you're laying out when you lose. On the other hand, if you keep betting into your losing streak you're going to go broke pretty quickly.
I think that Doc's Unit System is a simple and effective way to bet no matter whether you are hot or cold. What I suggest is to make each Unit represent approximately 1.0 percent of your total bankroll. Therefore, an average play constitutes between 3.0 and 4.0 percent of you total stack. Stick firmly to those wager sizes until your bankroll either increases or decreases by 20 percent. After that, you want to recalculate what each Unit represents.
It's probably best if I give you an example.
Say Jason starts with $1,000 in his bank account. For Jason, a Unit would be equal to 1.0 percent of his stack, or $10. Most of his plays are 3- or 4-Unit picks so he's wagering around $30 or $40 per game. Jason gets off to a great start and at the end of a week he is up to $1,200 in his account.
Because his account has grown 20 percent it's time for him to readjust what a Unit is. He still holds firmly to the 1.0 percent, but because he has more money now that means a Unit is now worth $12 and his average play is now between $36 (3 Units) and $48 (4 Units). After a couple good weeks his bankroll has grown to $1,800 and things are going great. He's playing $18 per Unit and he can't miss.
But then Jason hits a cold stretch. He has a terrible week and all of a sudden his bank account is back down to $1,200. Well, he's not going to keep betting $18-per-Unit in this case because after losing $600 he has to change the value of his plays. He scales back down to $12 per Unit because that's what 1.0 percent is.
Unfortunately for Jason, his losing streak continues. But his is smart about things. He doesn't chase and he doesn't increase his bet size. Instead, he starts limiting his plays to just his top one or two picks each night. Also, he lowers his bet size back down to $10 per Unit. Granted, that's half of what he was playing just a month ago, but he also has nearly half as much as he did then. Jason is able to weather the storm and eventually gets his bankroll back up to around $1,500 after a couple solid months.
In this example you can see how sticking to the 1-Percent Rule and sticking to Doc's Unit System can self-regulate your bankroll through good times and bad. This way you are automatically playing for higher amounts when you are winning and then playing for lower amounts when you're losing. But instead of you determining if you are "hot" or "cold" you let your bankroll determine how much you should be wagering and you roll with the punches.
If you feel more strongly about one game or the other you always have the flexibility to increase the Unit rating. And if you are feeling "cold" it's probably best not to play the games that you don't feel as strongly about. But that's another issue. In terms of money management, you should hold firmly to the basics. And by keeping a standard and adjusting to your roll you will stay in the game much longer and have a better opportunity for success.
The main ways to make it through a cold spell are to not panic, to not chase, and to not start betting more money or more games out of anger or frustration. You have to keep a level head and stick to some money management basics. It sounds simple, but there are millions of tales of guys who couldn't follow this these rules and they ended up going bust.
I'm not sure what a "critical point" is with a bankroll. If you are asking if there's a point where you should try to "double down" or "go for broke" then I say no, there isn't. Let's say our friend Jason's bankroll had been reduced to around $150 - and if he followed our guidelines that would take a heck of a long time to do - and maybe he doesn't find it practical or fun to play for $5 per game. Well, if that's the case, then he has to decide whether it's time to take what he has left and walk away or to reload the account and start from scratch.