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Gambling Bankroll Management – Dealing With the God of Volatility

Every gambler knows in his heart that his world is ruled by the iron gods of probability. That in the infinite spins of the wheel and rolls of the dice everything will be leveled equal. And if you were on the wrong side of the edge, then your doom is as inevitable as fate. Yet, there is a little demi-god in our wild pantheon that most gamblers ignore, that is, standard deviation. This god goes by other names, swing, volatility but perhaps is better known by his disguise, luck. This is the God that brings the chaos to the order that probability is trying to lay down. When he is kind, he is the one who gives the gambler that hot rush of cards at the poker table or the hands to make the dice burn, for that one night where the casino trembles under the weight of being the loser. But more often, he is a jealous god who tramples on those mere mortals whose ambition is too fast and strong. 918kiss

If you fear this god, you should know that his wrath can be avoided. 😛 Right enough of mad priest speak. Translated, gambling is a volatile activity and your gambling strategy needs to be able accommodate for swings in your bankroll. This is important because, gambling isn’t just about winning strategies. Your gambling strategy needs to also be a survival strategy. It needs to strike that balance between maximizing the chances of winning and minimizing the chances of going bust. Because losing your bankroll is death to the gambler. The solution is printing money. But another good strategy is to employ bankroll management.

A good gambling bankroll management strategy takes into account that you will face swings up and down. At the simplest level, it is just a matter of sizing your betting according you’re your bankroll. For the gambler, his bankroll is his life points. It keeps him in action.

If you have managed to find a gambling strategy where you do have an edge, with a positive expected value. Then the worst thing you can do is kill you chances by not taking into account a bankroll management system. Because even though a strategy may have a positive edge, there will always be volatility both up and down. If you cannot handle the short term down swing then your will never be able to survive into the long-run where your edge will materialize into real profits. Even if your game of choice is a negative expected value game, good bankroll management will ensure that you get the longest possible session out of your bankroll.

How to size your bet size depends on the volatility or standard deviation for the particular game you are playing. But if the math is a bit bothersome, just follow the golden rule, your bet size should be 2% of your session bankroll. This effectively stops any chance of the casino beating you from the first cold streak. So if you have $500, then you should keep your bets at $10. This ensures that you’ll have a long gambling session and hopefully be able to catch the swing in your favor. Lucky gamblers put themselves in a situation where they give themselves the most chances to get lucky

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