MULTIPLY PROFIT AND REDUCE RISK WITH PROPER MONEY MANAGEMENT
by Joe Gavazzi
Let’s talk about a concept that can SAVE YOU MORE MONEY and MAKE YOU MORE MONEY than any handicapping principles I can teach you.
It’s a money management system that multiplies profit, reduces risk, and if followed, helps to take expectation, and the resulting negative emotion, out of the equation.
This is the first thing I wrote in 1979, the year in which I opened my phone lines to Private Players of Pittsburgh. This system is designed to automatically prevent you from chasing losses, while offering you the opportunity to multiply profits.
Here are your premises:
1. DETERMINE YOUR ORIGINAL BANKROLL. This is the amount that will not change your lifestyle if you lose all of it. In other words, do not bet the mortgage, the car payment, your kid’s tuition, or other money for life’s needs. It doesn’t matter how small this amount is. It will grow large!
2. WAGER BETWEEN 2% AND 4% OF YOUR BANKROLL ON EACH PLAY
3. WHAT YOU SAVE IS WHAT YOU EARN. Understand the value of half a point. Shop multiple “outs” to obtain best value. Play only with “outs” who will pay you.
4. DO NOT STRAY FROM THESE PREMISES. THEY ARE ESSENTIAL.
NOW LET’S PUT OUR MONEY MANAGEMENT SYSTEM TO WORK
1. At the conclusion of each day, add your winnings, or subtract your losses, from the starting bankroll of that day.
2. This becomes your starting bankroll for the next day.
3. Continue this strategy (wagering 2% to 4% of your ORIGINAL BANKROLL) until you have either: won 50% of your ORIGINAL BANKROLL or lost 50% of your ORIGINAL BANKROLL. For example, if you began with an ORIGINAL BR of $10,000 you would wager $200 to $400 per play. You would add or subtract your daily results until your BR was either $15,000 or $5,000.
4. At this point your new BR would be either $15,000 or $5,000
If it is $5,000 your plays would then range from $100 to $200. By reducing your plays you have cut short a losing streak or bad season, and prevented yourself from throwing good money after bad.
You may resume your original bet size of $200 to $400 if your BR increases 50% to $7,500.
Should it continue to fall to $2500, you must again reduce your wager size to $50 to $100, AND CONSIDER A NEW AVOCATION!
But let’s assume you met with good fortune and (regardless how long it takes) your BR grows to $15,000. Congratulations, you may now step to the next window increasing your wager size to $300 (2% of $15,000) to $600 (4% of $15,000.)
YOU HAVE NOW PUT THE MULTIPLIER EFFECT TO WORK (WAGERING 50% MORE) BECAUSE YOU HAVE PROVED YOU ARE A WINNER.
FROM THIS WINNING SCENARIO, LET’S EXAMINE TWO OPTIONS:
1. Your fortunes take a turn for the worse and your BR falls to the ORIGINAL $10,000. DO NOT CHASE BY FALLING PREY TO THE NEGATIVE EMOTIONS RESULTING FROM YOUR EGOIC EXPECTATIONS THAT YOU WANT BACK YOUR $5,000. Rather, return to your original BR and original bet sizes of $200 to $400 per game. Have patience and stay in your present moment.
2. The second scenario is more positive. Your BR continues to grow due to your savvy handicapping judgments. But before you become too cocky, remember that it is easy to play out this positive scenario. For each time your BR increases 50%, step up your wager size a corresponding 50%. SOON YOU WILL BE SIPPING MARGUERITAS IN THE ISLANDS. OH, WERE IT ONLY THAT EASY! BUT IT’S NOT! Random variance will eventually exert a negative influence. YOU KNOW IT AS A LOSING STREAK! YOUR RESULTS ARE FILLED WITH “BAD BEATS” THAT COULD “ONLY HAPPEN TO YOU”. Your mind fills with expectations of former glory (and money) your emotions swirl amid a loss of confidence, anxiety from your bad bets, and fear that your future results will be negative.
RELAX! There are two things that save you:
1. The first you have already learned. You cannot positively function if you have expectations. You must return to your present moment strategy, functioning in the now.
2. The TRIPLE STACK METHOD of the money management system.
This theory states that “AFTER SEEING YOUR BR AT LEAST DOUBLE IN SIZE, SHOULD YOU LOSE ONE THIRD OF YOUR PROFITS FROM THE HIGH POINT OF THAT BR”. DECLARE YOURSELF A PROFIT BY DRAWING DOWN THE DIFFERENCE BETWEEN YOUR CURRENT BR SIZE AND THE ORIGINAL BR.
In our example, you handicap well enough to run your original BR of $10,000 into $30,000, only to lose back $10,000. You still have $20,000 in your BR. Declare yourself a profit of $10,000 (the current $20,000 BR minus the original $10,000.) NOW YOU CAN GO ON THAT TRIP TO THE ISLANDS. YOU DESERVE IT!
One final note, many successful professional sports gamblers use a separate BR for each sport. It’s a good idea if your level of handicapping expertise varies from sport to sport.
There you have it. The 2 prerequisites to understand before you make your first bet.
1. Eliminate expectations to make yourself a winner.
2. Multiply profits and reduce risks with sound money management.
You must master these concepts and implement them successfully if you have any hope of joining the 2% club of winning sports bettors.