This topic is dear to my heart and I would very much like to se some discussion on the topic. I apologize for the cross posting.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com
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In order to be a successful sports bettor you need to hit your picks. NO question about that! However, in order to be a winning sports bettor you need to have some money to invest in you picks. You simply cannot afford to loose your bankroll (bankroll defined as the maximum amount you can loose before you have to stop betting).<o></o>
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There seem to be some debate or high-pitched passionate believes about the pros and cons of different money management strategies. Basically there seem to be two alternatives: flat bets and proportional bets (a fixed percentage of your bankroll). There are of course several trade-offs, some mixtures of the two basic approaches.<o></o>
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The flat bettors seem to argue that a loosing season is not acceptable when you hit more picks than break even. How on earth can you loose money when you hit enough winners? Well, if you fiddle with you bet size it is possible.<o></o>
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But if your intuition works the way mine works it seems reasonably to bet more on your stronger picks. Also it seems right to bet slightly more when you are winning. Magic formulas such as the Kelly criterion are designed to guide you in your bet sizing. That sounds great but there are few quirks in the Kelly formula: 1) you need the true win percentage of the pick as an input to the formula. 2) The formula will suggest surprisingly large bets on strong picks.<o></o>
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I have not bothered to track down the original Kelly article but I have a gut feel that the article is sound given the rather strong assumptions that you know the true winning percentages and that you want to maximize the bank roll growth rate without considering different preferences for ruin probabilities (i.e. the chances of going broke)?<o></o>
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Ergo: There seem to be advantages and disadvantages with both approaches. Is it a matter of taste or are there strong theoretical arguments for a particular approach?<o></o>
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></o>In order to be a successful sports bettor you need to hit your picks. NO question about that! However, in order to be a winning sports bettor you need to have some money to invest in you picks. You simply cannot afford to loose your bankroll (bankroll defined as the maximum amount you can loose before you have to stop betting).<o
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></o>There seem to be some debate or high-pitched passionate believes about the pros and cons of different money management strategies. Basically there seem to be two alternatives: flat bets and proportional bets (a fixed percentage of your bankroll). There are of course several trade-offs, some mixtures of the two basic approaches.<o
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></o>The flat bettors seem to argue that a loosing season is not acceptable when you hit more picks than break even. How on earth can you loose money when you hit enough winners? Well, if you fiddle with you bet size it is possible.<o
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></o>But if your intuition works the way mine works it seems reasonably to bet more on your stronger picks. Also it seems right to bet slightly more when you are winning. Magic formulas such as the Kelly criterion are designed to guide you in your bet sizing. That sounds great but there are few quirks in the Kelly formula: 1) you need the true win percentage of the pick as an input to the formula. 2) The formula will suggest surprisingly large bets on strong picks.<o
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></o>I have not bothered to track down the original Kelly article but I have a gut feel that the article is sound given the rather strong assumptions that you know the true winning percentages and that you want to maximize the bank roll growth rate without considering different preferences for ruin probabilities (i.e. the chances of going broke)?<o
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></o>Ergo: There seem to be advantages and disadvantages with both approaches. Is it a matter of taste or are there strong theoretical arguments for a particular approach?<o
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