How To Handle Losing Streaks
- A proposed betting approach -

 

Perhaps the prime objective for a player serious about reaching  professional status should be - finding out how to best handle losing streaks.  Any valid long-term money management method must take this extremely important factor into account.

The "Kelly" method (discussed in previous letters) is optimal for increasing the bankroll during a positive series of wagers where winners are numerous enough to have produced a flat bet profit; however, the same method can decimate a bankroll's hard-won profits during even short losing streaks.

The most used of all betting approaches is likely the "Fixed Percentage" approach.  This is where a fixed % of bankroll (example - 5%) is always used to figure the next bet amount.  This approach (which essentially becomes "flat betting" when a comfort level ceiling has been reached) somewhat smoothes the more radical bankroll gyrations of the Kelly approach, but it still cuts deeply into bankroll profits during losing streaks.

I believe it was James Quinn who, about 20 years back, wrote about a method he called, "Fixed Percentage - Minimum."  This is one of the better money management methods for lessening the often devastating effects of grouped clusters of losses - the dreaded, yet inevitable, losing streak.

A warning: The F%M method performs very poorly when you are in an alternating pattern.  A pattern like this: w,l,w,l,w,w,l,l,w,l,l,w.  Because most players don't come close to hitting 45-50 % of their win bets, for this pattern to last over an extended series of wagers is rare.  The usual patterns for most players most of the time settle into clusters of (smaller) groups of wins and (larger) groups of losses.

Why the F%M method performs poorly in the alternating pattern runs will become apparent.  Here are the "rules" -

You will bet a fixed percentage of your starting bankroll after every win - but you will bet only a non-changing base amount after every loss.

Let's say you set your fixed percentage at 5% - that also becomes the non-changing base bet at that time.  If your starting bankroll is $1000, your starting bet and your un-changing base bet is then $50.

So you can get a better idea of this approach, below is an example of the method applied to a series of 15 races.  Red numbers are the races where the base bet minimum was used after a loss:

Now let's compare that same series to a straight fixed percentage of bankroll betting approach:

The bankroll using the F%M method (first table) has retained  5.7% more profits - $1263.60 versus $1196.00 in the standard fixed percentage approach (shown in the second table).

This in a good series of 33% winners at average mutuel $7.96.  The difference would be even greater in a very poor series (say a streak of 11 straight losing races) that resulted after fairly large profits (say a doubling of the original bankroll) had first been accumulated.

As always - test this on your historical betting records and see what would have resulted.  You may like what you find!  

 

Tools to help you along your road to race betting success . . .

Racing Exchange Gold

Show Me The Money!

The P-3 Betting Method

Wagering To Win

Exotics Wagering Calculator

Morning Line Maker

Dutching Calculator