Horse Racing 101: Understanding Money Management

money-stack-background-2You cannot expect to be a winner betting on horse races if you have habits that cause you to be a loser, so no matter what system or method you use to pick the horses you choose to wager on, it is imperative you manage your money properly. A number of years of poor betting strategies had passed before I understood how powerful that concept is; how important it is for me to keep a record of my wagers. I now do so religiously, even though I am making a good living betting on horse races; even though I have a sufficient bankroll to avoid tapping out.

I currently bet flat amounts to win and place, but I remember the days when I had limited funds. To keep from losing all of my money, I sought a way to keep my bankroll solvent. Several sources suggest you use a fixed percentage of your bankroll, say five percent. As your bankroll increases in size, so do your wagers, thus allowing you to capitalize on winning streaks. When you hit the inevitable losing streak, the size of your wager decreases after each loss. This prevents your previous winnings from rapidly slipping away. It also prevents you from dumping all your money on that 2-5 favorite that cannot possibly lose, only to watch it finish a well-beaten third, sending you home because you had no discipline.

Others suggest betting the square root of your bankroll on every race. It is similar in concept to the fixed percentage approach. For most of us, making that calculation means we have to carry a small calculator with us or make sure our cell phone is fully charged before we head out. Be that as it may, it works well for people who play both straight bets and exotic wagers. Allow me to elucidate. If you begin with a bankroll of $144, your first bet is $12. If you cash that ticket, your next wager becomes the square root of your original $144 plus your winnings. If, like with most races, you lose, then you automatically decrease the size of your next bet, in this case to the square root of $132. So, the size of your wagers increase and decrease from race to race, but tapping out takes an incredibly long losing streak.

amgona-06-19-13As you can clearly see in the chart on the left, the fixed percentage approach is more conservative than the square-root method. When you hit a losing, your losses are less. It also means that when you hit a winning streak, your bankroll increases at a much slower pace. Note that, after six wagers, the fixed percentage bettor has $24.00 more than the square-root bettor, but, after eight races, the bankroll for the square-root bettor contains $12.30 more than that of the fixed percentage bettor. Perhaps one of these methods will work for you.Horse_50x50

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