Wow, you’ve been thinking about this quite a bit! Although there is logic in your ideas, it doesn’t really translate to the world of gambling.
There’s nothing wrong with that. You will be limiting the size of your wins, but you will also be taking the time to enjoy them more often.
This will have a slightly different effect. You will be enjoying your small wins but your losses will still be quite large. You will often enjoy several winning sessions only to lose most of it back in one disastrous session. Again, there is nothing wrong with this as long as you understand and expect those results. Our graphs will end up in the same place but they will look somewhat different. Notice that yours looks more like a saw tooth (frequent small wins followed by a steeper loss) whereas mine looks more like a wild sine wave (occasional big wins and losses).
Therein lies the problem. The “Parrando’s Rachet” model only works if you have a lever that “locks in” the work that you have done thus far. Unfortunately, there is no such lever for variance. You cannot “trap” variance by leaving a table or taking a break from playing. The variance will be right there waiting for you when you return. Sometimes it will give you a little more money when you return, other times it will take back the money it just gave you. Sometimes you spend weeks earning a nice little win only to lose it back in one terrible session later. As you say, the overall fluctuations theoretically cancel themselves out.
You are not “trapping” the variance, you are only slowing it down. You are not escaping the negative variance by walking away with a win. The only way to escape that negative variance is to quit playing forever. You are not trapping the positive variance either, you are only limiting the size of the wins. Your wins and losses are just a big as mine but yours are spread out over several sessions.
Wonging is a method for trapping advantage, but not variance. A Wonger will actually experience much higher variance than a regular player. Essentially, “Wong’s Ratchet” is a way to “lock in” the advantage and stop all work until that advantage has been restored. You
can use this as a “lever” to maintain a constant advantage, but the same is not true for the variance. Variance is uncontrollable. The best plan is to be aware of it, be prepared for the size of it, and take it like a man.
Quitting while you are ahead will reduce the magnitude of each session’s fluctuation (smaller wins) but will not affect your overall results. You will still have the same swings in your bankroll but they will take longer to happen. Whereas I (with no limits) might win or loose 50 units per session, you might limit yourself to 10 units, but that doesn’t mean you won’t lose 10 units 5 times in a row. Our overall results will be the same.
Although I appreciate your desire to smooth out the variance by setting limits for yourself, I personally just don’t work that way. In my mind I would rather get the whole thing over with as soon as possible, like pulling off a band-aid. I don’t want to lose 5 short sessions in a row. That would depress me. I would rather lose one big session then be ready to win it back. Huge swings don’t bother me as much as prolonged losing streaks. If I lose 100 units in one session then I think “Man, that was a nightmare! Well, time to move on” and I get over it, but if I lose 10 continuous sessions of 10 units each I think “Man, this is terrible. I just can’t win! I’ve just wasted 10 sessions.”
When it comes right down to it, everyone will think and play differently. Gambling will always be a huge psychological roller coaster. We all find our own ways to make the ride bearable.
-Sonny-