Risk Management by Tamburin

[zengrifter]

Risk Management

by Henry Tamburin,
August 19 2002
BJInsider

The number one reason that most blackjack card counters are not successful is that they do not understand risk management. In essence they are undercapitalized when they play and therefore they increase their risk of going broke.

Nowadays there are a number of tools that can you use to determine your risk and bankroll requirements. We’ll use the excellent software program Blackjack Risk Manager 2000 (BJRM 2000) by John Auston to demonstrate how this is done.

..continued here - http://web.archive.org/web/20021003110512/www.casino.com/blackjack/article.asp?id=1920

 

[Sonny]

Fantastic article! Absolutely MUST READ for every player.

His tolerance for risk is a bit higher than mine (10% ROR?! Argh ) but I guess I've always been a miser. This article really shows how important a solid bankroll is.

-Sonny-

 

[Mikeaber]

I read it. As a new AP, ROR is definitely something weighing heavily on my mind. I fear that I'm not nearly where I need to be with ROR.

 

[zengrifter]

His tolerance for risk is a bit higher than mine (10% ROR?! Argh ) but I guess I've always been a miser. This article really shows how important a solid bankroll is.-Sonny-

10% is quite OKAY if you are willing to halve your bet size if/when your BR drops 50%. Then your effective overall RoR would only be 2%. zg

 

[Gregory]

Peculiar phrasing: "Lifetime Bankroll".
I personally can't imagine what my lifetime bankroll would be.
Maybe I am missing something. All I know is what discretionary cash I have here and now. I label those funds as my "bankroll" and adjust my wagers to reach a risk of ruin that I can work with.
Isn't your bankroll (lifetime or otherwise) in a state of constant change as you win and lose sessions? For example, I believe my maximum bet of $50 is reasonable for my current bankroll of $4800.00. The only reason I would alter my maximum bet is due to a change in my bankroll. But I wouldn't want to change my maximum bet because I think next year I can add another $2000.00 to my bankroll. Maybe that's just me being conservative.

 

[Cass]

Peculiar phrasing: "Lifetime Bankroll".
I personally can't imagine what my lifetime bankroll would be.
Maybe I am missing something. All I know is what discretionary cash I have here and now. I label those funds as my "bankroll" and adjust my wagers to reach a risk of ruin that I can work with.
Isn't your bankroll (lifetime or otherwise) in a state of constant change as you win and lose sessions? For example, I believe my maximum bet of $50 is reasonable for my current bankroll of $4800.00. The only reason I would alter my maximum bet is due to a change in my bankroll. But I wouldn't want to change my maximum bet because I think next year I can add another $2000.00 to my bankroll. Maybe that's just me being conservative.

I noticed this too. When I think of a "lifetime BR", i'm thinking of the total amount i am willing to lose over my life. Now myself being pretty young that is a hard number to decide but it would probably be 100k(i like to gamble i guess). So since i have 5k on me right now am i going to go bet 1k a hand top bet with a 5% ror on 100k br? Of course not. Betting proportionately to what your current BR is will help you sleep better at night. Unless you dont mind losing everything you have in a single session. Its all up to the player i guess and how much risk you want to take.

 

[sagefr0g]

Ror

Peculiar phrasing: "Lifetime Bankroll".
I personally can't imagine what my lifetime bankroll would be.
Maybe I am missing something. All I know is what discretionary cash I have here and now. I label those funds as my "bankroll" and adjust my wagers to reach a risk of ruin that I can work with.
Isn't your bankroll (lifetime or otherwise) in a state of constant change as you win and lose sessions? For example, I believe my maximum bet of $50 is reasonable for my current bankroll of $4800.00. The only reason I would alter my maximum bet is due to a change in my bankroll. But I wouldn't want to change my maximum bet because I think next year I can add another $2000.00 to my bankroll. Maybe that's just me being conservative.

well i guess i'm more conservative than you. i've got almost the same bankroll as you quote mine is about $5250 now . but i've been going by what Arnold Snyder says about needing to have a bankroll equal to 150 times your big bet. my maximun bet is $35 . 35 X 150 = 5250 .
i'm not for sure what ROR that gives me.
best regards,
sagefr0g

 

[Gregory]

well i guess i'm more conservative than you. i've got almost the same bankroll as you quote mine is about $5250 now . but i've been going by what Arnold Snyder says about needing to have a bankroll equal to 150 times your big bet. my maximun bet is $35 . 35 X 150 = 5250 .
i'm not for sure what ROR that gives me.
best regards,
sagefr0g

My maximum bet is based on 1% of my total bankroll. So today it's $50.00, but since it's a percentage that will change as my bankroll changes. It's fairly conservative and gives me a general risk of ruin of less than 5%.
But I could see myself adjusting that maximum bet based on the individual game.
Crappy penetration at a table would see me reduce my spread to 1 - 5, with my maximum bet being $25.00 even on high counts.
I guess what I'm trying to say is that while my maximum bet is $50.00, it's really not very often that I place a maximum bet. Usually my bet inches up as the count inches up, but then either the count plummets or it's shuffle time and I'm back at table minimum.

 

[zengrifter]

Crappy penetration at a table would see me reduce my spread to 1 - 5, with my maximum bet being $25.00 even on high counts.

You've got it backwards - poor penetration requires a BIGGER spread! zg

 

[Gregory]

You've got it backwards - poor penetration requires a BIGGER spread! zg

Now that you said something and I have thought about it, I can see that in order to maximize my opportunity I should increase my wager during the rare times when a high count comes on the poor penetration shoes.
Probably better off just avoiding them altogether.

 

[zengrifter]

Probably better off just avoiding them altogether.

Yes, and the increased spread needed for poor pene requires a bigger commensorate BR due to increased variance (higher Ror)... BUT this means that with a bigger BR a poor pene game can deliver a good EV nonetheless.

Remember - spread is always calc'd from the top down... SO if a great 2D game is spread 25-100, a decent pene 2D game is spread 10-100, the poor pene game is spread 5-100. zg

 

[Mikeaber]

Question of clarification ZG...In that example you talk of 5-100 spread. Are you talking units or dollars? Either way, are there many casinos around where you can take a 1:20 spread and not be tapped on the shoulder?

 

[Cass]

Question of clarification ZG...In that example you talk of 5-100 spread. Are you talking units or dollars? Either way, are there many casinos around where you can take a 1:20 spread and not be tapped on the shoulder?

He is talking about units, and yes in my experience you can get away with all kinds of crazy things for awhile. Depends on where you are how much they are watching you how much you aer winning or losing.. A couple weeks ago i was spreading 25x1 to 500x2 in a four deck game. This is a 40 to 1 spread! I was losing so of course they didnt care...

 

[zengrifter]

Either way, are there many casinos around where you can take a 1:20 spread and not be tapped on the shoulder?

Yes, MOST if you are cool... and besides, TAPS are part of the trade. Keep you sessions short (60 min) and be aggressive. In the case of the 1-20 2D example - thats for a sh*t game in Vegas where we don't care about tap - like the Calif Club or 4Q. zg

 

[Mikeaber]

Yes, MOST if you are cool... and besides, TAPS are part of the trade. Keep you sessions short (60 min) and be aggressive. In the case of the 1-20 2D example - thats for a sh*t game in Vegas where we don't care about tap - like the Calif Club or 4Q. zg

Cool. Thanks guys. I might should have tried that at the old haunt I was staying at a couple of weeks ago. Perfect example of when this spread should be used!