Money Management Part I: Definitions
November 07, 2006

Bankroll: Money that you have and can afford to lose in an attempt to win.

Breaking even: Where you were before you started.

Edges: The basis for bets that you think will take you beyond breaking even.

Unit: How much you bet when you have edges.

Exposure: How many bets you have going at once.

"My Money" (as in "I'm trying to win My Money back"): Below breaking even; i.e. House Money.

"House Money" (as in "I'm playing with House Money"): Above breaking even; i.e. My Money.

Winning percentage: The track record of your edges.

Brilliant Handicapping: When Edges work out.

Bad Beat: When Edges don't work out.

Winning Streak: A short-term track record of Brilliant Handicapping that's bound to continue. Bet More!

Losing Streak: A short-term track record of Bad Beats that's due for a change. Bet More!

Money Management: The missing ingredient when Brilliant Handicapping isn't Breaking Even.

If you want to make money as a sports bettor, Money Management is Step One. Much the same as financial planning, sports betting properly requires an overall plan or strategy. What is your goal? What is your track record? What is your risk tolerance? How much diversification do you need? How important is capital preservation and how much can you "handle" losing or winning?

How would you answer the following?:

1. I know how much I want to win and how much I can stand to lose.

2. I have a pretty good idea of how I've done in years past.

3. Bets should be rated and then the bet size varied accordingly.

4. Making a few highly-rated bets is better than making more lower-rated ones.

5. Bet more when you're hot and less when you're not.

Next week I'll give you my take on these statements and explain my money management plan.

Reed Hogben M.D.