An Aggressive Approach to Bankroll Management Article

[Mr. Now]

The concensus is that bankroll management (money management) is overdone on 2+2. Reviewers tend to say this, in OP comments about most bankroll-related articles.

But you can’t really overdo articles on optimal bet sizing. Sizing bets relative to bankroll and edge is fundamental to success. Achieving the opposing goals of optimizing return while maintaining acceptable risk of ruin is essential to success long-term wagering success.

For these reasons I like seeing the article “An Aggressive Approach to Bankroll Management” in the magazine. In general the content is good. I do have some comments.

The article focuses on bankroll growth strategies and does not mention much about the downside Risk of Ruin aspect. RoR in fact is not mentioned at all.

An important aspect of RoR is that it can never be eliminated. Yes in theory you can never go broke with fixed fraction approaches but as a practical matter your BR can get lower than the minimum amount you need to sit down and play, leaving you effectively busted.

What you can do is manage to an acceptable RoR level. An excellent discussion on the “Acceptable Risk of Ruin” concept appears here:
http://www.traderscalm.com/rorhandiwork2.html

The other thing I comment on is the Value vs. Growth investing analogy in the article. These are equity investing approaches, not BR management concepts. Equity investors regardless of approach must size their per-equity positions on BR (read: RoR) considerations. I think the author uses ‘value’ and ‘growth’ in the article as proxies for ‘conservative’ and ‘aggressive’ BR management approaches. Some readers may find the value-vs-growth analogy an impediment to understanding the otherwise good content in this article.

The last item is Optimal F. Optimal F is a fixed-fraction betting method that optimizes bet size for net profit. As such it is an important BR approach to understand. It’s a much more aggressive approach than Kelly. Optimal f optimizes theoretical net profit but results in huge BR swings.

Optimal f Overview:
http://www.adaptrade.com/Articles/article-ffps.htm

The Definitive Work: Fundamentals of Money Management by Ralph Vince
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