Attitude to Risk and Risk Management

[dreamylittledream]

So what's your guiding principle?

I've been musing this one over as I've managed to get myself a little overexposed to a certain C- rated book which now has in my balance all my ringfenced 'us book' float and about 8% of my total working float with a sizeable roll over still to go.

The old only work with that you can afford to lose maxim is of course applicable but how do you define that?

My bank roll is all pure profit and has been for a longtime (I've probably spent about half of what I've made over the past 4 years so original investment has long since been removed) but I still have a preservation impulse - I can 'afford' to lose 8% of my bankroll sure but do I want to because of the potential further risks? How much can I 'afford' to risk? All of it as its not money I use to live off? Or given will need/want to continue to spend chunks of it none of it? That of course would be silly and prevent further profit but where is the line?

How much are you prepared to invest and what level of risk will you take?

And perhaps more importantly when you get over exposed what action do you take?

I'm thinking here particularly when you were happy to take a measured risk to begin with but then circumstances change and you become less enamoured with the situation as the level of perceived risk has risen. What's your personal stopgap?

Thoughts welcome - I think I know where my own limits lie and I will be probably taking action (ahem read mugging/seriously underlaying) for my own situation but I'm interested in others views.

I've had a bit of a charmed life to date with slightly suspect books turning altogether rogue and I have wagered my way out more then once and been very lucky and just plain dodged a few bullets with regard to being out at the right time - given your luck has to run out sometimes how much risk do you take particularly when the writing is appearing on the wall?

[musicbox]

My guiding principle is the tried and tested method of not putting all your eggs in one basket and pre-planning as much as possible to avoid such a scenario - usually by not maxing reloads for example with US books and working out the overall risk when considering having to complete a WR.

At the moment, my bankrolls (US and GBP) are spread over 40 places if I include bank account and Moneybookers. The most risk I feel tomy main GBP float is to the value of 2% in a particular book where I have no WR to complete. The most risk to my US float is to the tune of 30% of that particular float in one book and I have a small WR to complete.

Because it's late, I'm going to go off on a tangent to what I feel is equally important... in fact, I feel it is more important as it over-rides the idea of risk-management as an isolated thing. I think before considering the risk of being caught out by money management issues comes into play, I would think about the risk of a loss of sense of reality. Bear with me, I think I'll make sense

Many of us probably started with a few hundred or so and, over the months/years, the hundreds turned into thousands of profit and some of us may have quite considerable bankrolls now, all (or the majority) of which are from profit. The betting turnover which was once £500 per month may now be £thousands a day. The figures easily lose meaning. The four-figure payouts blur into one another, you log into a book to find you'd forgotten about £850 or something. Is it a nice surprise or have you gone bonkers? Wouldn't you notice someone's taken an £850 3-piece suite from your lounge, you wouldn't miss it? Ok, a strange way of saying it but still, you get the idea - that money wasn't missed because it was just a figure on a screen, forgotten about. So it can be quite an unhealthy mindset that one develops in relation to money. Consciously, one may be thinking about money management in terms of "shall I risk x today to gain y" but subconsciously it could be more a case of "does x even mean anything to me anymore?" clouding that money management question.

And considering there is not one person here who hopes to lose money and, most likely, pretty much all will do this to mainly make money (although for some it is a source of enjoyment/learning experience etc), I would say that before we jump to risk management as a way of protecting our profits sensibly (in order to go on to make money), we should first protect ourselves from losing reality. Dramatic and possibly very obvious I know but still, if the figures lose meaning to you, then how do you expect to manage the figures productively, manage the risk involved etc?

It may be impossible to fully see money as it was once seen once you get a decent bankroll and so on and some may not even care about wanting to do so, but maybe there are steps to take to try and help if the above makes sense and anyone feels at risk of making a major risk-management boo-boo which, regardless of whether it's "all profit" or not, would matter to them. For those with children, perhaps you can visualise those figures as future education or whatever. Perhaps volunteering a few hours to a local charity to see how them receiving a donation of £50 means a lot to them can bring home those figures you view later that day on your screen. Whatever it be, perhaps some (not everyone) may think they require a way of helping with not losing focus on the figures and what they equate to in reality. Of course, in this game, tagging every penny to a physical object is not going to help because then you will absolutely fear any risk whatsover which is equally unhelpful... but overall, perhaps this is something worth taking a moment to consider just to make sure the ability to manage money isn't being battered by a mindset which isn't really that helpful.

edit, sorry I kinda missed answering the q... I've not been in a position of over-exposure so can't say what I have done to get out of it. Any sort of laying obviously means more money can go to the book you're already worried about and mugging can increase a balance in a book which might be struggling and it can obviously lose your funds as well so neither are ideal. But what does doing nothing achieve? So it's a hard call I think. I've been able to stay within a level of risk I felt comfortable with and I'm pretty sure that's remained at 15% or less than my overall float (USD+GBP) in any book I felt wasn't too financially confident in. Like you, I have managed to avoid the effect of books going rogue/bust - I've played at several which went bankrupt but always got out months ahead thankfully. As you say, this luck can turn at any point though although we can all still go by our feelings much of the time and try to be as aware as possible... pretty much all we can do.

[Sticky]

two quality posts!!

i have been equally lucky with dodging some major bullets and particularly when i had over exposed myself. This happened twice in the last year, 1 of the books has gone to the wall the other is still slow paying......

Those two posts really were great! really got me thinking! there was a time not so long when i had probably 15% of my USD float in a fairly reputable book but with pathetic limits and huge wr... i did start thinking, can i really afford to risk completing this WR ... it could mean i finish with a balance of $60k or something stupid?! which despite being profit i would be utterly sick if they didnt pay out! the thought doesn't bare thinking... as fate would have it I ended up getting gubbed the following day after mentioning the situation on this forum (coincidence?) and was forced to take miserly payouts over the next god knows how long and paying for each one... although i didnt have to complete the wr...

i dont think i have really answered the question either! i try to avoid it but betting big stakes makes it an occupational hazard i guess.... perhaps i should give it more thought...

The idea of logging and finding high end 3 figure sums is nuts, and i have done it, i have often thought about teh fact that these numbers on a screen could make a real difference to other peoples lives i.e. like Charity as mentioned, or even that superstar who paid off their sisters mortgage?!

newbies probably think these posts are either bullshit or people like us need locking up! sadly, my post is 100% true

[triplea]

I am happy so say get £36 instead of £39 on an offer if it meant I was risking say 150 less.

Tipico was a good lesson for me. Divided it up into 4 smaller bets that I could place a higher odds on and not be risking a huge amount and tried to bust out instead. Did save me quite a bit even thought they still shafted me for about £50

I know over the course of 20 bets thats £60 wasted but if I took 1 bad bookie that would be less than the £60 anyways.

[EvilMickey]

Ending up with $6000 in a possibly dodgy book is one thing but taking on a WR that could leave SIXTY THOUSAND exposed IS nuts IMHO!

I was bricking it when I started on US books and ended up with my entire USD roll in one place, had to match the rest of the WR off with GBP and ended up with $12,000ish in the book. D- rated on SBR. Got the lot in three installments, $5000 a week, fee free. After that I was more dubious about SBR ratings!

Things to watch out for: Betting limits. Don't deposit 500 for a 250 bonus when you can only stake 500 a line - you can't bust out in one!

Payout fees - if you're being charged 25/30 to get out 500, make sure that for every 500 you move to that book, you also move in close to that fee amount! It stings when you've kept 90% of your cash bonus, but 50% of that is then eaten in fees.

After my most recent episode (Sunday?), I'd advocate always keeping something aside in a bank account or Ewallet in case of emergency. Half my problem was I swore I didn't have the funds to deposit to a book to cover a problem (live game) so was racing around logging into bank accounts, eWallets etc etc. Managed to scrounge up £1500!

Look out for holds. If there is one, check if it's flat Xdays (those poker named sportsbooks) or activity days (911), whether winnings above D+B can be withdrawn before the hold's over (pinnacle in the old days) or not (lots of other places).

I'd say in terms of the original question that your first bet with a new bonus is key. It sucks balls but underlaying hugely is the way forward - you may get a $200 bonus and bust in one for $60 but that's the way to do it. If it wins, you can easily add hundereds to your bonus to cushion WR and allow further gross underlaying.

End of the day: calculate the worst case scenario and decide if you're happy with THAT much money in there. If you're not, reduce the deposit or stay out!

[munk]

Very good question/thread.

I think this question applies mainly to US books on the whole, where generally you find yourself asking whether it's a good idea to deposit into a book that's offering an extremely generous bonus and whether they're doing that because they're about to go to the wall or are having cashflow problems. Ie if you go in there and go on a winning spree, there's a good chance you won't get the money back out again.

I very rarely go into a US book with the intention of maxing out any bonus. It obviously depends on the quality of the book to a large extent and admittedly for Pinnacle I did go in the full hog for the full intro bonus before they stopped doing it. However for smaller books with a rating of 6/10 or less I wouldn't go in for more than a few hundred dollars as a reload at any one time for the simple reason that by going in small you can easily bust the whole bonus out in one bet and not worry about losing a large amount if you do go on a winning spree.

There are a number of times I've been faced with the prospect of a juicy fat bonus being offered by a US book, but it's not quite clear whether or not they're in real financial trouble or not. I would say I'm quite risk averse and I'm not greedy, so usually I don't get that tempted to go in when it looks like a book is offering overly generous offers to try and get the cashflow going. The usual saying holds true, if it sounds too good to be true often it is (although sometimes you'll get away with it ie if you can bust out quickly and not run up a large balance).

I have to say I don't have the 'problem' with what's mentioned above about finding nice 3 figure balances that I've forgotten here or there! I'm quite anal about keeping track of all my money - literally down to the penny - at the end of every day I always do a 'stock taking' check to total up the p&l for the day and reconcile it against any the balances at all the books I have a balance at that have changed during that day's betting. So generally I know if I'm missing a balance somewhere and it's usually not too hard to work out why (usually due to market exposure/open bets that I didn't account for). Does get to be a nightmare when you've placed more than a few dozen bets in a day across more than a dozen books, but it works for me, plus I get to create a natty graph to show how the P&L is doing over time - surprisingly smooth graph which is no doubt a function of my risk aversity.

So maybe that's part of my risk management strategy as well, keeping on top of all my accounts and making sure I know where every single penny has gone. I think it helps alert you to any problems that are out there re having too much in one book.

[Sticky]

Got the lot in three installments, $5000 a week, fee free. After that I was more dubious about SBR ratings!

that would be SBG then? If so, i also had excellent experiences with them until they clamped down on Moneybookers deposits....

lol.... excellent tips though mickey! the hold doesn't really bother me but was defo a new thing when 911 piped up and said it was days of activity!?! talk about moving the goalposts! in the past have been done over by low limits on deposits! not having spare funds readily available, basically you name the f*ck up and i have made it!

[Sticky]

I'm quite anal about keeping track of all my money

in my mind i keep excellent records ... its just the actual updating of my xls where i fall down!

i have every intention of making sure its up to date all the time...

[EvilMickey]

that would be SBG then? If so, i also had excellent experiences with them until they clamped down on Moneybookers deposits....

Bet Royal - but near as makes no difference SBG! They're getting on my tits as I'm gonna have to change $4000 into GBP almost certainly, with a bank wire costing $75! ballache

[triplea]

in my mind i keep excellent records ... its just the actual updating of my xls where i fall down!

i have every intention of making sure its up to date all the time...

Just remember to keep an updated spare copy of your updated spreadsheet elsewhere to in case it goes tits up! I nearly got caught out like that