Busy reading and thinking, not much blogging and poker

Hi All! It's been an interesting January for me so far on the poker front. I've NOT played much poker at all! So far only about 200 ring game hands and I haven't even completed my WillHill 5 hour bonus yet.

It all started when I got into a discussion over at wasscasino's poker forums on the bankroll needed to play limit ring game. The discussion got into the typical need of 300BB bankroll and not risking 5% of your roll at any one session or day... yada, yada, yada.

So that got me thinking WHY are those numbers used? So I did some stats from first principles to work it out for myself. (I'll put that in a later post)

That exercise clarified alot about why these general rules of thumb for a bankroll help avoid almost any risk of ruin. Then it got me thinking this deals with avoiding risking too much of one's bankroll. Is there also a risk of risking too little?

In another words, given a certain bankroll size, is there an optimal bet to maximize growth.

That got me reading all about financial money management and portfolio management.

After reading that as long as you have a positive expectation on the investment/bet, there IS an optimal fixed fraction to invest/bet of your total stake. That got me thinking about why do I still play mainly at 1/2 when I have a large enough bankroll for 5/10 or higher?

Well that got me started reading up on behavioural economics and how our money mind-set and existing patterns of thought and habits lead us to get less out of our financial choices than we should (so sub-optimal).

That lead me to think, if all this psychology and statistics is what's going on fundamentally, then is there a simple answer to how do winning gamblers win? Since they aren't the types to anally research this out beforehand, they just go do it!

And what do you know, it leads me back to a twoplustwo page on the concept of non-self-weighting strategies explained by Mason Malmuth in his book 'Gambling Theory and Other Topics.'

I'll quote his enlightening example here:

Suppose you make a trip to Las Vegas, walk up to a craps table, and start betting $1 every time you roll the dice. You do this for 10,000 rolls, and then suddenly on the next roll you pull $1 million out of your pocket and put it all into action. Now how many times have you rolled the dice? Well, there are two answers, both correct. The mathematicians will say 10,001 times, but the statisticians will say one time simply because your results are all clustered around that one big bet. Notice, that during the first 10,000 rolls of the dice, we were looking at a self-weighting gambling experience. But after that $1 million bet came along, we had a very non-self-weighting gambling experience. Incidentally, and this is important, all successful gamblers are statisticians, not mathematicians.

The nugget of all this reading is simple... when you have the best of it (+EV), consistently bet the optimal fraction of your total stakes if you can or as high as you can without overbetting.

If you can consistently do that, your total stakes will grow as optimally as possible. But to consistently make these ever larger +EV bets rationally, we need to acknowledge, understand and overcome the negative human characteristics (guilt, fear, regret, compulsiveness, addiction, bad habits, ego, peer pressure) that affect our money decisions.