TheSnapper

TheSnapper's Bank: $1 749,47
TheSnapper's Start Bank: $198.00

Mr. Kelly's Bank: $3974,27
Mr.Kelly's Start Bank: $20.00

Longshot Larry's Bank: $197,03
Longshot Larry's Start Bank: $100

Shannon's Demon: $1666,40
initial investment:$1610,50
profit: $55,90

Total profits: $5658,67

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Yesterday, I changed all of the betting funds for myself, Mr.Kelly and Longshot Larry to half-bank, ratcheting. The idea is to use only half of your betting bank, and invest the unused half. Each time your bank reaches a new high, you withdraw funds to your investments. You never have more than 50% of your bank at risk, and the unused half is gaining profits for you. So, I am now using half-bank, half-kelly staking, Mr. Kelly is using half-bank, full-Kelly staking, and Longshot Larry is using half-bank, half-Kelly staking (on the horseracing win market).
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Mr. Kelly continued his rampage yesterday... he has won 8 straight for a profit of $1028,64. He's going logarithmic, man!

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Kelly Staking and the half-bank ratchet

One of the great advantages of proportional staking is that you can protect yourself better against bankruptcy during a losing streak. Of course, you can still be reduced to virtual bankruptcy (i.e. losing 99,9% of your bank), but it would take an amazing mega-streak of bad luck (assuming you have an edge and a fairly high strike rate). The system reduces your staking as your bank decreases, and keeps you in the game long enough to hit the inevitable big comeback.

Notice that fixed stake betting (i.e. betting $10 on each event, for example)offers no such bank protection, and you also face a real risk of 100% bank loss, with no "floor" in your betting bank. A $100 bank will be gone after 10 straight $10 losses. ( A Kelly staker would still be going, however....)

By using half of your betting bank and a proportional staking system (Kelly), you can limit the amount of possible loss to your bank. Each time your bank  reaches a new high, you withdraw funds to your reserve bank. You calculate your stake based not on the entire bank, but just on the half used for gambling. It is a simple, but very effective method of bankroll management.

Think of it like a ratchet. Only half of your bank is used, and this amount increases with each new bank high. Each new high sends a payment to your bank account.

So, for a practical example. Mr. Kelly has a bank today of $3974,27. Half of this ($1987,13) is under the careful control of my investment team. Mr. Kelly can never lose more than $1987,13, no matter how ugly a losing streak becomes. His full-Kelly stake is now based on $1987,13. Let's say he has a great day tomorrow and wins $500. His bank is now $4474,27. Half of this is $2237,13, so Mr. Kelly withdraws $250 and invests it. He then uses $2237,13 to calculate his next stake.

Remember...poor bankroll management is what kills most gamblers.

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