Drawdown

The importance of drawdown is extremely large. Do not discount the importance, value or advantage it will allow you to have. As you will lose singular, multiple and numerous wagers in-between your wins, you must have a buy-in large enough to survive the downside you are subject to. And within that buy-in you have your drawdown. 

What Is It?

It is the size of your buy-in with the amount of your wagers you can lose before you begin to capitalize on the game. Simply it affords you the chance(s) to apply your wager preferences and strategies to materialize.

How Do You Plan Your Drawdown?

Naturally the larger the better. At least in most cases. But practicable versus reality, is the case for the highest majority of all players.  You will need to incorporate your drawdown amount with your M.M.M. Your drawdown is not always your initial buy-in. Although I personally favor one buy-in, and the buy-in as a risk capital, the drawdown is virtually the buy-in, within most all cases. If you favor planning for multiple buy-ins rather than a singular one, then your drawdown will be split as well.

As each of us wager differently, flat betting, progressives, etc., You need to generalize your bet sizes and the amount you are comfortable to lose. Then you need to divide the amount of wagers by your comfort level and you will come up with a drawdown amount. Example. You are comfortable losing $4,500. You wager $150 with one time negative progressions occasionally.  You generalize you can lose 12 to 20 wagers before you win a series of wagers you can apply your wins to your M.M.M. for application to a 1/3rd, 1/3rd, 1/3rd, system or something similar. So $150 times 20 equals $3,000 and say 10 negative progressions at $150 each equals  an additional $1,500. So, you need a $4,500 drawdown amount. IMO, you should also have a three times wager of an extra amount and in this case I'll give it my preference of $200 wagers if I had a base wager of $150, for another $600 total.  Add another $600.

EXAMPLE

Base Wagers:  $150.00 X 20 = $3,000.00
Negative Progressions:  $150.00 X 10 = $1,500.00
Extra Wagers:  $200.00 X 3 = $600.00

A $5,100.00 Drawdown would be a very comfortable amount in the hypothetical wagering scenario of $150.00 by a player that engages in some negative progressions as well. 

Control Of Your Game

Do not allow your buy-in, drawdown, etc, to control your game. To a certain extent, your decision making process including your wagering amounts must not be totally controlled by your drawdown size, buy-in balance, etc.

Use your drawdown as a guideline, replace it immediately with your wins and use it if you are less than even money. When you capitalize on your game, apply your every so often cumulative wins to your M.M.M. The rest will work itself out in your advantage, if you are employing a solid M.M.M.

Cumulative Wins

Wins should be maintained sideways from your buy-in/ drawdown amount. As I said, use your sporadic cumulative wins to replace your lost Wagers and begin your other 1/3rd, 1/3rd, set-asides as well. This is Paramount!  That is the most important task you must engage in for proper M.M.M., that will give you a solid advantage to maintain both your win profits and your buy-in.

If you question several different financial experts to define risk and draw down, you will get unclear answers. What you will get is various ramblings of incomplete ideas, attempting to describe variables that might contribute to risk, but not what the risk actually is. Very similar to what systematic gambling writers often write about as well as how casinos and  the industry present the simplistic nature of each game.

So, IMO you must figure it out for yourself according to your style, desires, experience and your goals. Because it is all individualistic to each of us. However, applying a proper M.M.M., Drawdown, and the rest of it what I describe in this posting is not.

Think.  Think hard!

Not Systematic But Opportunistic

Think. Exploiting chances offered by circumstances without reference to statistics or beliefs.

I must expose the ultra importance of extreme advantage a player can give himself if he uses proper drawdown with a reasonable buy-in, in relation to his wager sizes and goals. Gambling for the player is opportunistic.  Period. Gambling for the casino is systematic.  Period.

Every gambler will face countless singular or numerous series of drawdowns, that will lead themselves to seriously question their strategies and beliefs. Learning to recognize them and deal with them positively, will probably be the hardest task each of us face. And, I must add the largest and most harmful performance each gambler faces is emotional disruption to his decision making process, that he inflicts upon himself.

While it is in your best interest to totally remove the emotion out of wagering, it is almost impossible. This is a widely debated and discussed subject for as long as I can remember. However, let's talk frankly, let's discuss the truth at most every gaming table by most every player.

Textbook psychology will dictate if strictly practiced, a player should become as in different to a win as a loss. However, becoming completely detached requires a level of confidence in a players every single game ability, and nothing else. Extremely difficult for most all players to do. But let's be conscious of it and let's work on it and remember it most of all at the gaming table.

Let me define.  The lack of good sense, the foolishness and wishful fake foresight seems to have most every player believing chasing losses is some kind of golden rule of gambling. What am I talking about? Two things. One is repetitive negative progression and the other is, continued wagering to recoup losses.  In other words, increasing your wagers until you win is so erroneous, it is catastrophic in most cases, unless you manage it through proper M.M.M., when you are winning.

Negative progression and continued wagering to recoup losses and begin to win, are perfect examples of gamblers fallacies. But they are employed day after day at most every table that exist in casinos. That is why players lose their winnings if they do not strictly adhere to a proper M.M.M. plan with a 1/3rd, 1/3rd, 1/3rd, division for your wins or something very similar to it. Why? Because two things. One, you will give up a greater percentage of wins and buy-in funds to recover previous losses because the drawdowns will destroy your bankroll that could have been employed making you profits. Two, believing that negative progressions and continued wagering to recoup losses will only lead you to ignoring randomness in your evolution of winning and losing. Even for successful gamblers. How can I state the above? Because I have had countless real experiences as well as research data for it.

What it boils down to is, players dramatically increasing their wagers after generating sizable profits during small/smaller series of wagers. The highest amount of all players lost almost all of it again in a considerable small/short amount of time if they did not subscribe to and adhere to a proper M.M.M. with something similar to my 1/3rd, 1/3rd, 1/3rd, division and application of your winnings.

Summation

Be intelligent, understand drawdown, emotional distraction, and opportunistic wagering over systematic beliefs. I will probably look a little bit foolish to say, what happens in winning is partly luck, where cause-and-effect were loosely connected. But it is true. Intelligent players will avoid the temptation of looking at outcomes and assuming they made them happen or knew they were coming. Instead, they will realize how great understanding drawdown, emotional distraction avoidance and opportunistic wagering gave them advantages while religiously capitalizing on the game when the opportunity presented itself.

Reactions based on opportunity. Realize what they are and how to take advantage of them.

I would much rather lose wagers with a positive progression of winnings and expectation; then to win wagers with a negative progression because I was playing repetitive catch up.

Good essay and real(What really happens in realtime at the live table with ones' real cash).

One of several topics(Drawdown) that jumped out at me /I find very important.

alrelax
(in part)

"...Drawdown

The importance of drawdown is extremely large. Do not discount the importance, value or advantage it will allow you to have. As you will lose singular, multiple and numerous wagers in-between your wins, you must have a buy-in large enough to survive the downside you are subject to. ..."

     This is extremely important. I observe many players almost daily that cannot clearly define "their" objective. Thus, they have little chance of defining "how-many-tries" do I typically need to reach "my" objective.
Sometimes I will have a player ask me something like: How do you bet, or how do you press,...etc(seems like its always following a sizeable win).

I never get questions like: Hey Mr. Fu, how did you manage to only drawdown 40% with such a low hit rate,...etc??? . OR
Mr. Fu that was a really horrible shoe (-4.5SD), and I notice you only busted your buyin once (and didn't rebuy into that shoe). What is your money management system???
*I drawdown nearly every shoe(sometimes 40=70% of buyin or bust, prior to achieving win.

I've learned that any time I get any kind of question I immediately follow up(prior to answwering their Q) with : "What is your main objective"? if the person cannot clearly define their objective (e.g., win 20% of buyin before losing said buyin, win $300 a day on a 5K buyin,earn 100% of buyin prior to losing buyin,...etc), then I will just respond with a generic/encouraging phrase.
I realize it does not matter what I suggest they will not reach their goal because they have not clearly or self-defined what they are trying to accomplish(their precise goal).

My thinking is it doesn't matter what our individual goal is(it will vary as much as the different type of players height,weight,skin color,shoe size,...etc). The key is we should all clearly define our goal, define how many tries we need to reach our respective goal more times than not, design our monetary system to reach that goal with the greatest efficency(bankroll:buyin:bet size,style of wagering(press,regress,flat), AND then: stick with it, with the greatest of discipline, and don't let temporary emotions alter our approach. If we truly have an advantage it will show if we just give it the proper number of tries.

Continued Success,

Thanks for your input. IMO and that of others I associate with in person, is a proper Money Management Method with a drawdown that supports your goals, desires and styles, will add huge advantages to your win chances and rock solid win retention if followed.

The understanding of opportunistic wagering as well as emotional indifference  also adds more advantages to the players that choose to do so.

After lengthy play I have kind of came to the conclusion, that sorting things out with one's play (development of a proper M.M.M., goals, desires, styles and beliefs) is too much work.  Better for most to just hit the casino with as much cash as possible, desire to win money, follow the score board and have a dream. 

Think!

Nice post!

as.

There is another definition for drawdown mainly used by futures and stock traders....and that is how much of a decline in profits comes after a new bankroll ( trading capital ) high is reached.  You can also use this definition for any kind of gambling results.

For example, you have the following winning shoes:

+  $ 100
+  $ 200
+  $ 400

so now you have a new bankroll high of $ 700

Now the next 2 shoes are
- $50
-$100

So now your bankroll is $ 550 and you are in a  drawdown of $ -$150

Then the next 3 shoes are :

+ 200
+ $50
+ $100

So now your bankroll is $ 900  which is greater than your last bankroll high of $ 700 .......and a new drawdown will start when your losses will go below the $ 900 bankroll.

Now the next 2 shoes are

$ -50
$ -100

So now you are in a -$ 150 drawdown from the  previous bankroll high of $ 900 and you will be in a drawdown until you exceed the last bankroll high of $ $ 900 ....... and so on and so on.

Of course you will need all your shoe results recorded on a spreadsheet to calculate the drawdown along with numerous other important statistics.





.

Thx 8OR9
I like your analogies to the stocks/futures markets. I've seen other gamblers even compare Bac to sports handicapping. A lot of similarities. I know little about sports handicapping, so I find it more helpful to use the stock market and banking analogies.

re: Stock Market. I find many comparisons between Bac and the markets. Besides drawdown I also see many similarities with compounding and interest spinoff.

I view our Bac bankroll as similar to ones overall holdings in the markets. Our allotted buyins would be analogous to ones individual stocks. Lets say we have 30 stocks(buyins)in our overall portfolio. Lets say one stock tanks(drawsdown)/loses 40% of its value(So one buyin has drawndown 40%).

Providing we had near the same amount of our portfolio weighted for each of 30 stocks, then if that one stock drops 40% it should  have little effect on our overall investment(bankroll). Obviously if our buyin drops 40% in a session we shouldn't add to that losing investment(just as we likely would not buy more of a stock that suddenly tanked 40%), or I wouldn't.

I like the example you provided and I agree with the drawdown definition. However, I treat my Bac drawdown slightly different.

For example, let say I buyin with $2K which is approx 35 units(approx 80% of my casino market only has tables at $50--2K), with a couple casinos offering $25-1K, and a couple offering $50or100--$5K). So its really easy to generalize to the various increments/keep base unit size proportional in #/ to respective buyin.

E.G.,

If my $2000 buyin wins +400 in the first session(of that $2k buyins' lifespan), I don't change my buyin in my next session as it still= $2k/same base unit size.

Lets say the second session(of that $2K buyins lifespan) has a net loss: -400, so now that $2000 has drawndown and now only has a value of $1600(-20%).

My third session for that buyin will start with the $1600(with same original base unit size), as that  +$400 W from session  #1 was placed in the W stack/never rejoins that parent buyin.

    In that third session for that buyin lets say I make a net of +600(so I now have 2200:1600+600). However, this is irrelevant in my big scheme of things(I simply put that excess $200, (2200-2000), into the stack with the +$400 from the W in buyin session #1.

This keeps going until that $2K buyin has died(And it will). So I could actually buyin with just a few hundred dollars remaining from the initial $2K and still make a comeback(Last week I had a session produce a net win of +$2700(so the 2700 went into the W stack and my MonMgmt)/ the very next session the same $2k buyin had a drawdown to $500(-1500), made a comeback to 1200 in the next session, then the next session it went to -0- (it died).

I find it helpful to have discipline on the drawdowns(The upticks are easy). I never rebuy into the same shoe when I lose the buyin completely. My thesis is that managing our drawdowns will allow us to maximize the upticks(which will be at a >=(+SD) at or above the (-SD) of our drawdowns. I don't limit the upticks. This is one of the main reasons I mostly prefer a pos progression wagering regime.

What I find is that unless I get completely whacked in the very first session(for that buyin), then I never lose 100% of that specific buyin(Which is more important than it may seem),

(In the example above it earned $600/then lost, so that $2k still produced $600 prior to its demise).
Sometimes it may earn >= 300--500% , or more,  prior to its drawdown to -0-.

For me personally it keeps the emotions at an even keel (though the drive home is more enjoyable after an uptick(s) vs a day where I had a drawdown or drawdown(s) to -0- .

*I often pat myself on the back (after a drawdown or bust) in which I leave that shoe or session. Drawdowns and busts are inevitable.


Thx again 8OR9


Continued Success To All,