Deep Sea Diving

A well knonw theorem on stock markets is the one of the frog but i changed some basic principles so i rename it Deep Sea Diving Experience. As most stock market and financial theorems apply to betting , well , with some alterations i really liked this one and i wish to pass it through.

The theorem should be applied to crisis management and the way that bad streaks can be faced carefully. As i wrote in a previous blog and i guess you all have seen in the past , there is a big possibilty of a very long and painfull bad streak. Imagine that you had a bank of 100.000 and you have lost 80.000. What happens then?

An inexperienced punter will add more risk and will end up losing the whole bank sooner or later. In the frog theorem the investor is compared with the diver (or frogman) as deeper as he goes the more time he needs to return back to surface.

Actually , the bigest problem of the punter , always IMO is not how we is going to gain some winning knowledge , the problem is how we will do face those deep crisis on his betting career. Many say money management is essential and surely it is but a crisis is imminent and must be expected , if the crisis could be fought with a good manner then success seems the one-way road for the punter.

Going on the theorem , the rule says that when you are close to bankrupcy , the one wrong step brings the other. And that happens because when we lose the 80% of our bank we still act as we have the 100% and not 20% meaning that our stakes and risk stay on the levels of a 100.000 bank and not 20.000 bank after the bad streak. I have been a big supporter of the flat staking technique , for me you either wish to follow a bet or not so this 1/10 scale is uselless as on my eyes every bet is worth or not worth to be taken.

So in order to avoid being bankrupt if the bad run continues , we must level our stakes after a very bad run to the new amount of 20.000 and not carry on betting as we have 100.000. That will allow us to take a small breath and recover slowly but with more safety by minimizing the risk of going even deeper. At the end of the day , a very deep dive and a fast return could easily bring a bigger fish but with the same ease could bring us to a near death experience. A diver may recover fast for one or two times but sooner or later he will go to the deep instead of the surface...

Have a nice weekend...

ps. Albert i will try to extend my answer on your subject at a latter entry.