Free Blackjack Money Management Systems

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Free Blackjack Money Management System

"If you would be wealthy, think of saving as well as getting"
- Benjamin Franklin

Money Management and Free Blackjack

"Money management systems" are unnecessary for blackjack players who stick to playing free blackjack. By definition, a free blackjack game isn't played for real money, so there's nothing to manage. On the other hand, some readers are going to want to move up to real money blackjack games. For them, I offer this information about blackjack money management systems.

There are differences between a legitimate money management strategy and a bogus money management system.

A legitimate money management system helps you figure out how large a bankroll you need in order to avoid going broke. This assumes you're playing a game where you have an advantage. If you have a negative expectation, you'd require an infinite bankroll in order to avoid going broke. The Kelly Criterion and the maximum boldness strategy are legitimate money management strategies in blackjack.

A bogus money management system promises to limit your losses or maximize your wins by using stop loss limits and setting win goals. Some of these bogus money management systems also involve changing your bet size based on whether or not you won or lost on your previous bet.

The Kelly Criterion, Money Management and Blackjack

Free Blackjack Money Management System If you're counting cards, and you're good at it, you can get an edge over the casino of 0.5% or maybe even 1%. The Kelly Criterion suggests that the appropriate size wager to avoid going broke is the same as your advantage over the game. So if you have a bankroll of $1000, and your estimated edge over the casino is 0.5%, then the appropriate size of your starting bet is 0.5% X $1000, or $5.

In a game where you have an advantage, you want to minimize volatility and standard deviation. You do this by playing a "minimum boldness" strategy. The longer you're able to stay in a game where you have an edge, the more likely you are to win. If you have an edge over the casino, and you wager your entire bankroll on a single bet, your chance of losing your entire bankroll is far greater than if you just wager a little at a time.

Suppose your chance of losing is 49% and your chance of winning is 51%. You have an edge over the casino. If you bet your entire bankroll, your chance of losing the entire $1000 is 49%.

But suppose you make two bets at $500 each. To lose both of them, your chances are 49% X 49%, or 24%. If you make four bets at $250 each, your chances of going broke become 49% X 49% X 49% X 49% or 5.8%. By betting only 0.5% or 1% of your bankroll at a time, you make going broke almost impossible.

The Maximum Boldness Money Management System

Suppose you're playing a game where you don't have an edge. Maybe you're playing an online blackjack game, or you're just not very good at counting cards. If you want to maximize your chances of doubling up, you'll bet your entire bankroll on a single bet. This doesn't give you an advantage over the casino, but it does maximize your chances of doubling up.

Here's why. Suppose you have a 49% of winning and doubling up. If you bet your entire bankroll $1000), you have an almost 50% chance of doubling up, if you stop after that single bet. But if you make two $500 bets, you only have a 24% chance of doubling up. That's because you have to win both bets. The more bets you make, the more likely it is that the house's statistical edge will break you.

The Martingale System and Other Progressive Betting Systems

A progressive betting system, like the Martingale system, involves increasing your bets based on how you did on your previous bets. For example, if you bet $1 and you lose, you'll bet $2 on your next bet. If you lose again, you'll bet $4 on the next bet. When you eventually win, you'll recoup your losses and be ahead by $1.

The problem with the Martingale system is that you'll eventually have a devastating loss which will wipe out your entire bankroll. All casinos have maximum betting limits, which means if you have a big enough losing streak, you'll need to bet more than the casino's maximum in order to recoup your losses and eke out that tiny $1 win. And it doesn't take as long to reach a very high betting amount that you might not be comfortable with. If you double a penny ten times, you'll have $10. If you double that $10 ten times, you'll have $10,000. And losing streaks of 20 losses in a row can and will happen.

The problem with money management systems that involve progressive betting schemes is that they provide the false hope that you can change the odds in your favor by changing the amount of your bet. This is seldom true, unless you have an edge over the house.

Most card counters do gain an edge over the casino by using a type of progressive betting system though. The count provides a rough guideline as to how much of an edge the counter has over the casino at any given time in a blackjack game. If your advantage over the house at a given time is 2%, and you've been betting $1 per hand, you'll increase your bet to $2. If your advantage over the house (based on the count) is 4%, you'll bet $4, and so on.

Increasing your bets is only a winning money management system if you're doing so when you have an edge over the house.

Stop Loss Limits and Win Goals

Some gambling authors like John Patrick are big believers in setting stop loss limits and win goals for gambling sessions. Nothing is wrong with such a money management system as long as you realize that doing this does nothing toward changing your mathematical expectation in the long run.

A stop loss limit is an amount that you're going to lose that will cause you to end your session. For example, if you have a $1000 bankroll for a session, and you set your stop loss limit at $400, you'll quit if your total losses amount to $400 in that session.

This stop loss limit is usually accompanied by a corresponding win goal, which is the amount of money you've won that will cause you to end the session. You might have a win goal of $400 in the situation above. If that's the case, you'll quit playing as soon as you've won a total of $400 in that session.

The problem with this mathematically is that gambling is best seen as one long session that lasts your whole life. And if you play a game with a negative expectation long enough, you will lose. It's a mathematical fact. Sometimes you'll be up, sometimes you'll be down, but in the long run, if you gamble with a negative expectation long enough, you'll be a loser.

"Money was never a big motivation for me, except as a way to keep score. The real excitement is playing the game."
- Donald Trump