Monday, September 26, 2016

Bankroll Management: The Most Important Skill To Master

Today is my first in a series of weekly blog posts detailing my journey in becoming a fantasy sports professional. Every week I will write a blog post where I will cover two areas:
  1. I will share an overview of how I performed the previous week.
  2. I will cover a topic of importance that will help you in the area of fantasy sports.
Weekly Overview - 9/19/2016 to 9/25/2016

On Monday, I took off for the first time since fantasy sports relaunched in New York. I had a lot of work to do on my blogs, so I didn't play any contests that day.

On Tuesday, my week started getting better. I entered 12 MLB DraftKings contests and won 8 of them.

Wednesday was even better. I entered 11 MLB DraftKings contests and won 10 of them.

Thursday, I entered NFL DraftKings contests for the Thursday to Monday slate. I entered 16 contests and only won 1 of them.

Friday, it was back to MLB baseball. I entered 13 MLB DraftKings contests and won 11 of them.

On Saturday, I played fantasy MMA, participating in the UFC Fight Night event. I entered 12 contests and won 7 of them.

Finally on Sunday the bad streak in football continued. I entered 16 contests and only won 1 of them. It's actually crazy football was one of my best sports last season. This season it has been a disaster!

Season long fantasy football hasn't been much better. I have 4 teams. 2 in money leagues and 2 in leagues just for fun. I only won one game this week in one of my fun leagues. My current records are 0-3 and 0-3 in my money leagues. 1-2 and 1-2 in my fun leagues. How embarrassing is that for a "fantasy sports professional."

Also wrapping up my one season long baseball league a keeper league. Its a rotisserie league so it's pretty much over for me. I'm in fourth place out of ten just trying to finish as high as possible. The one redeeming takeaway is I made a trade to get Kris Bryant. We have to keep one player and we have the option of keeping a 2nd player. I already had Mike Trout so I have a nice foundation to work with for next year.

Despite the bloodbath in football I still finished the week with a 12% ROI (return on investment). Definitely not getting that from my 401k plan or my bank account that's for sure!

Bankroll Management

If there was ONE skill that you could master for fantasy sports, I would say that skill is bankroll management. Bankroll management is critically important for long term success in playing fantasy sports for profit.

What is a bankroll?

A bankroll is the amount of money that you have available to play fantasy sports. That amount of money is going to be different for everybody based on their unique circumstances and financial situation.

Some players mistakenly believe that their bankroll is the amount of money they have in their fantasy accounts. That is incorrect for several reasons.

What if you only have $25 in your fantasy account? If you lost the $25, would you stop playing fantasy sports completely? Or would you make another deposit? If the answer is you would make another deposit, then $25 is not your bankroll.

On the flip side, what if you won a $1,000,000 prize in a fantasy sports contest and you have a million dollars sitting in your fantasy account. Is your bankroll a million? Probably not. Your actual bankroll is likely going to be significantly less than the full million that you have in your account.

So the first question you want to ask yourself is "How much money do you have currently available to play fantasy sports?" Calculate what that number is regardless of whether you have all of that money in the account or not.

For example, let's say you work a job and you have $25 a month that you can budget to playing fantasy sports. That money is available the 1st of every month and you currently have $75 in your site account right now, all money available to play games.

Your current bankroll as of today would be $75. If by the 1st of the month you still have the $75, your new bankroll would be $100 even if you did not feel the need to deposit the additional $25. As long as you have the $25 somewhere (i.e. checking account, savings account, etc), it would be considered a part of your bankroll.

Once you decide what your bankroll is, the next step is to decide how much money you feel comfortable playing with in a giving day of contests. You should decide on a percentage of your total bankroll that you feel comfortable playing with.

For example, on MOST nights I play no more than 5% of my total bankroll. Periodically I may go as high as 10% of my total bankroll, but never more than 10%.

Here is why it is important to decide on a percentage of bankroll and stick with it.

One of my friends told me a story about a friend of his. This guy played in a tournament and won a 5 figure prize. However, he didn't have a bankroll management strategy like I am suggesting today. Therefore, he played the full five figures in more games and lost ALL OF IT and THEN SOME!!!

Having a bankroll percentage that you commit to avoids this as you will never play more than your agreed upon percentage each day.

In fantasy sports no matter how good you are, you will go through winning streaks and losing streaks. A good bankroll management strategy allows you to be able to survive the losing streaks. The smaller the percentage you play with, the longer you will be able to survive losing streaks.

As an example, suppose you have a total bankroll of $100. You play fantasy football each week. If you play the full $100 and you lose all of it, guess how much money you have left? $0. You are now finished for the season.

Let's say you have a total bankroll of $100 and you play 50% of your bankroll every week. How long would it be before you ran out of money if you lost all your money every week?

  • Week 1 = $100 bankroll. Play 50% ($50). Lose All. New bankroll $50.
  • Week 2 - $50 bankroll. Play 50% ($25). Lose All. New bankroll $25.
  • Week 3 - $25 bankroll. Play 50% ($12.50) Lose All. New bankroll $12.50.
  • Week 4 - $12.50 bankroll. Play 50% ($6.25). Lose All. New bankroll $6.25
After 4 weeks of losing your have lost almost 95% of your entire bankroll. That's not even a quarter of the NFL football season and your bankroll is almost gone.

Now, let's say you have a total bankroll of $100 and you play 10% of your bankroll every week. How long would it be before you ran out of money if you lost all your money each week?
  • Week 1 = $100 bankroll. Play 10% ($10). Lose All. New bankroll $90.
  • Week 2 = $90 bankroll. Play 10% ($9). Lose All. New bankroll $81.
  • Week 3 = $81 bankroll. Play 10% ($8). Lose All. New bankroll $73.
  • Week 4 = $73 bankroll. Play 10% ($7). Lose All. New bankroll $66.
  • Week 5 = $66 bankroll. Play 10% ($6.50). Lose All. New bankroll $59.50.
  • Week 6 = $59.50 bankroll. Play 10% ($6). Lose All. New bankroll $53.50.
  • Week 7 = $53.50 bankroll. Play 10% ($5). Lose All. New bankroll $48.50.
In this scenario it would take you SEVEN straight weeks of complete and total losses just to get down to half of your bankroll gone. Why? Because you have a bankroll strategy that allows you to minimize your losses.

Next week, I will talk about game selection. However, what's great about fantasy sports is there are contests where you can win 1000 times your contest entry fee. Some, you can win even more. You win a million dollar tournament with a $20 entry fee and you are looking at a win of 50,000 times your entry fee.

The most I have ever won personally is 1500 times my contest entry fee. Having a bankroll management strategy allowed me to minimize my losses until I was able to have a big win. That big win allowed me to take my profits AND increase my available bankroll all at the same time.

However, if you don't have a bankroll management strategy and you lose, you won't have the money to be around so that you can even have a chance to win a big contest.

So before you begin to play consistently, decide what your bankroll is going to be. Then decide what your bankroll percentage is going to be.

Let me know if you need any help with this. I would be more than happy to help you!


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