The Winning Discipline
Last week we discussed the how much money it cost to play different casino games. By using the House Edge and the Standard Deviation we are able to figure out approximately how much we could expect to win or lose based on the size of our bets. Thus we found the “Price We Pay to Play”.
This week I want to put these figures in perspective with things happening outside the Casino. Take a look at your plain old savings account at you local bank. What are they paying you for the privilege of safe guarding your money? Two percent maybe? How about the CD you were able to get that pays you five and a half percent if you keep it there for a year.
A friend of mine was all excited when he told me about a mutual fund that just made him 20% interest last year on his $5,000 investment. That’s $1,000 he made for the year. If he were working for this 40 hours a week for 52 weeks, he earned 48 cents an hour.
Now you go into the casino and sit down at a blackjack table. You buy in for $100 and bet five dollars a hand. For this example we will figure that playing heads up with a dealer you play 100 hands in an hour. After an hours time you find that you are ahead $75. You have just made a 75% return on your $100. investment. You earned $75 for an hours work. Why aren’t you happy with this?
We established last week, the Estimated Value
(EV) is -$2.50 and the Standard Deviation
(SD) for this example to be:
minus $112. to $107. for two SD
Take another look at our bell chart and you will see that you are into the two SD range and far right into the green of the chart. There is now a greater probability that you will go back toward the center of the bell than to go further to the right. The longer you play the greater your chance of attaining the EV. The smartest investors and financial Gurus will tell you there is a time for profit taking. This is your time if you are smart.
This is where the Discipline comes in. Too many people that know how to play the casino games perfectly still end up going home Losers because of Greed. I don’t know how many times people have told me stories about how much money they made so fast only to give it all back plus more of their own money. I say “more” of their own money because once you make money in the Casino it is “Your” money. You have to look at it that way. The other thing I hear all the time is, “I just got there and wanted to play more”
If this is the case, there are two things you can do. The first; and one I recommend is to take a break. Go get something to eat or people watch. You might want to go watch how a different game is played. Many casinos offer Free lessons, try it. Anything to get you away from the table or slot machine.
The second; if you don’t want to leave because you think you are on a roll then take your original buy in plus at least one third of your profit (one half is better) and put it in your pocket. Don’t Touch this no matter what. If you lose your profit you are playing with, it means your luck has changed and it’s time to follow that old saying “Quit While You’re Ahead.”
It takes discipline to be a winner. You can know how to play a game using perfect strategy, the house edge and probabilities but if you can’t control your greed, you are destined to go home a loser. This advice applies to Slots as well as table games
I recently was in the mathematics room of the Science Center in Boston. There is a sign that reads: “The theory of probability is nothing more than good sense, confirmed by calculations” I liked that sign, so in closing I will say to you, “Have the good sense to quit when you are ahead and the probability of going home a winner, will be confirmed.”