Ahh, money management. It's like some mythical beast that every gambler has heard about but no one has ever seen. So what is it exactly?

From wikipedia:

Money management is used in Investment management and deals with the question of how much risk a decision maker 

should take in situations where uncertainty is present. More precisely what percentage or what part of the decision maker's 

wealth should be put into risk in order to maximize the decision maker's utility function.

Huh? Not much help. Well at least in sports gambling, I have a easy definition. It's a betting strategy that allows you to weather 20, 30 or 40 consecutive losses and still allow you to recover. I call it the 20-30-40 rule. Notice I did not say 5, 10 or 15. Much too risky. You'll go broke every year. Nor did I say 50, 60 or 100. Much too boring, and lacking in potential return. Instead, just pick 20, 30 or 40 depending on your risk level, figure out how a strategy that allows you wager and lose that many bets consecutively, recover, and go.

While you do that, here are two techniques that I know already work.

The easiest way is to start with an initial bankroll, divide it by your risk level (i.e. 20, 30 or 40) and what you get is your bet size for the entire year. This is called flat unit betting. It's by far the simplest and it works.

A slightly more sophisticated technique is to bet a constant percentage of your current bankroll. Somewhere in the 2% to 5% range. Theoretically you can go higher, but it's almost impossible to recover from a bad run. Any lower and you'll fall asleep, and unless you're making thousands of bets, never make any money anyway. The main difference with this approach versus flat betting, is that this approach wins exponentially and always allow you a chance to recover. Both good things in my book.

There are other strategies out there, but unless they pass the 20-30-40 test, don't bother.

(c) Parrish Heppenstall