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Thread: Doesn't this exercise prove money management and win goals/loss limits don't work?

  1. #1
    Alan, here’s a simple mental exercise I dreamt up that will tell you all you need to know about whether or not “money management” or if having “win goals” or “loss limits” will work.

    Imagine a video poker machine that randomly generates 1 million hands. Archimede$ or some other “computer perfect” advantage player plays these 1 million hands exactly “by the book”. Whatever profit or loss they end up with will be the maximum EV that machine could have generated over those 1 million hands.

    Now imagine you or anyone else (Rob, jatki, regnis) sit at an identical machine and play those exact same 1 million hands with the exact same original 5 cards and the exact same 5 potential redraw cards. You can take as long as you want to play those 1 million hands. You can get up and leave when you get ahead or fall behind by whatever amount you choose. Just understand that when you come back to play you’ll pick up where you left off and continue with those same 1 million hands that the advantage player has already played. So, if you start playing and hit a royal flush on hand 4,000 and quit, when you return to play you’ll be playing hand 4,001 that the advantage player has already played.

    Who will be further ahead? If you play exactly by the book, wouldn’t you be even with the AP? Nobody can play better than computer perfect. The only way to alter what the machine ultimately will pay out at the end of those 1 million hands is to deviate from computer perfect play. It’s already been discussed that Rob’s special plays could factor in and put you further ahead (possibly), or further behind (probably). But it should be obvious that if you continue to play those 1 million hands to completion, money management and win goals / loss limits would be meaningless.

    One last question. You seem to have more disposable income than many of the posters here. Let’s say you have $1,000,000 that you have to invest in a video poker player. Would you rather give it to arcimede$ with his purported positive EV machine, or hand it over to jatki or Rob and have them play the negative EV 8/5 machines? You must choose someone. Assuming they are all trustworthy individuals whose system of play would you put your own faith and money in?

  2. #2
    A good analysis A2A. Let me express a little of my thoughts on that. None of us that you named will play only 1 million hands. We all have played more and will continue to do so. But assuming we sit side by side playing perfect strategy (not even considering Rob's special plays), if Alan or I hit quad aces or a royal, we are going to quit or play back only a little. Arci will keep playing. Since we are presumably on a negative game, he will lose some back.

    Now assume Alan and I are losing and Arci hits something. I (and I believe Alan) have a loss limit and will go home a moderate loser. Arci will keep playing and lose some back.

    If Arci is losing, he nay keep losing because he has no loss limit.

    So I believe that on a negative game, all else being equal in terms of perfect play, I prefer win goals and loss limits so that no one bad day will wipe me out, and I do not have to play longer than I desire to try to achieve the expected return. I also believe, as Alan has said, that it pretty much is based on luck--I don't believe that the RNG is a guaranty. All gambling (other than sports and horses) is an attempt to ride brief deviations from the expected results, and that is a short term proposition.

    On Arci's positive return games, I don't totally disagree with him but I don't believe it can be done short term and I don't have the time necessary to play that way.

  3. #3
    Originally Posted by regnis View Post
    A good analysis A2A. Let me express a little of my thoughts on that. None of us that you named will play only 1 million hands. We all have played more and will continue to do so. But assuming we sit side by side playing perfect strategy (not even considering Rob's special plays), if Alan or I hit quad aces or a royal, we are going to quit or play back only a little. Arci will keep playing. Since we are presumably on a negative game, he will lose some back.

    Now assume Alan and I are losing and Arci hits something. I (and I believe Alan) have a loss limit and will go home a moderate loser. Arci will keep playing and lose some back.

    If Arci is losing, he nay keep losing because he has no loss limit.

    So I believe that on a negative game, all else being equal in terms of perfect play, I prefer win goals and loss limits so that no one bad day will wipe me out, and I do not have to play longer than I desire to try to achieve the expected return. I also believe, as Alan has said, that it pretty much is based on luck--I don't believe that the RNG is a guaranty. All gambling (other than sports and horses) is an attempt to ride brief deviations from the expected results, and that is a short term proposition.

    On Arci's positive return games, I don't totally disagree with him but I don't believe it can be done short term and I don't have the time necessary to play that way.
    regnis,

    Thanks for your reply. Don't you see that given the parameters here, it does not matter when you start or stop since ultimately you will both play the exact same 1 million hands? All winning and losing streaks will be the same if you both play the exact same way. Let's say you hit a royal on hand 4000 then quit. Then for the next 10, 000 hands there is a losing streak. Both you and the AP player will play through that eventually. Why would it make a difference if the AP player played the 14, 000 hands through 1 session and you split it up?

  4. #4
    A2A, if you have deep pockets and a seemingly never ending bankroll, loss limits are not necessary. So in theory, there is no need to have loss limits... or win goals... because in theory if you are playing a game with a 99.54% return, over time you will get back 99.54%.

    So why loss limits? Well, loss limits keep you from getting caught up in a short term spiral of death. Your loss limit mandates that you stop playing and conserve the rest of your bankroll for another day when luck might be on your side. You loss limit becomes a circuit breaker to keep you from playing until its all gone.

    Even on positive games you can run into long losing cycles. So even on positive games a loss limit can be helpful.

    Now, not everyone needs a loss limit. Arc obviously doesn't. He might be "better bankrolled" than I am, and he might have more of a stomach for losing than I do. Remember, I play for recreation so if I am not winning or if I am losing too much, I am not having fun anymore. So, the loss limit allows me to keep having fun because as a recreational player I am willing to accept a limited amount of loss.

    Now let's talk about the win goals. For someone who is not a recreational player -- someone who is a pro, or someone who is determined to get his long term mathematical advantage -- there probably is no need for a win goal. But since I am a recreational player (as I would think nearly all casino goers are) the win goal allows us to step away from the machine and enjoy our profits and proclaim to the world "I am a winner!"

    Also, as a recreational player I don't know when I might return to the casino again. I don't know if I might find another way to spend those recreational dollars. And as a recreational player I would like to leave the casino with money so that I can return sooner to enjoy the games again.

    It doesn't matter what your math says about who will come out ahead in the long term. Win goals and loss limits are not a matter of math-- they are a matter of what suits the personality of a player and the objectives of a player.

    Of course the battle here is that the math guys say having a win goal will not let you beat the expected return of the game and indeed they are correct. The "expected return" is dictated by the paytable and nothing can alter the "expected return." But as a recreational player the expected return and the paytable help me to choose the game to play, but what really matters is the money in my pocket at the end of the visit. The "expected return" is a guide to help you play and what games to play, but how you play and how much you decide to win or lose ultimately determines how much money is in your pocket.

    When you have a loss limit or a win goal, your main concern is your "actual return" and not the theoretical "expected return."

    Now, I've had an incredible run of good luck lately, and it happened again overnight. (It's now about 4:40am) and a few minutes ago I got back from a quick trip to Rincon. I actually went there to redeem reward points for gifts from the Total Rewards catalogue for holiday gifts, and I had $210 of free play. I played it. And I lost it. So I took out $300 just to try that Super Aces Bonus game with the 99.9% payback and played at the $2 level. I was dealt quad 9s which paid $500. So I switched to $5. And a few hands later quad deuces for $2000. I played a while more switching back to $2 and came back with a profit of $1200. I could have kept playing but that was a nice win for a few hours at the casino.

    Maybe if I kept playing, with the way my luck was going, I could have hit another royal? Or, maybe I would have given it all back? And maybe after giving it all back I would have gone to the ATM and taken out a couple of thousand to chase my losses and try to win it back? But instead I said to myself, "self, that's a nice night's work... twelve hundred bucks... and after paying the "wife tax" you'll have some money left to play again, self." And, self liked that idea very much.

  5. #5
    Alan is obfuscating again. The point being made is that over time the win/loss goals make no difference in a person's results. That is the only point of the post. Most have no problem with a person using win/loss goals for other reasons.

    Alan also shows he still doesn't believe in the math or that the machines are random. He states,

    "Your loss limit mandates that you stop playing and conserve the rest of your bankroll for another day when luck might be on your side."

    There is no difference in the next hand in Eddie's example. There is also no real difference in a casino. Since the machines are random your next hands may be better if keep playing vs. coming back. There is no way to know.

    The point folks should understand is the benefit of win/loss goals on negative machines is they reduce one's overall play. This reduces expected losses. Since the real benefit is the reduction of play, there are many ways to do that. All of them have the same expected losses over time. It just spreads those losses out.

    The idea of win/loss goals creating net winners on a negative machine is the big problem. Singer has claimed this is possible using his system many times and that is why I object to his claims. Alan has alluded to the same as well. Anyone who makes claims like this need to be made to look foolish (and that is quite easy since it's true).

  6. #6
    Arc, you understand my point, but you just don't want to believe it. You wrote:

    "Since the machines are random your next hands may be better if keep playing vs. coming back. There is no way to know."

    This is absolutely true and I agree. But the key point is "there is no way to know." So if you are there to have fun (and winning is fun) you take the money and you run.

    Remember: when you win money it is your money, and when you bet it again you are not betting the casino's money, but you are betting your money.

    And can win goals help you beat a negative expectation game? Of course they can. Is it guaranteed? Of course not. But the bottom line is this: each and every time you leave with a profit, you have come out better than the expected return of the machine. Does that turn your world upside down, Arc? Why should it? Expected return does not have to equal actual return. Deal with it.

  7. #7
    In fairness to A2a, I guess he is right that 1 million hands is 1 million hands and the results will be the same. But the parameters of the million hands is not what we have otherwise been arguing in the other threads.

  8. #8
    Originally Posted by regnis View Post
    In fairness to A2a, I guess he is right that 1 million hands is 1 million hands and the results will be the same. But the parameters of the million hands is not what we have otherwise been arguing in the other threads.
    In the theoretical world of video poker, every set of one million hands on a game returning 99.54% will return 99.54% because that's what the math says should happen theoretically with all other things being equal.

    Now, let's talk about the first time visitor who walks into a casino, sees a bank of machines with a sign that says "these pay more than 100%" and sits down and puts $20 in a 25-cents machine and hits a thousand dollar royal on that positive expectation game. Would you suggest to them to keep playing? Or would you suggest to them to take the money and go to the pool/show/buffet/club? And why would you make that suggestion?

    I'll start: I'd tell them that if they want to go home with all of that money to quit now and go home a winner and have a great time in Vegas doing other things. But if they want to play some more, play at your own risk. They just beat the odds "big time" by hitting the big one and they might lose it all if they keep playing even on those machines advertised to pay more than 100%.

  9. #9
    Originally Posted by Alan Mendelson View Post
    In the theoretical world of video poker, every set of one million hands on a game returning 99.54% will return 99.54% because that's what the math says should happen theoretically with all other things being equal.

    Now, let's talk about the first time visitor who walks into a casino, sees a bank of machines with a sign that says "these pay more than 100%" and sits down and puts $20 in a 25-cents machine and hits a thousand dollar royal on that positive expectation game. Would you suggest to them to keep playing? Or would you suggest to them to take the money and go to the pool/show/buffet/club? And why would you make that suggestion?

    I'll start: I'd tell them that if they want to go home with all of that money to quit now and go home a winner and have a great time in Vegas doing other things. But if they want to play some more, play at your own risk. They just beat the odds "big time" by hitting the big one and they might lose it all if they keep playing even on those machines advertised to pay more than 100%.
    Alan,

    I don't know if you are trolling me and everyone else on the forum to increase traffic or not...

    You seem like a highly intelligent guy, so I don't understand why you seem to be misinterpreting this example.

    If you were to play the same hands as an AP player or any type of player for that matter in the same order, wouldn't you end up with the same results as that player unless you made different holds? When you start and stop playing would not matter because you will eventually play the same hands in the same order. When you think about it, that is exactly what the casinos are doing. They don't care if it's you or any one else playing their machines with a negative EV. The overall net result of all play on that machine will be in their favor.

    Perhaps what you view as winning is the question here. In the example I started this thread with, let's say the AP player plays these 1 million hands perfectly and ends up with a loss of 0.46% of his total coin in. Let's assume it's $1 VP (99.54% as you've stated) so he has a total coin in of $5 million and loses 0.46% or $23,000.

    Since you are playing those exact same 1 million hands in the same order wouldn't you too end up down $23,000? Sure, along the way you could stop when you won a certain amount or lost a certain amount, but the end result would be the same. With the win goals and loss limits you may be able to celebrate more often with "wins" and pat yourself on the back more often when you walk away without losing any more than a pre-determined amount, but in the end, all of your play added together would still result in a $23,000 loss.

    So what do you view as winning? Being an overall net winner when all of your play is added together, or having several winning sessions or limited losses regardless of what the sum total of all your play has yielded?

    By the way, I'm still curious to see whose system you would endorse with your own money if you had to choose.

  10. #10
    Alan tends (no, religiously adheres to is better) to not address questions that cut to the heart of the matter, such as the question regarding which system he would endorse. He will go through back-bending mental double-jointedness that would make Cirque Du Soleil proud, but he's not going to actually answer the question.

  11. #11
    Originally Posted by regnis View Post
    In fairness to A2a, I guess he is right that 1 million hands is 1 million hands and the results will be the same. But the parameters of the million hands is not what we have otherwise been arguing in the other threads.
    regnis,

    Thank you for your response. I think having win goals and loss limits help you gamble more responsibly, and are a great idea when you are on vacation, because no one likes to lose more than they budget for especially when they're supposed to be having a good time. They just don't make you an overall winner. Alan is right when he says if he plays a machine and hits a royal flush or any other high paying hand right away he has overcome the EV of the machine. Sure he has, for that 1 hand. And if you never played another hand that would be true. But like arcimede$ has said, the more hands you play, the closer the sum total of all your play will approach the machine's EV.

  12. #12
    Voila... "But like arcimede$ has said, the more hands you play, the closer the sum total of all your play will approach the machine's EV." Exactly. And this (brace yourselves) is part of Singer's strategy: don't play more than you have to.

    Because the more you play, as you point out a2a, the closer you will approach the machine's EV. So, who the heck wants to be sitting in a chair for hours and days only to make a return of 0.5% ?? As I said early on in this debate, the money that is cycled through video poker would gain a much better return selling covered calls on Wall Street. Of course Arc criticized me for that, but he never sold a covered call in his life.

  13. #13
    Originally Posted by a2a3dseddie View Post
    Alan,

    I don't know if you are trolling me and everyone else on the forum to increase traffic or not...
    Let me put it to you this way: it will take me more than five years to play a million hands of video poker if I keep playing at the pace I have for the last two years. I probably played more VP in the last two years than I did in the previous twenty years combined.

    I don't know if I am going to be playing VP for another million hands or if I am going to make it back to a casino anytime in the next year, or two. I can't even consider what you guys are talking about when you discuss long term. Heck, I almost died five years ago from kidney failure. I look at every visit to a casino as a one time event and I want to maximize my win or minimize my loss each and every time I go.

    So while I am not going to say your long term approach is wrong, I am simply going to say "I can't relate to it."

    My whole life I have always had a loss limit, and I have always had a win goal system which uses a rising "stop loss" which is something I adapted from stock market investing.

  14. #14
    Originally Posted by Alan Mendelson View Post
    Voila... "But like arcimede$ has said, the more hands you play, the closer the sum total of all your play will approach the machine's EV." Exactly. And this (brace yourselves) is part of Singer's strategy: don't play more than you have to.

    Because the more you play, as you point out a2a, the closer you will approach the machine's EV. So, who the heck wants to be sitting in a chair for hours and days only to make a return of 0.5% ?? As I said early on in this debate, the money that is cycled through video poker would gain a much better return selling covered calls on Wall Street. Of course Arc criticized me for that, but he never sold a covered call in his life.
    So Alan, you don't or won't say which system you would endorse?

    Even regnis has conceded that given the parameters of this thought exercise you would not be further ahead by using win goals or loss limits. I don't know why you can't see that.

    My 70 year old mother enjoys playing slot machines. She is convinced that she can stop the reels when she wants to. She is so convinced that she will only play machines where pressing the spin button a second time will also stop the spinning reels. Despite what I have tried to tell her about the RNG and the disclaimer that appears on the machines that state the player cannot influence the outcome of each spin she believes what she believes.

    I guess you''re the same way with your win goals, loss limits and other non-mathematical strategies.

  15. #15
    Excuse me, a2a, but a win goal is a mathematical strategy. And the strategy goes like this: every win that goes into my pocket and goes home with me is my money.

    Loss limits are also part of a mathematical strategy and the strategy goes like this: the less money I lose, the more money I keep.

    You know, it's wonderful to talk about theoretical dollars. Unfortunately, I can't pay the bills with theoretical dollars. And the casino will not allow me to bet theoretical dollars either.

  16. #16
    Originally Posted by Alan Mendelson View Post
    Excuse me, a2a, but a win goal is a mathematical strategy. And the strategy goes like this: every win that goes into my pocket and goes home with me is my money.

    Loss limits are also part of a mathematical strategy and the strategy goes like this: the less money I lose, the more money I keep.

    You know, it's wonderful to talk about theoretical dollars. Unfortunately, I can't pay the bills with theoretical dollars. And the casino will not allow me to bet theoretical dollars either.
    Alan, take a look at this sentence you wrote in comment #4:

    "It doesn't matter what your math says about who will come out ahead in the long term. Win goals and loss limits are not a matter of math-- they are a matter of what suits the personality of a player and the objectives of a player."

    You were right then. Why the about face?

    Look, I am like you. I go to a casino with a set amount I am willing to lose. I have some vague win goals and can quit when I reach them if I am lucky enough to win. There are no positive EV video poker games at the casinos I play at, and even if there were, I wouldn't play them since I don't really enjoy video poker. I play on-line poker and live poker when I get the chance and I do make a little bit of money doing so.

    You seem to think that you can string together enough wins on negative EV machines to end up with an overall net profit. As discussed ad nauseum, that is not possible. If it were wouldn't the casinos all be losing money? Doesn't every gambler who has ever lived tried to quit while they were ahead?

  17. #17
    Originally Posted by a2a3dseddie View Post
    Alan, take a look at this sentence you wrote in comment #4:

    "It doesn't matter what your math says about who will come out ahead in the long term. Win goals and loss limits are not a matter of math-- they are a matter of what suits the personality of a player and the objectives of a player."

    You were right then. Why the about face?
    You are nitpicking. So to give you a nitpicking answer, it has to do with the math of my personal bank account.


    Originally Posted by a2a3dseddie View Post
    You seem to think that you can string together enough wins on negative EV machines to end up with an overall net profit. As discussed ad nauseum, that is not possible. If it were wouldn't the casinos all be losing money? Doesn't every gambler who has ever lived tried to quit while they were ahead?
    I don't think I can do anything when I am in a casino. I hope. I even pray. I pray really hard in casinos. I make no assumptions because I know it's all a gamble. I play correct strategy because I hope that it will pay off. Twice in my life I made a "Rob Singer special play" -- once on triple double bonus when I was dealt three aces with a kicker and I only held the three aces and the hand did not improve. And the second time on 8/5 Bonus when I was dealt a full house with three aces and I was losing big so I held only the three aces and I drew the fourth ace for $2,000. That's all. With more than 300-thousand hands of VP played since I met Rob I made only TWO of his special plays. And one worked.

    You raised an interesting question: Doesn't every gambler who has ever lived tried to quit while they were ahead? I'm sure every gambler does. But according to gaming author Victor Royer 86% of casino gamblers are ahead at some point during their visit but less than 1% leave with a profit. Watch the interview here: http://alanbestbuys.com/id73.html It's pretty far down the page.

  18. #18
    Originally Posted by a2a3dseddie View Post
    By the way, I'm still curious to see whose system you would endorse with your own money if you had to choose.
    Originally Posted by redietz View Post
    Alan tends (no, religiously adheres to is better) to not address questions that cut to the heart of the matter, such as the question regarding which system he would endorse. He will go through back-bending mental double-jointedness that would make Cirque Du Soleil proud, but he's not going to actually answer the question.
    I think I said it several times, so pay attention redietz I am going to spell it out for you:

    I play MY way. I look at each session as the only session. I limit my losses and I maximize my wins. If that means a loss limit is triggered, then it's triggered. If I have profits (wins) I will raise my stop loss as I continue to win. There is no long term consideration for me when I play. I will not say "I lost today, but it will average out in the future."

    Given a choice between Arc on a positive ev machine and Singer playing his neg ev machine, I would choose neither. I wouldn't trust either one of them with my money. However, if you asked me which game I would prefer to play, I would say the game with the positive EV. AND, if you also asked Rob Singer which game he would prefer to play he would ALSO say the game with the positive EV.
    Last edited by Alan Mendelson; 11-29-2012 at 10:46 PM.

  19. #19
    Originally Posted by a2a3dseddie View Post
    Alan, here’s a simple mental exercise I dreamt up that will tell you all you need to know about whether or not “money management” or if having “win goals” or “loss limits” will work.

    Imagine a video poker machine that randomly generates 1 million hands. Archimede$ or some other “computer perfect” advantage player plays these 1 million hands exactly “by the book”. Whatever profit or loss they end up with will be the maximum EV that machine could have generated over those 1 million hands.

    Now imagine you or anyone else (Rob, jatki, regnis) sit at an identical machine and play those exact same 1 million hands with the exact same original 5 cards and the exact same 5 potential redraw cards. You can take as long as you want to play those 1 million hands.
    I didn't want to comment on this question originally, but I feel forced to. Your question is absurd.
    First you say a video poker machine randomly generates one million hands and you have one "computer perfect" player at that machine, and then as a "test" you have an identical machine generating the same exact hands with the same potential draw cards being played by another player. Do you see the flaw from the outset?

    No two players ever get the same combination of cards, in the same order, with the same bankroll, with the same emotions, playing video poker. This is truly a "dream problem" because there is no reality attached to it.

    Of course, you can "dream up" whatever you want to, and you math guys in your theoretical world don't take into consideration human emotions when it comes to play such as the emotions that come into play with win goals and loss limits.

    So let's test your emotions, if that is possible. What would you do if there was the "video poker" version of a person putting his entire life savings on the spin of a roulette wheel?

    In our video poker life savings test all of your money is at stake and you are dealt four to the royal with a flush. If you hold the flush you break even. If you get the royal you win 47 times your current wealth. But if you don't get the royal (even if you draw another flush) you lose everything and live in poverty forever. What do you do?

    Hey, the math says go for it, doesn't it? The math says yes, because you have a 1 out of 47 chance to get 47-times your wealth. There is no house edge and no house advantage on this bet. Would you take the gamble? If you say no to this bet, you are not doing the math -- and you are using your emotion.

    In fact, I'm going to make the "math problem" even easier for you math advocates to answer. Instead of winning 47 times your wealth, you can win 48 times your wealth. You now have the edge!! What do you do? And if you say, again, no -- it's because you are using your emotion and not considering only the math.
    Last edited by Alan Mendelson; 11-29-2012 at 11:29 PM.

  20. #20
    Just for the record, I think it is inappropriate to quote Victor Royer as claiming 86 percent of gamblers are ahead at one point in their trips. There is no data attached to that claim, just the assuarnce that Royer is a "gaming author." Hell, I'm a "gaming author." Rob Singer is a "gaming author." The phrase "gaming author" means absolutely nothing in terms of providing an objective evaluation of expertise or accurate information.

    That's pretty obvious, but it needed to be pointed out.

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