Bankroll Management

One of the most important things about investing, gambling, or playing poker is proper bankroll management, it can often make the difference between success and failure.

What is your bankroll? It is the amount of margin (money) that you currently have in your account. This is the amount of margin that you have personally set aside to invest on Intrade. And managing it correctly is the key to success.

For example, recently I made a prediction about Swine Flu and I was wrong. But this loss did not bother me. Why? Because the amount that I wagered, was an amount that I was comfortable with losing. Now of course it is preferable to not lose any money at all, but we can't win every bet all the time. Everyone loses eventually. The best we can do is to try and make sure that the amount of our losses is less than the amount of our winnings.

The amount that you bet should depend on two things. The size of the bet in proportion to your entire bankroll and the confidence that you have when making the bet. I would recommend not betting more then 10% of your bankroll on any one contract. If you feel very confident about the bet you are making and want to bet more, then feel free to do so, but do so cautiously. If you want to bet everything on one contract, you better be damn sure you'll win.

The loss that I had on Swine Flu represents 1/4 of the amount that I wagered on Transformers. This is because I put a lot more thought and effort into my bet on Transformers then I did for Swine Flu. As a result I was a lot more confident and the winnings from Transformers are more then going to make up for the losses of my bet on Swine Flu. Overall, I am winning more then I am losing and I am happy.

Proper bankroll management will also allow you to make more wagers. If you win more often then you lose, then the more wagers the better. More wagers allow for less risk, more opportunities, less frustration and worry.

Losing can sometimes affect your judgement when making other bets and this is another reason why bankroll management is so important. One day you might make a bet that you didn't put the correct amount of time into. But if you use correct bankroll management then the loss itself will be manageable. You may lose some money, but you are still playing the game. Which is the most important part. Eventually you will find the contract where you are right and others are wrong. The point of bankroll management is to make sure that when that happens, you have the margin available to take advantage.