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Sunday, March 22, 2009

Strategy Basics - ‘Small bets on sure things’

So far I have told you that I am going to gamble with £100 to try and get a better return on my money than I would putting it in the bank and why I am trying to get a better return. In this blog entry I will explain the basics on the strategy I am going to use to do this.  I may talk about what I am doing as an investment, this is purely for the purpose of the experiment and it should be remembered what I am doing is gambling and it should not normally be considered a form of investing.

First, what I am doing is gambling so the risk element is high as I could lose all my money.  Two things to note, first I am only using £100 for the experiment as it is an amount of money I am prepared to lose.  This is true of many investment vehicles, for example shares, people always say don’t invest more than you are prepared to lose.  It is also an amount I have just got from selling stuff on eBay, so is extra money I didn’t count on having available to me. The second point is that I will be spreading my risk to minimise the possibility of losing all my money.

So how does the strategy work?  First I will only be placing small bets, starting at £1 so as never to risk more than 1% of my initial deposit on any single event.  This way if I lose, I have plenty of opportunity to win my money back.  Second I will only be betting on ‘sure things’.  I realise that nothing is ever certain, but bookmakers aren’t stupid.  If something has long odds there is a reason for it, it is unlikely to happen.  Likewise, the shorter the odds the more certain the event to happen.  Remember I am not looking for quick fix, this is a long term strategy.

Basically that is it, ‘small bets on sure things’.  I’ll go in to things in more detail as I progress, but that is the basic principle behind my strategy.

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