The nature of a lot of professional gambling is it's short-term uncertainty. As I already covered here, long term returns must be positive, otherwise we're on a road to poverty not riches. However in the short-term our return is highly volatile. This volatility is a result of the variance and standard deviation of events occurring from their probable occurrence. I'm going to be writing a lot about variance, as it's an important aspect psychologically, and mathematically as a professional gambler. Today I'd like to look at it's impact on working hours and incentives.
Due to the volatile short term nature of a lot of advantage gambling, on some days I may make large 4 figure sums, and on other days 4 figure losses. Yesterday was a great example of this. Before the day had really got started, I was already a comfortable £5k in profit. The expected value of my actions that morning however, had been nothing more than a few hundred pounds. Variance was in my favour, and I'd already surpassed my daily target.
This contrasts with the beginning of the month, where a week into April and my balance sheet showed a fairly deep £5,000 loss.
The impact of these swings on my work-load is noticeable. Naturally, when I'm down I will work harder, longer hours chasing increasingly diminishing value, just to try to swing it back the other way. This is not dis-similar to a gambler going on a 'tilt', and chasing their losses. Only when I tilt, I chase my losses with a positive expected return: Eventually I'm 99.9% guaranteed to end up on top again. In terms of working hours, efficiency and 'value-per-hour', I'm more profitable when I'm making losses. It forces me to work harder.
As my risk tolerance adjusts, and I become less affected by the variance, I expect to see my work attitude change. I should be working to an expected value target, rather than net-profit. This would see my daily earnings become more volatile, whilst my work load become roughly constant. It's something I'm working on, and for the mean-time I find the incentive of loosing periods beneficial to finding new avenues, value and a 'fixer' mentality.
There's nothing better than digging yourself out of a hole, and it's when I have my back to the wall that I innovate and push myself harder.
The picture is a graph showing my profit/loss for April