WHEN TO PLAY, WHEN TO QUIT?

Update April 23, 2016  There is plenty of advice about when to play. Some of the basics are to play when your mood is good and never play when you are troubled or depressed. Play when you can afford to play and you have the bankroll or the budget so you are not pressured should you start your session losing. Play when you are rested. Play when you feel healthy because you don't want to be running to the restroom or reaching for tissues to constantly catch a runny nose.

I also just listed some reasons to quit including when you start to feel bad or you are not enjoying yourself anymore. As soon as gambling is no longer fun, stop. It doesn't mean you have to stop forever but it does mean to take a walk, get a meal, watch a movie, maybe even stroll over to another casino. But stop when it's not fun.

Few will argue with the advice I've given so far. But there are plenty who will argue with the idea that you should quit when you are ahead. There are many of us who will gladly get up from a table when we have a profit, or leave a machine after a big win. But there are those players who say -- and I can't argue with this -- that after winning a big jackpot you could go on to win even more.

That's absolutely true -- you could go on to win even more. It happens that players win and then continue to win. It also happens that players win and then lose it all back. Is there a happy medium? There might be and it's called "using a rising stop loss."

Stock market investors commonly use a rising stop loss when they trade stocks. With a rising stop loss strategy you adjust your target price higher as the stock price rises so that you keep more of the additional profits. Here's an example:

You buy Stock A at $10 a share and set a profit goal of $15 which is the point when you will sell your stock. Slowly your stock rises to $14 a share and then suddenly there is a big spurt in the stock's price to $18. Do you sell at $18 because it now exceeds your target price of $15 a share? No. With the "rising stop loss strategy" you say to yourself "I will now sell Stock A if it drops back to $17 a share and if the stock continues to rise I will reap in the additional gains."

You can do the same thing when you are playing in a casino. And here's an example of that:

Let's say you put $100 into a video poker machine and you set a win goal of $150 for a $50 profit. You play for a while and during that time the credit meter ranges between $80 and $130 and then you hit a couple of big winners and suddenly you have $200 on your credit meter. Do you cash out because you beat your win goal of a $50 profit? No, you set a rising stop loss of $175 (an extra $25 profit) and hope to win even more.

Below is another discussion about the pros and cons for win goals and quitting when ahead as it applies to players who believe they have an edge on a particular casino game.

WIN GOALS AND LOSS LIMITS: SHOULD I FOLLOW THEM?

Update March 15, 2016  There is probably nothing more controversial among "math oriented gamblers" than the admonition to quit when you're ahead. While many of us go to a casino and will gladly quit when we are showing a profit, math oriented gamblers will question that.

Here's what math oriented gamblers will question:

1. Are you playing a game where you have a theoretical or math-oriented advantage? If you do have an advantage, why would you quit when ahead? What do they mean by an advantage? Well, one example is if you are playing blackjack and you are able to count cards and the shoe or deck shows a strong count that favors you getting blackjacks. Another example is that you are playing video poker and the paytable on the game has a theoretical payback of greater than 100-percent. Another example is that you are playing roulette and you have detected a bias on the wheel that favors a certain quadrant. In cases such as those the argument is that it would be smart not to quit when ahead because you have an edge.

2. Do you have a positive return on the game with other casino benefits thrown in? In other words, are you earning some sort of benefit for your play which added to the theoretical return of your game puts you ahead? For example, you are getting a rebate of 1% of your bets and the video poker game you are playing has a theoretical return of 99.2% then combining the rebate plus the theoretical return gives you a positive "play" on the game.

3. Are you really quitting when ahead? One of the favorite attacks on the concept of quitting when ahead goes like this: you aren't quitting when ahead if you are going to return to the casino an hour later, or a day later, or a year later to play again.

But should you have the same perspective?

Here are some questions to ask yourself:

How much do you trust your own skill at counting cards if you are playing blackjack? How much do you trust your own skill at determining a bias in a roulette wheel? How much do you trust the positive theoretical return on a video poker machine that you will have a positive session? Are you satisfied with a profit for this particular trip even if you will return to the casino another time to play?

Let's talk about video poker for a moment because many math-oriented players are devoted to video poker and they will swear by the paytables and the theoretical returns of the paytables on video poker games. My dispute with those who swear by the paytables is that on most video poker games a Royal Flush makes up about 2% of the return of any game. This means that if you are playing a video poker game with a theoretical return of 100.17% if you don't get a Royal Flush your theoretical return drops to about 98.17-percent. My question for those who swear by the paytables is simply this: how do you know you are going to get a Royal Flush in the time that you play? In most games a Royal Flush comes about once in 42,000 hands, so what happens to your theoretical return if it takes you 50,000 hands or 70,000 or 120,000 hands to hit a Royal Flush?

Those who decide to quit when ahead might quote the proverb "a bird in the hand is worth two in the bush." At the same time those who believe that they have an edge can argue "how do you know you won't get a bigger win if you keep playing?"

There are plenty of stories about players who hit two Royals in one trip -- even two Royals in the same day playing video poker. There are plenty of players who hit a big jackpot and kept playing and hit more jackpots. So yes, you can keep winning after a big jackpot. But, there are also plenty of stories about players who won big and then got greedy and lost it all, and to add insult to injury, after losing their big win they ran to the ATM to draw out more money in a futile attempt to win it back.

It's quitting when ahead that's a problem for many players because when you're ahead you may think that you are now playing with the casino's money and if you lose that profit you're losing the casino's money that you won and not your money. But that is very bad thinking.

Of course the truth is, once you win that money it's your money and not the casino's money anymore.  So every single time you keep making a bet after you're ahead -- after you have a profit -- you are risking your money and not the casino's money.

So now, instead of considering paytables and odds, and whatever edge you might think you have, the question becomes what is your tolerance for losing your own money?

The problem with going by the theoretical math or theoretical return is that there is no guarantee it will work for you. A classic example is this: you are dealt four cards to a royal flush. You have one out of 47 chances to hit the royal card, but how many times have you been dealt four-to-the-royal and you drew a deuce or any other non-royal card? There are plenty of stories about long term video poker players who have who have been dealt four-to-a-royal a hundred times and never got the Royal Flush card.

While you can't depend on the math of any game, you certainly should know the math of every game you play so you can make the right decisions about how to play that game and even if you should play that game. But when it comes to quitting when ahead or limiting your losses it's probably best to consider your own tolerance for losing and your own ability to walk away when you are ahead.