Is the bet spread only used for cover and to limit risk? It seems to me that "optimal strategy" would be to bet minimum when the house edge is greater than 0 and bet maximum when the count determines that the house edge is less then 0. Anything less would just be reducing short term risk and providing cover only... Right?
You are correct. The fact of the matter is that if you spread fro $5 to $2500 you'll get canned in a hurry. And you have to have a huge roll to bet $2500 per hand.
Normal bet spreads are 1-4 single, 1-4or6 for double, depending on club heat, 1-12 for 6 and 8 deck. Unit size should be bankroll related.
Using bets between your min and max is useful for more than just cover. It lowers your variance and decreases your risk of ruin. Let's takes an extreme example: If you knew that you had a .01% advantage on the next hand, would you bet half your bankroll? Of course not. But if you had 90% chance of winning, you might.
The betting system you describe would have the highest EV. But the variance would be sky-high as well. Your risk of ruin would approach 100%.
Kelly betting describes the optimal way to bet depending on your advantage. According to Kelly, the amount that you bet should be the same percentage of your bankroll as your advantage. For example, if you have a $10,000 bankroll and you determine that you have a 1% advantage, you should bet $100 on that hand. Theoretically Kelly betting has a 0% risk of ruin. As practiced it has about a 13.5% risk of ruin.
Why the difference? For one reason Kelly says that you should bet 0 when the casino has the advantage. This is often not practical in the casino. Also, when your bankroll drops, you are supposed to drop your bet size as well. In the above example, if you lose that $100 bet and your bankroll drops to $9,900, your bet size should drop to $99. Again, not very practical.
Keep reading on this site and you will learn a lot more about Kelley betting and risk of ruin.
"Kelly betting describes the optimal way to bet depending on your advantage. According to Kelly, the amount that you bet should be the same percentage of your bankroll as your advantage. For example, if you have a $10,000 bankroll and you determine that you have a 1% advantage, you should bet $100 on that hand.
According to the Kelly Criteron, one should bet his advantage multiplied by his bankroll divided by the variance. Therefore, with a 1% advantage, a $10,000 bankroll, and a variance of 1.32 (S17, DOA, DAS, 5/6 from PBJ), the bet would be approximately $75.
Regards,
MF
Very well said. We can simplify this further by saying to bet the True Count -1 in green with a 10K roll. That is until your roll gets bigger, and bigger........
