What about diversification into casino gambling? I realize that craps has a negative expectancy, but the house edge on the pass line bet is only 1.41%. One advantage of casino games over the stock market is that you actually know the probability of the various outcomes and the statistics are stationary. Perhaps we can learn something about money management from analyzing casino games?
Take a look above at a typical equity curve for a pass line craps bet. (You of course do not always make a profit for every 1000 trials.) The run lengths of winning and losing (negative run length) bets for the same 1000 trials is also shown above. We can see that you typically do not lose more three times in a row. We can double the amount of the wager after we have lost three in a row and continue with the larger wager until we win. This gives you a good shot at a successful trip to the casino.
I will have to look further into quantifying the apparent improvement in performance by increasing the wager after three losses in a row. Perhaps additional mild progression may be the way to increase the frequency of successful trips to the casino?
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