The "So What" Approach - This is for people who go to the track with completely disposable money in their pocket. If all of it is lost, "So what?!" It is rare for a serious handicapper to have this attitude, but much of the handicapper's winnings come from the pockets of people who do have this attitude!

The Weekly Bundle - In this case, a slightly more sophisticated handicapper sets aside a fixed amount to bet each week, or each trip to the track; $100, for example. At the end of the day, does he or she have more money than they did at the beginning of the day?

The Investor - The most sophisticated horse handicapping set aside a bankroll, perhaps at the beginning of their betting season. The objective is to grow that bankroll by a certain amount or percentage by the end of the betting season. To put it another way, the historical returns from buying and selling stocks is anywhere from 4-7% per year. Riskier investments yields higher returns. Thus, an investing handicapper will have a goal of increasing their bankroll by 25-35% or more each year.

From an ardent horse handicapping perspective, the investor approach makes the most sense. Now suppose you are an investor, how do you manage your funds? To ask it in a simpler manner, how much should you bet at a time? On a particular race? As with just about everything else in handicapping, there are no simple rules. However, there is one overarching principle that is critical to money management. This principle is discipline.

Simply stated, managing your bankroll requires discipline. A good horse handicapper will only bet on a select number of races where the conditions are favorable for making a profitable bet. However, when at the track, or when horse betting online, it is very easy to bet "a little here and a little there" on intervening races. For example, suppose you feel confident in your selections for races 2, 3, and 7. It is easy to skip race 1 by showing up late. Since races 2 and 3 are consecutive, you are fully involved in the race card. Maybe you have done well on races 2 and 3.

Now what?

The disciplined horse handicapper places his bets for the 7th race, and immediately goes home. Where we get into trouble from a cash management perspective is when we start betting "just a few dollars" on races 4 and 5. We had a betting plan, but we decided to deviate from it! Making these extra bets is especially easy to do with online horse betting.

The other scenario is when your selections are out of the money in races 2 and 3. It is very tempting to make questionable bets in the intervening races leading up to the 7th in order to try to catch up.

This is why a long-term, bankroll perspective makes so much sense. If your objective is to grow your bankroll by 30% in a given year, then you know that you will lose some bets. In fact, you may lose many bets. But that's acceptable if you have a good handicapping system and are disciplined enough to make only those bets which are in keeping with your system and your plan.

In his book Picking Winners, Andrew Beyer divides his betting situations into two broad categories. The first are what he calls the primes. These are situations where a horse fulfills all of the criteria for his betting system and has odds of 7 to 5 or better. Importantly, he notes that while those odds may seem low, winning half of your bets at 7 to 5 odds will yield a 20% return on your investment, which is excellent. These are the bets which pay the bills, so to speak. These are not glamorous bets, but they generate profits.

A non-prime bet in Beyer's parlance is a true flier. Perhaps it is a 50 to 1 long shot that otherwise looks very promising. Perhaps it is an exacta box with a favorite and a few 20 to 1 horses. These are the glamorous bets that everyone craves, but the reality is that they are exceedingly rare. Yet, they are a necessary part of handicapping. A few fliers in a given season can make the difference between a 15% and a 30% return for a year. Plus, the excitement and pride and bragging rights are an undeniable pleasure.

So, how to balance the two? Again, this is where a disciplined is necessary in horse betting. One rule of thumb is to set aside 5-10% of your total bankroll for the "prime" betting situations. This fixed amount of cash can be distributed loosely across all the prime betting situations on a given day. So, with a $1000 bankroll, 5-10% results in a personal betting pool of $50-$100. This is more than enough to bet on a select number of races. In addition, one can set an additional third to half of the daily bankroll for the fliers, or another $25 to $50, bringing the total personal betting pool to $75 to $150. Note that you are not required to bet everything in a particular day. Again, by walking away from potentially bad bets is a sure way to have more money in your pocket for the next flier that comes along.

So, to summarize:

• Have a bankroll for the season, and a goal of increasing it by 20-30% or more by the end of the season, horse betting.

• Bet only where conditions are favorable, according to your handicapping system

• Set aside a fixed percentage of your horse betting bankroll splitting it between prime bets and fliers

• Stick to the plan!