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Risk of Ruin?
| August 28th, 2010 at 8:49:28 PM permalink | |
| CapnDave Member since: Jul 16, 2010 Threads: 2 Posts: 18 | Howdy, folks, Wondering if anyone can help me understand the concept of Risk of Ruin a bit better. OK, I get that it's basically your risk of going broke... But, your risk of going broke before what? Doubling your bankroll? Winning 10% of your bankroll? The reason I ask is to better prepare myself in terms of "session planning"... The specific question is, for a given house advantage (H), how many Units do I need to buy in for to have certain percentage (P) chance of winning X units before I lose some amount of my bankroll? For sake of argument, let's say 50% of my bankroll. Is there an equation that links these variables together? Thanks for any guidance you can provide! |
| August 28th, 2010 at 9:04:20 PM permalink | |
| mkl654321 Member since: Aug 8, 2010 Threads: 65 Posts: 3412 |
RoR assumes that you play either until you go broke, or reach a point where your bankroll will grow infinitely. The concept only has meaning in a positive expectation context, as the RoR for a negative expectation game is essentially 100%. In actuality, RoR is NEVER 0%, but for the purposes of bankroll calculation, you could make the presumption that, say, an 0.01% RoR (one in ten thousand chance of going broke from this point on) is adequate. Therefore, an RoR calculation would have a goal--that of reaching a point where further RoR was essentially zero. Some RoR calculations assume a goal-point of doubling your stake, in which case the RoR number would be lower than for reaching "never look back" territory. For example, at positive EV video poker, we considered $5,000 to be the magic number (bankroll) for a 1% RoR, playing at .25 denominations. Since a $10,000 bankroll had a RoR of 0.2%, we considered this to be an "orbital velocity" number and equated it with infinite bankroll--although one of us can and did go broke after reaching $12,000. The point I'm trying to make is that an RoR calculation can either be considering an infinite number of trials, or have a fixed goal (such as doubling up) in mind, and if you see a RoR calculation, you should know what it assumes as the "goal", if any. The fact that a believer is happier than a skeptic is no more to the point than the fact that a drunken man is happier than a sober one. The happiness of credulity is a cheap and dangerous quality.---George Bernard Shaw |
| August 28th, 2010 at 9:19:29 PM permalink | |
| dwm Member since: Aug 9, 2010 Threads: 13 Posts: 109 | Not sure what game you are playing, and do not know the equation. But a proper money mgt plan for craps, with good bets of less than a one percent house advantage, is a 10 shooter bankroll per session, and a 20x session bankroll for the total bankroll. So if per day session you risk about $50 out of pocket per shooter, use a $500 bankroll per session, and have a gambling total bankroll of $10,000. |
| August 28th, 2010 at 10:03:12 PM permalink | |
| Caffiend Member since: Aug 3, 2010 Threads: 0 Posts: 27 |
www.bjmath.com has a risk of ruin section devoted to blackjack that covers topics like that. In particular: http://www.bjmath.com/bjmath/ror/donror1.htm which answers your question. |
| August 29th, 2010 at 5:47:24 AM permalink | |
| Wizard Administrator Member since: Oct 14, 2009 Threads: 255 Posts: 5761 |
Usually when a RoR is quoted, the goal will be stated as well. In my experience, usually that goal is to increase the bankroll by a factor of x. It's not whether you win or lose; it's whether or not you had a good bet. |
| August 29th, 2010 at 7:05:44 AM permalink | |
| teddys Member since: Nov 14, 2009 Threads: 87 Posts: 2305 | Holy cow, man. That sucks! I bet the "team" had a little soul-searching after that one. "If you can make one heap of all your winnings / And risk it on one turn of pitch-and-toss / And lose, and start again at your beginnings / And never breathe a word about your loss..." -Rudyard Kipling |
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