Risk of Ruin?
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!
Quote: CapnDaveHowdy, 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!
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.
Quote: CapnDaveThe 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?
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.
Quote: mkl654321RoR assumes that you play either until you go broke, or reach a point where your bankroll will grow infinitely.
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.
Holy cow, man. That sucks! I bet the "team" had a little soul-searching after that one.Quote: mkl654321Since 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.
