Risk of Ruin numbers

moo321

moo321

Well-Known Member
I keep seeing people making claims about risk of ruin, and I'm confused about what they're even referring to. It seems a lot of people around here use lifetime risk of ruin. I would like to criticize this method and propose an alternative.

First, what is lifetime risk of ruin based on? How many hands? If you assume infinite hands, then the eternal risk of ruin for any bankroll is 100%, because there will always be a fluctuation that will wipe out that bankroll.

Secondly, how useful is it? If we're basing this lifetime risk of ruin on the number of hands a pro will play over his lifetime (and how long is this lifetime?) what does that mean to someone who goes on a few trips a year?

I would propose instead that we stick to two statistics. Trip risk of ruin, and risk of ruin vs. chance of doubling. Trip risk of ruin is far more useful for an occasional vacation counter all the way to a part-time player. Risk of ruin vs. chance of doubling is much more important for team play, and professional players.

I know it would be much more useful to an investor to know exactly what chance there is that they would lose everything, vs. get a certain return on their money, rather than some vague statement about lifetime risk of ruin.
 
R

RG1

Active Member
I don't even know my RoR. What I do is calculate two negative standard deviations given my bet spread and how many hands I plan on playing during a trip. This is what I take to the casino. If I plan on backcounting and spreading 1 x $10 (if the count drops) to 2 x $100 for eight hours (640 hands), two negative SD is about -$1300. So I'll take a little more than that, about $1500. I have the same chance of winning $2100 as I do losing $1300 so I'm comfortable with that.

If I am going for a few days and plan on playing 20 hours (1600 hands), two negative SD is about -$1700. So I'll take about $2000.

To calculate my bet spread I look at how low 3 SD can get (about -$4100 at 6300 hands) and I double that. You will hit the negative side of 3 SD only 0.15% of the time or 3/2000. So to play this way I have $8200 and my RoR should be very low, much lower than 3/2000.

This doesn't really have anything to do with your post other than my opinion that the specific RoR doesn’t matter, at least to me.
 
EasyRhino

EasyRhino

Well-Known Member
Lifetime risk of ruin isn't THAT different than risk of ruin vs. doubling. If one is playing with an advantage (very important), then the risk of ruin with a static bet ramp can never be 100%. The whole idea is that you can win enough to where the casino can never catch up to you.

Also, in my case, my bankroll is semi-fixed. And I tend to think about it in a "lifetime RoR" fashion. Even if I double it, I still don't want to lose it all afterwards!

But agree that RoR vs doubling is more useful for team play.

RG1 said:
If I plan on backcounting and spreading 1 x $10 (if the count drops) to 2 x $100 for eight hours (640 hands), two negative SD is about -$1300. So I'll take a little more than that, about $1500. I have the same chance of winning $2100 as I do losing $1300 so I'm comfortable with that.
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From an intuitive standpoint this doesn't sound like nearly enough?
 
K

Kasi

Well-Known Member
moo321 said:
Irather than some vague statement about lifetime risk of ruin.
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OK - we'll just replace a vague lifetime ROR statement with a vague statement about trip ROR instead.

Just bring your entire bankroll on a trip, play for an hour, and your trip ROR will likely be 0.

Or bring 5% of your total bankroll for 20 trips and play 40 hours every trip and you'll probably have nothing.It is confusing that's for sure.

So bring 50-60% of your total bankroll and you'll probably be OK for most trip lenghts. The more you bring the better off you are lol.
 
K

Kasi

Well-Known Member
RG1 said:
I don't even know my RoR. What I do is calculate two negative standard deviations given my bet spread and how many hands I plan on playing during a trip. This is what I take to the casino. If I plan on backcounting and spreading 1 x $10 (if the count drops) to 2 x $100 for eight hours (640 hands), two negative SD is about -$1300. So I'll take a little more than that, about $1500. I have the same chance of winning $2100 as I do losing $1300 so I'm comfortable with that.

If I am going for a few days and plan on playing 20 hours (1600 hands), two negative SD is about -$1700. So I'll take about $2000.

To calculate my bet spread I look at how low 3 SD can get (about -$4100 at 6300 hands) and I double that. You will hit the negative side of 3 SD only 0.15% of the time or 3/2000. So to play this way I have $8200 and my RoR should be very low, much lower than 3/2000.

This doesn't really have anything to do with your post other than my opinion that the specific RoR doesn’t matter, at least to me.
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I don't know but something here seems weird to me, 80 hands an hour back-counting? How are you figuring your stan dev - from a sim or spreadsheet? You know your avg bet size? Using the satnadard 1.14 can be very deceiving and probably wrong. But, you know, it could be OK too lol. I hope it ends up of about half your total bankroll anyway.
 
blackjack avenger

blackjack avenger

Well-Known Member
We Already Have These

moo321 said:
I keep seeing people making claims about risk of ruin, and I'm confused about what they're even referring to. It seems a lot of people around here use lifetime risk of ruin. I would like to criticize this method and propose an alternative.

First, what is lifetime risk of ruin based on? How many hands? If you assume infinite hands, then the eternal risk of ruin for any bankroll is 100%, because there will always be a fluctuation that will wipe out that bankroll.

Secondly, how useful is it? If we're basing this lifetime risk of ruin on the number of hands a pro will play over his lifetime (and how long is this lifetime?) what does that mean to someone who goes on a few trips a year?

I would propose instead that we stick to two statistics. Trip risk of ruin, and risk of ruin vs. chance of doubling. Trip risk of ruin is far more useful for an occasional vacation counter all the way to a part-time player. Risk of ruin vs. chance of doubling is much more important for team play, and professional players.

I know it would be much more useful to an investor to know exactly what chance there is that they would lose everything, vs. get a certain return on their money, rather than some vague statement about lifetime risk of ruin.
Click to expand...

There is information available for trip ROR.
There is information available for ROR vs doubling bank.
The total ROR numbers are important because as you play on you approach the total ROR numbers very quickly. As soon as you play several trips you need to have a sense of total bankroll.

There is also information available on if you can add to your bankroll from outside sources and if you have to take out of your bankroll.

The fluctuations are STAGGERING. This is why on about a weekends trip you need approximately half your bank, so it does not require much playing before you need whole bank considerations.
 
G

Guynoire

Well-Known Member
I agree with this thread, a static lifetime risk of ruin doesn't seem to make sense to me. ROR should be a function of how often you compound and reinvest your bankroll. ROR vs doubling at least seems to take into account you'll compound at 100%.
 
R

RG1

Active Member
EasyRhino said:
From an intuitive standpoint this doesn't sound like nearly enough?
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My numbers could be wrong, but it works for me. I'm backcounting and only betting about 30 hands per hour. The 80 hands that I figure include the hands that I don't place a bet. Also, about 20 of the 30 bets are $25 or less where that count is +2 or less.

I do play like a progressionist though, in that if I win a $25 bet with a +2, and it is still +2 I bet $50, $75, $100, etc. If I win a $25 bet with a +2, and it drops to +1 I will bet $35, $45, $55. If it goes negative I will keep my bet out until I lose or the count really drops, then I will walk.
 
R

RG1

Active Member
Kasi said:
I don't know but something here seems weird to me, 80 hands an hour back-counting?
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80 hands/hour includes the hands I don't play. I bet about 30 hands/hour.

Kasi said:
How are you figuring your stan dev - from a sim or spreadsheet?
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A spreadsheet I made with the frequency and EV numbers from Professional Blackjack.

Kasi said:
You know your avg bet size? Using the satnadard 1.14 can be very deceiving and probably wrong. But, you know, it could be OK too lol. I hope it ends up of about half your total bankroll anyway.
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Average bet = $29.988 (including all the hands I bet $0)
Standard Deviation = 1.1418
EV/80 hands = $51.711
Max negative 3 SD = -$4080.98 @ 6320 hands or 79 hours @ 80h/hr

This assumes I play every positive hand, which I don't because I am backcounting. But the hands I miss are small bets so I should only decrease the Ave bet and SD, and increase EV a small amount.

This also assumes there are two spots to play open at the table, which is not always true. This would cause Ave bet, SD, and EV to drop.
 
blackjack avenger

blackjack avenger

Well-Known Member
Not Mutually Exclusive

​
Guynoire said:
I agree with this thread, a static lifetime risk of ruin doesn't seem to make sense to me. ROR should be a function of how often you compound and reinvest your bankroll. ROR vs doubling at least seems to take into account you'll compound at 100%.
Click to expand...

I believe you have to start with a bankroll and a ROR to come up with doubling numbers etc.

Ex.

Betting full kelly your chance of doubling your bank before losing half is 66%.

Now a separate issue you bring up is reinvesting, when and how much. Some of these questions are personal and some are math based. I think with reinvestment and expenses being personal decisions and the math getting more complex these issues may get a little sticky but info is available.
 
K

k_c

Well-Known Member
moo321 said:
I keep seeing people making claims about risk of ruin, and I'm confused about what they're even referring to. It seems a lot of people around here use lifetime risk of ruin. I would like to criticize this method and propose an alternative.

First, what is lifetime risk of ruin based on? How many hands? If you assume infinite hands, then the eternal risk of ruin for any bankroll is 100%, because there will always be a fluctuation that will wipe out that bankroll.

Secondly, how useful is it? If we're basing this lifetime risk of ruin on the number of hands a pro will play over his lifetime (and how long is this lifetime?) what does that mean to someone who goes on a few trips a year?

I would propose instead that we stick to two statistics. Trip risk of ruin, and risk of ruin vs. chance of doubling. Trip risk of ruin is far more useful for an occasional vacation counter all the way to a part-time player. Risk of ruin vs. chance of doubling is much more important for team play, and professional players.

I know it would be much more useful to an investor to know exactly what chance there is that they would lose everything, vs. get a certain return on their money, rather than some vague statement about lifetime risk of ruin.
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A goal oriented risk of ruin will depend upon a couple of things:
1. Expected value of each wager and size of bankroll
2. Odds paid to a winning wager

Examples (using a fixed EV)
1a. If your expected value=0 (fair coin toss) and you will play until you either go broke or double your bank, ror=50%

1b. If your expected value=0 (fair coin toss) and you will play until you either go broke or triple your bank, ror=66.6667%

1c. If your expected value=0 (fair coin toss) and you will play until you either go broke or win 10% of your starting bank, ror=~9.1%

1d. If your bank=10 units and you play until you either go broke or your bank grows to 20 units and your EV=+1%, ror=~45%

1e. If your bank= 100 units and you play until you either go broke or your bank grows to 200 units and your EV=+1%, ror=~12%

2. If you are playing a game in which your chance of winning is 1 in a million but if you win you are paid 1,010,000 units, this is a positive EV=1%. If you start with 10 units and bet 1 unit per trial your ror is very high even though your EV is positive.

The figures from 1a-1e are from my (Dead link: http://www.bjstrat.net/cgi-bin/ror.exe) _web program, ror for a fixed EV_. Risk of ruin for a fixed EV can be mathematically computed and this program does that. Blackjack is closer to a fixed EV than not, but variable bets at variable EVs need to be factored in. Theory of Blackjack outlines a method of approximating risk of ruin for blackjack using a fixed EV claculation like mine. It would require inputting a betting schedule such as:
Code: 
TC=-1 bet 0 units (wong out)
TC=0 bet 1 unit, EV=~-.5%, occurs p0 per cent of the time
TC=1 bet 1 unit, EV=~0%, occurs p1 per cent of the time
TC=2 bet 2 units, EV=~.5%, occurs p2 per cent of the time
....etc
You would use whatever schedule you like, but p0+p1+p2+....+pn
would need to sum to 100%. This information could come from a sim.
I could relatively easily write a program to do this, but there probably wouldn't be much interest.

Anyway, hope this helps.

k_c
 
C

Cardcounter

Well-Known Member
Risk of ruin?

If you are playing with a disadvantage such as basic stragedy blackjack than your risk of ruin is 100% however if you are good enough to get the edge than you could get your risk of ruin down very low. The wizard of odds did an experiment starting with 1,000 units playing with a biased coin that gave him a 1% advantage and played either till he lost his whole bankroll or won a $1,000,000! He won a $1,000,000 before losing his 1,000 units more than 99% of the time! When you figure risk of ruin you always add your winnings and subtract your losings.
 
moo321

moo321

Well-Known Member
Cardcounter said:
If you are playing with a disadvantage such as basic stragedy blackjack than your risk of ruin is 100% however if you are good enough to get the edge than you could get your risk of ruin down very low. The wizard of odds did an experiment starting with 1,000 units playing with a biased coin that gave him a 1% advantage and played either till he lost his whole bankroll or won a $1,000,000! He won a $1,000,000 before losing his 1,000 units more than 99% of the time! When you figure risk of ruin you always add your winnings and subtract your losings.
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No, a basic strategy player does NOT have 100% risk of ruin, and the fact that people keep saying that is one reason I started this thread. A basic strategy player has more than a 50% risk of ruin vs. chance of doubling, but it is quite possible to double a bank at a disadvantage. I've done it many times clearing bonuses.
 
QFIT

QFIT

Well-Known Member
blackjack avenger said:
Your "Hands Required Given Probability of Reaching Goal" calculator is not working. It's the bottom one on page.
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Thanks. Restarted the server and it's OK now.
 
QFIT

QFIT

Well-Known Member
mdlbj said:
Haha Windows. Crash-reboot-repeat.

Ever thought of exporting your app to XML so all of us " MAC " Types can enjoy the benefits of using it?
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These calculators can be used on a MAC. Converting CV would take over a year.
 
K

Kasi

Well-Known Member
RG1 said:
80 hands/hour includes the hands I don't play. I bet about 30 hands/hour..
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Well good luck - sounds like alot of variables - so many in fact that one answer may not fit all lol - hope you know what you're doing!
 
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