Nov8-11, 09:40 PM
Has anyone used this formula before?
risk_of_ruin = ((1 - Edge)/(1 + Edge)) ^ Capital_Units
Edge is the probability of a win.
How is capital_units defined? Is it certain % of current balance or initial capital?
If p=0.5, e.g,fair coin toss,
how is the formula derived such that ROR always= 0.5/(1+0.5) or 1/3 of capital units?
Is there a rationale behind this?
Looking for a formula to work backwards for optimal bet size each round of bet , taking into account p,q,C,N where N = max consecutive/string of losses.
N is an important variable because total ruin can still occur even when p>0.5.
Related free ROR calculator
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