Register to reply

Kaufmann Risk of Ruin formula

by scalpmaster
Tags: formula, kaufmann, risk, ruin
Share this thread:
Nov8-11, 08:40 PM
P: 35
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
Phys.Org News Partner Science news on
What lit up the universe?
Sheepdogs use just two simple rules to round up large herds of sheep
Animals first flex their muscles

Register to reply

Related Discussions
How Clocks (Seemingly) Ruin Everything Special & General Relativity 41
Ruin Weapon! General Discussion 6
Finding the beta risk from the alpha risk Set Theory, Logic, Probability, Statistics 4
Regular or Premium: would this ruin it? General Engineering 3