Bhagwhan THANKS for that, that is EXACTLY the kind of answer I am looking for, now could you kindly tell us the maths used to arrive at those answers, so I can apply it to other examples?

Crash - Grade 3 schoolboys know the maths for working out the odds of a series of outs as in your example. In that respect, with a calculator or Excel I can happily calculate the LIKELIHOOD of any series of outs, which is the maths you provided, but that's not the question I asked. The question I asked is what run of outs should one prepare to expect at some point, given the strike rates, and THEREFORE what is a safe betting level, given the strike rates? That is exactly what Bhaghwan has endeavoured to (and seemingly succeeded to) answer.

No harm though Crash, always do enjoy your electic posts.

But, again, Bhagwan, show us the maths please?

Actually Grade 3 schoolboys DON'T know the maths. If they did then what are they still doing in Grade 3?

But Duritz, if you claim to be able to do such basic probability, how can you NOT realise that once more Bhagwan is talking nonsense.

Obviously the largest run of outs increases with the more bets you make.

Anyway here are the maths.

http://mathworld.wolfram.com/Run.html

To paraphrase Groucho, maybe a Grade 3 schoolboy can understand that, but where on Earth am I going to find one.

Duritz,

TwoBets gave you a link to PRECISELY answer your question.

If you weren't interested in value why didn't you just say strike rate of 22%, and leave out the $4.80 dividend?

Key those numbers into that calculator and you will get an answer - which fortunately matches mine.

Dutch betting does NOT consider value as you claim.

What you appear to looking for is a "Risk of Ruin Calculator".

Simply google for that (Australia) and you will find a free one.

If I gave you a link directly it would offend the censor.

Hi JFC,

With the aid of my mates twelve year old I attacked the maths in your link and came to the conclusion it only predicts the likely run of CONSECUTIVE outs, not the actual worst run. The worst run being the cumulative effect of maybe many runs of outs and what we really need to know to judge our bet size. (If this conclusion is wrong blame the 12 year old).
As you say knowing the number of bets is essential to working out the likely number of consecutive outs or for that matter the worst run. I suspect the figures Bagwhan provided are based on statistics and if I were at home and had my handy 3rd grade statistics book handy I'd explain how they are derived.
From what I remember integration was required to provide a formula giving the maximum number of outs from a sample size and a hit percentage so the book takes pity on the mathematically challenged and provides a table of approximate values. Using this table you can predict the likely number of consecutive misses at any percentage hit rate and sample size (number of bets).
This again doesn't help us with the calculation of our worst run. I believe this is what Bagwhan is providing when he says multiply the worst run of consecutive outs by 3.5. He does fail to tell us (as JFC point out) what number of bets his figures relate to.

I wonder though if Bagwhan's figures have any meaning without knowing the likely dividend we are going to win. Obviously if we have a 50% strike rate and an average dividend of $1.90 we will always end up losing our bank whatever the run of outs though we may succeed with an average divvy of $2.10.

I still reckon my random number program at the start of this thread takes a lot of beating. It takes everything except variably divvy into account and must be worth a fortune to everyone that bets on horses. When interest is at a fever pitch I might even market it unless that cursed "Risk of Ruin" thing is just as good as it is foolishly underpriced.

O.K. On holidays, starting to ramble, leaving now.

KV

Thank you JFC, I feel vindicated. I also think Bagman's figures say nothing. I had previous stated on an earlier page: 'Expected runs of outs' are meaningless. I did however extent the courtesy for him to explain his reasoning.
I had explained previously [3rd or 4th post here] how to work out [simply] the odds of an any run of outs. The odds of various possible outs happening are more meaningful and useful than 'expected". Surely a grade 3 schoolboy should have been able to take it from there for their betting purposes Duritz ?

Cheers.

Was that:
a) eclectic.
b) electric.
c) epileptic.
d) I should buy a better dictionary.

KV

KV,

This is one big problem I have with Bhagwan's inclinations, he still doesn't seem to understand the insanity of playing negative expectation games.

He's quite content playing Roulette Red/Black which has an expectation of -2.7%. Then he seems to delude himself with some low run-of-out estimates to justify donating money to Casinos.

---

I just ran my Drawdown simulator for 1,000,000 trials @ 22% and $4.80 to contrast my results with your earlier ones.

Profits - Drawdown
$54,964 $226
$57,435 $219
$59,254 $241

Right now I'm unsure of the implications.

Crikey JFC...

that has to be the worst **************isation of the Kelly criterion I have seen in a looooooong time.

Anyone who stakes according to the above Math needs to seriously reconsider their life as a gambler.

Cheers,
Chris.

Well I don't care what you'se say.
JFC is the best,and I love him.
And have you dowloaded and ran "risk of ruin" yet,Duritz?
You must!

Unable to find the Risk of Ruin calculator.

As to the Grade 3 schoolboy (with the guide in his pocket):

Say, for example, you had a method with a 1 in 100 strike rate, but it was beautifully profitable with an average dividend of $1000. Well, you still have to consider money management and prepare for runs of outs. Say your bank is $1000. Even with this superlatively profitable system you can't go having 5% of your bank on them, because at some point you WILL hit a run of outs of 20, destroying your bank. The likelihood of a run of outs of 20 is 82% (0.99^20).

So, say you bet 1% of your bank. The likelihood of beginning a run which would wipe it out is still high, at 36.6%. (0.99^100). So, on average, with a s/r of 0.01 you are going to begin a streak of 100 losses every third bet or so. Not sustainable at 1%.

All right - 0.1% of your bank is the bet. In order to wipe it out, you need to have 1000 losses. Chances of that - 0.004%. (0.99^1000)

@@@@!!!!!!!!!!!!!!!

That's a massive difference!!! Suddenly, with this, your chances of wiping out your bank are merely 1 in 23,000 or so!!

So, is that the right bet size? 0.1%? Or is it something slightly more, or less? WHAT FIGURE IS THE RIGHT FIGURE TO BEGIN BETTING WITH???

That is the essence of the question I am asking. It is merely what is sensible, given a strike rate, to use as an outlay figure, given a strike rate. I think perhaps what people are forgetting is that this question is not entirely mathematical. In working out what is "sensible", part of the consideration is determining what you as a punter can handle losing of your bank before you strip off and start pacing the living room, bottle of scotch in hand, quoting from Kerouac's On the Road.

We need to consider the psychology of it: ie, what can we handle, before we do our banana?

In that respect, I again applaud what Baghwan said, for in that is some truth. He said that your bank should be 3.5 times what you can reasonably foresee as a losing streak. I myself had been thinking along the lines that if my worst losing streak only wiped out a quarter of my bank, I'd be fine. THAT'S the logic behind figures like the 3.5 of bank etc. This is what I mean when I say it's NOT a purely mathematical question. People forget that we are humans with human frailties and the best test and strain of these frailties is a long losing streak. Trust me, like no doubt all of you, I've been through them. The biggest test of a method is how is stands up while the selections are falling down.

So, like the Castle built on the hill for extra fortification, I only want 25% of my bank to be lost in the longest forseeable losing streaks.

In that case, if your bank is $1000 and your longest forseeable losing streak (LFLS so I can stop typing it) is 50, then your bet size $5, or 0.5%.

Problem is, HOW does one calculate the LFLS??? What is reasonably foreseeable?

I take Crash's and others' point that the LFLS depends on how long you bet, so in this case let's say 10 years. We live under the decimal system, everything is 1's and 0's, so let's say 10 years.

With that in mind, next thing we need to quantify is number of bets in the 10 years, so - 200 per week, strike rate 10%, let's work it out on that. (I know, 200 per week, shock horror, let's just go with it).

Therefore, 200 bets per week, lets round that to 10,000 per year, 10 years, 100,000. It all fits nicely in the decimal system.

So, strike rate 10%, 100,000 bets, what are the chances of a run of outs of 100?

Well, the chance of a run of outs of 100 at any given time with a strike rate of 10% is 0.9^100, or 0.002656%, or 1 in 37648. So, reasonably, you can expect 3 of these such runs in a 100,000 bet run. In that case, if that is the maximum run of outs you can "reasonably" expect, then your bet size should be 0.25% of your bank, given that you only want to lose 25% of you bank in this longest run of outs.

But can you expect worse than that?

What's the probability of a run of outs of 200? It's 0.9^200, or 0.00000007055079%, which is 1 in 1,417,418,550 bets.

Now, maybe the pessimists out there wills say, "yeah, I expect that, just my luck. First bet I have, and wouldn't you know it, a 1,417,418,550/1 shot will get up by me having a run of outs of 200." Well, we'll just rename you Neil from the Young Ones.

From my point of view, I don't think that's a reasonable run of outs to expect, therefore reasonable is somewhere in between.

How about 125? - Maths is 0.9^125, or 0.00019068374812%, or 1 in 524,428.

110? - 0.9^110, or 0.00092613871310%, or 1 in 107,975. This means you could expect one of these runs in your 100,000 bet run.

Maybe it's 110. Maybe you have to find the figure whose likelihood matches your anticipated run of bets. In this case, that would mean betting 1/440th of the bank, so that in the event of that run, only 25% was knocked out. Of course, 1/440th of $1000 is only about $2.20, so you'd want to have a big bank.

I don't know, this is why I posed the question in the first place - to try and find the way of working out what is a SAFE level but not a DEAD level at which to punt, given a method's strike rate. Perhaps I just answered my own question?

Must run now, my Grade 3 class starts shortly, teacher said we're learning about the Magic Faraway Tree today.