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Thread: Double21: ROR Question

  1. #21
    ET Fan
    Guest

    ET Fan: It may be a simple question ...

    ... but I'm not at all sure Double21 knows what he's asking!

    He said: This is a practical issue for those of us who rely on blackjack winnings for income!

    Since he's relying on winnings for an income, I really don't think he intends to make ONE withdrawal, then play forever after with zero withdrawals! How practical is that? I really think he wants to make withdrawals every time he doubles in perpetuity.

    I completely understand MathProf's caution. This is not discretionary income for D21. He is relying on blackjack winnings for income.

    ETF

    > This is really too easy for MathProf to not
    > understand, so I don't know what all the
    > fuss is about. I would estimate that the
    > original 3% has to be increased to at least
    > 4-4.5%, and 5% wouldn't surprise me.

    > Basically, all we want to know is of the
    > 97% who reach $2,000 and continue forever,
    > how many would have tapped out when their
    > $2,000 slipped back to $1,000, if they had
    > been deprived of the extra $1,000 cushion
    > that they had and went bust instead of
    > bouncing back up and making their fortune.

    > VERY simple question, no, MP?

    > Don

  2. #22
    ET Fan
    Guest

    ET Fan: Tell me where it hurts

    > One poster declared if you start out
    > without the intention of withdrawal after
    > doubling the bank, then revert back to the
    > original bank after doubling it, one retains
    > their initial ROR. However, starting out
    > with that intention and then doing it,
    > increases the ROR. Go figure.

    Why do these two statements seem contradictory to you? Once you've doubled your bank, your ROR is no longer X%, it's much lower. (The original ROR wasn't predicated on the assumption you were surely going to double that bank. Once it's doubled, you have new information to plug into the ROR formula.) If you then take enough to restore the original constraints, the ROR goes back to square one.

    Got it?

    ETF

  3. #23
    Double21
    Guest

    Double21: Re: It may be a simple question ...

    Yes ET I know what Im asking. I'm first of all trying to understand what happens to my initial ROR (BJA definition) if after a certain amount of winnings---in this example an amount equal to the starting bank---I withdraw and start over with the initial bank. Having gotten that data, the next question (as your post suggest) would be what if I do this over and over again? If withdrawal after doubling the bank results in an unacceptable ROR then maybe it has to be winnings of three times the original bank. I'm still uncertain what happens to the starting ROR if you withdraw after doubling the bank. It still seems strange to me that if you take two players (A and B) and A plays until doubling the bank; makes a withdrawal of these winnings and starts over; Player A's ROR is higher than Player's B's who then starts playing for the first time.The cards don't know who's been playing and who's been waiting.

    This seems like a very practical question to me. I can easily imagine people and teams using their winnings at some point on a regular basis.

  4. #24
    Don Schlesinger
    Guest

    Don Schlesinger: Now, you're talking!

    > If I now understand what you are saying,
    > the player has the following plan. Start
    > with 1000K Bank and play with a 3% RoR.

    Well, if it's all right with you, we'll start with $1,000 and not a million! :-)

    > If he doubles the bank, he withdraws the $1000
    > and starts again. He then continues to play,
    > at the same betting levels, with no further
    > withdrawals.

    See, that wasn't so hard, after all! :-)

    > His overall RoR is the sum: 2.91% +
    > (97.09%)* (3%) = 5.83%.

    > Note that this is just under 6%, a little
    > less than double the original RoR.

    Now, you're talking! And, as you can see, above, this is precisely the question that D21 wanted answered and which hasn't been answered until right now. I was a little conservative in my estimate of 4.5%. But, as initial ROR goes up, the difference between the correct new answer and double the original answer is not quite as dramatic as "almost double." So, for 10% ROR, the new answer might be something like 18%.

    Don

  5. #25
    Oldster
    Guest

    Oldster: Re: Wow, this is weird

    If the 3% ROR assumes NEVER removing money from the bankroll, then seems to me more than 97% would reach $2,000 and later suffer a loss so great that they eventually lose everything including the original bankroll.

    Or am I overlooking something?

    Oldster

    > This is really too easy for MathProf to not
    > understand, so I don't know what all the
    > fuss is about. I would estimate that the
    > original 3% has to be increased to at least
    > 4-4.5%, and 5% wouldn't surprise me.

    > Basically, all we want to know is of the
    > 97% who reach $2,000 and continue forever,
    > how many would have tapped out when their
    > $2,000 slipped back to $1,000, if they had
    > been deprived of the extra $1,000 cushion
    > that they had and went bust instead of
    > bouncing back up and making their fortune.

    > VERY simple question, no, MP?

    > Don

  6. #26
    Don Schlesinger
    Guest

    Don Schlesinger: Re: Wow, this is weird

    > If the 3% ROR assumes NEVER removing money
    > from the bankroll, then seems to me more
    > than 97% would reach $2,000 and later suffer
    > a loss so great that they eventually lose
    > everything including the original bankroll.

    > Or am I overlooking something?

    You're not overlooking anything, but your assumption just isn't correct. This is in keeping with the "if they don't get you early, they'll probably never get you" concept I enunciated in BJA. It's a little like escaping the earth's gravitational pull; all the hard work is at the beginning, but once you're free and clear, you don't get pulled back.

    Survive that treacherous early period, on your way to $2,000, and you stand a good chance of "escaping" ruin and never looking back.

    Don

  7. #27
    Don Schlesinger
    Guest

    Don Schlesinger: Shortcut

    > But, as
    > initial ROR goes up, the difference between
    > the correct new answer and double the
    > original answer is not quite as dramatic as
    > "almost double." So, for 10% ROR,
    > the new answer might be something like 18%.

    With a little simple algebra, it occurs to me that if x is the original ROR, in decimal form, and we're looking for the formula to express total ROR if we plan to siphon all profits, should we double, then the new ROR is just: 2x/1+x.

    I'd like to make another suggestion, if I may. When I was trading, I often wondered if I should stay with a position, or take it off. My colleague used to remind me that the decision didn't have to be "all or nothing." He used to advise me to take off half of the position. That way, I could never be 100% right or 100% wrong; it was a simple compromise.

    The analogy here is that, if siphoning off ALL profits at the doubling point increases your initial ROR to unacceptably high levels, the alternative to waiting until you triple or quadruple a bank, to take any profits, is to take only half of your profits, once you double, rather than take all of them. You get to spend some money, and your initial ROR isn't increased as dramatically. A nice compromise.

    Don

  8. #28
    ET Fan
    Guest

    ET Fan: Typo

    With a little simple algebra, it occurs to me that if x is the original ROR, in decimal form, and we're looking for the formula to express total ROR if we plan to siphon all profits, should we double, then the new ROR is just: 2x/1+x.

    Correct, but you need parentheses in the denominator:

    2x/(1+x)

    Rather important parentheses, in this case.

    ETF

  9. #29
    Don Schlesinger
    Guest

    Don Schlesinger: Re: Typo

    > Correct, but you need
    > parentheses in the denominator:

    > 2x/(1+x)
    > Rather important parentheses, in this case.

    Technically, you're right, but there's little chance for confusion here. I'm sure everyone understands that I didn't mean 3x, because I would have said so, if I did. After all, what would have been the point of writing 2x as 2x/1?

    Don

  10. #30
    ET Fan
    Guest

    ET Fan: Chance for confusion

    Technically, you're right, but there's little chance for confusion here.

    This from the PRINCE of spelling critics? ;-)

    Person enters it into his calculator, gets the answer, and relies on it. Happens all the time. Not everyone speaks algebra as a language. Not everyone who speaks it looks carefully every time.

    ETF

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