Terminology: Risk of ruin

[NotEnoughHeat]

Hi, I have one of those 'stupid' questions that people are sometimes embarrassed to ask, so I thought I might as well get this one out of the way early on before it gets to the point where I'm too embarrassed to ask at all!

I understand what risk of ruin refers to, it refers to the probability that an investor/gambler will face a particular level of ruin (in our case, it most commonly refers to losing one's entire bankroll). It makes sense to me when someone says the risk of ruin after X number of hands, or the chance of losing a bankroll before doubling it but sometimes I'm a bit lost when people talk about risk of ruin without these details. I'm not quite sure what the standard assumption is for what people are referring to when they only say 'risk of ruin'.

When people simply say 'risk of ruin' does it refer to:
A. the chance of going bust before doubling
B. infinite trials
C. something else

So just to clarify. I'm not asking what RoR is in general. I'm asking, what 'version' of it is usually referred to when it isn't explicitly stated. In other words, what's the standard way people usually talk about RoR.

[DSchles]

Unless stated otherwise, ROR means the probability that you will lose your entire bankroll. Period. No time limit attached to it, and no goal to reach before it happens. In essence, it means the chance of losing your entire stake before you win, well, all the money in the world. :-)

Don

[Aslan]

Unless stated otherwise, ROR means the probability that you will lose your entire bankroll. Period. No time limit attached to it, and no goal to reach before it happens. In essence, it means the chance of losing your entire stake before you win, well, all the money in the world. :-)

Don

Interesting, Don. I always looked at it as the chance of losing your entire bankroll (X) before you double it (2X). I guess because once you double it (2X), if you lose it (X), you still have it (X), if that makes any sense.

[ohbehave]

Just my 2 cents, but I think if you double the bankroll that is your bankroll. I don't think bankroll refers only to the initial bankroll but whatever it is at that point in time. If you lose half the initial BR you don't have half a BR, you have a BR thats half the original. We have to constantly assess ROR in terms of what is the current BR.

[Aslan]

Just my 2 cents, but I think if you double the bankroll that is your bankroll. I don't think bankroll refers only to the initial bankroll but whatever it is at that point in time. If you lose half the initial BR you don't have half a BR, you have a BR thats half the original. We have to constantly assess ROR in terms of what is the current BR.

I believe that is how Don is looking at it.

I would be thinking more along the lines of spending or saving my earnings if I were a pro, since blackjack would be the way I make my living. Therefore, unless I want to play higher and consequently need a larger bankroll, assuming I started with an adequate bankroll for the level I play at, I do not see myself adding anything to my bankroll. In this way, if I double my bankroll, then I am starting over again in a manner of speaking, the winnings I formerly made having become expenditures or savings.

Theoretically, if I saved all of my winnings, then I would have doubled my "bankroll," even if I don't choose to use it as additional bankroll. You could call it a back-up bankroll.

[ohbehave]

I agree with that as a practical point of view for a pro who would likely play to a 0 or sub 1% ROR to their initial BR.

[Bodarc]

I do not see myself adding anything to my bankroll. In this way, if I double my bankroll, then I am starting over again in a manner of speaking, the winnings I formerly made having become expenditures or savings.

If it is savings it is one thing Aslan but if you spend it all, you will eventually become one of the 5% or so who gets caught by the ROR.

[DSchles]

The original concept of one's bankroll being his entire wealth was, in fact, first enunciated by Karel Janecek, but no matter.

As is so often the case, a very specific question is asked, I answer that question, and within minutes, the off-on-a-tangent guys take over with ten comments that have nothing to do with the original question.

What sense does it make to talk about how risk of ruin changes if your bankroll increases, doubles, halves, what your net worth is, etc.? You can only express ROR right now, given the current situation. Five minutes later, you're in a different situation, and if you now want to ask the question again, then ask it again!

Why must everyone make things so complicated? To enunciate a ROR this second, you have to define the game you play, including the betting style, and the bankroll. PERIOD. NOTHING ELSE changes for that calculation. If you plan to do something to commemorate doubling your bank that changes how you play, then your ROR at this second will be different. If you plan to cut back if you lose half your current bank, then your ROR will be different. If you plan to replenish your BR, then your ROR will be different.

So, if you want to define YOUR ROR ruin differently, be my guest. But that wasn't the original question. I answered that question. Don't over-complicate matters.

Don

[ohbehave]

Well said, KJ. I don't think anyone was disputing Don's answer. As always Don provides most concise answers, but this is a discussion group and many times answers to questions that are never asked come out of these round-table like discussions.

[Aslan]

This is interesting, Aslan. Several years ago, I had ongoing discussions with a member of another site, BJ21, Kim Lee (not his real name) concerning definition of a professional player's bankroll. Kim Lee's contention was that a players entire wealth was his bankroll. I had a great deal of trouble wrapping my head around that one. But as time goes on, I have come to think he was spot on.

Here's how I do things: beginning of every year, I reset my bankroll to a certain amount. Playing off this bankroll I have a relatively small RoR. Not less than 1% like most professional players will tell you. It's actually hard to come up with a number because I play such a variety of games, conditions and spreads. Some games I am playing with different RoR than others. I have no idea how to put it all together and come up with a total RoR for all my play.

So anyway, if I were to lose this entire year beginning bankroll, which even during several 6 month, mid five figure down turns, I have not really come close to, but if I did lose this year beginning bankroll, I could set another bankroll from so called "other" funds and start again. And if it came right down to it, I could go into the equity of my home and use that. I mean everything I have, everything I own, less $4300 that I started with, came from blackjack.

So Kim Lee, if you are around and reading....I now believe my entire wealth is my bankroll. Sometimes it takes me a while, but like the tortoise I eventually get there. The beauty of this concept is that as you grow your entire wealth and bankroll by this definition, your total RoR grows smaller and smaller.

One other thing: There is such an abundance of info available about card counting, from all those still relevant, but becoming outdated books of the 70's to 90's, to more recent books like Norm's "Modern Blackjack" which focus more on todays conditions, but money management has always been a topic that I don't feel has been adequately covered, especially at the top levels of professional player money management.

I understand what you are saying, and to the extent that one considers himself a professional, that is a definition (Kim's definition) that stands up. But in another sense, the only bankroll a professional or anyone else has is what he is willing to "dedicate" toward advantage play. In your case, you have come to the point of knowing you are not going anywhere, that is, you are not going to be abandoning blackjack, or getting a "normal" job to raise another bankroll, but you are "all in;" you are taking it to the limit. Of course, as you say, the more your savings grow, the smaller your ROR grows, so that as a practical matter, you will never face such a bleak and dire situation. I believe you probably have more than a mere anecdotal sense of the ebb and flow of the game by now, if in all this time you have not come near to losing even the "dedicated" bankroll you set each year. Still, if the dreaded worst possible thing did come to pass, it would have to come to pass not just once, but also against your savings, and then, also against your home equity. So what are the chances of your ~1% to ~3% ROR (I'm guessing) actually occurring three or four times in succession in your lifetime? You may be safer than crossing the street at Paradise and Desert Inn (watch out for those U-turns and non-stopping right-hand turns). I still say dedicated because I am used to being around gamblers who have something set aside for nothing but gambling, but if they should lose it, they never dip into their rent/food money and such, but find some way to build back another bankroll, such as a temporary job, a loan from a friend, or a back-up stash. Your willingness to go "all in" bespeaks your sense of having way the "best hand," provided you play the same disciplined game you are accustomed to, and do not "go on tilt" as the poker players say. Ours is a far more scientific game I think than poker, and going on tilt is not something you would expect from a pro as yourself. Still, we are all human, so it is not out of the question, but it's something I am far more likely to do than yourself, from my read of you. Some people are just better built for the job of AP than others, and I like your chances. So, in short, I don't reject your definition of bankroll, I just don't believe it will ever come to pass, so long as you don't mess with your formula. If you begin betting at much higher stakes, however, all bets are off.

[Smoke8]

Well said, KJ. I don't think anyone was disputing Don's answer. As always Don provides most concise answers, but this is a discussion group and many times answers to questions that are never asked come out of these round-table like discussions.

Yes, well said....I agree with the "round-table concept", because all people do not see things in the same prospective. Don's answer is absolute, dead center, can't be improved on. What I think is important for the OP and other newbies reading these post is being able to extract the important elements. An example where KJ wrote, I don't know how to calculate my R.O.R? This is not targeting KJ in anyway, as I always enjoy his post, but would rather build on it. At this time I play DD Pitch, same rules, same table min., same spread, same BR and I know exactly what my R.O.R is today. A beginner AP might be attaching several different games thinking his CURRENT, ON HAND, BR is sufficient for his play. Well, just like Don was saying, it is not! One cannot bank on, "one fits all". If a player is going to attack a multitude of different games and wants to work with a low R.O.R., then I am assuming he needs to have a separate BR for each different game and make BR adjustments after each playing session. He will then have a much less risk of loosing it all!

[Aslan]

The original concept of one's bankroll being his entire wealth was, in fact, first enunciated by Karel Janecek, but no matter.

As is so often the case, a very specific question is asked, I answer that question, and within minutes, the off-on-a-tangent guys take over with ten comments that have nothing to do with the original question.

What sense does it make to talk about how risk of ruin changes if your bankroll increases, doubles, halves, what your net worth is, etc.? You can only express ROR right now, given the current situation. Five minutes later, you're in a different situation, and if you now want to ask the question again, then ask it again!

Why must everyone make things so complicated? To enunciate a ROR this second, you have to define the game you play, including the betting style, and the bankroll. PERIOD. NOTHING ELSE changes for that calculation. If you plan to do something to commemorate doubling your bank that changes how you play, then your ROR at this second will be different. If you plan to cut back if you lose half your current bank, then your ROR will be different. If you plan to replenish your BR, then your ROR will be different.

So, if you want to define YOUR ROR ruin differently, be my guest. But that wasn't the original question. I answered that question. Don't over-complicate matters.

Don

I think everyone does in practice what you are suggesting here, that is, they realize that their ROR begins anew each and every time they step out to play based on their here and now bankroll. No one is criticizing what you are saying, just using this thread to bring their own experiences and understandings into a conversation on the subject of ROR, unrelated to the question of the OP. Sorry if you took it any other way.

[DSchles]

It's just sometimes frustrating to me that a person asks a very clear, very pointed and specific question, and rather than simply answering the question, so many people have to step up and relate their life stories! :-) This is how 99% of threads get completely off-track and degenerate into unrelated topics. For a thread that starts off: "what is ROR?" by the time we're 20 posts down, someone is telling you what he had for breakfast. Personally, I hate it.

If Norm received revenue from the number of posts per thread, this would be terrific; but for someone trying to sift through all that is posted everyday, it would be just wonderful if people could learn to stay on topic and resist the urge to continually be telling us what they had for breakfast and how smart they are (nothing personal; this is a general criticism of all boards).

Don