Re: Friend doesn\'t believe risk of ruin calcs are possible, thoughts?
"e" is the base of the natural logarithm.
Your friend may be overlooking a common trap. Any downswing is possible, and the more you play, the larger downswing you might experience. Think about flipping coins. If I flip a coin 10 times, a streak of 10 heads would be very unusual. However, if I flip a coin 100,000 times, streaks of 10 heads and more are quite likely. I would be wrong to suddenly conclude the coin is biased when I experience a run of 10 heads during a sequence of 100,000 flips. Similarly, your friend should not conclude RoR calculators are wrong when he experiences a large downswing (assuming he plays a lot).
BTW, the RoR equations you listed in your transcript assume you play forever and let your bankroll grow without ever withdrawing.
Hope this helps.
Paul
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