Re: Risk of ruin question
Calculate a z-score that corresponds to losing 20B. This can be done as follows:
z = -(20+(WR)(n))/((S.D)(n^0.5)
RoR = NORMSDIST(z)
Where:
n=hours played
WR=hourly winrate
SD=hour SD
NOMRSDIST is an Excel function.
For example, if your win rate is 1 BB/hr and your SD is 10 BB/hr and you play 4 hours, then:
z = -(20+4)/(10x4^0.5)=-24/20=-1.25
RoR = Normsdist(-1.25)= 10.6%.
So, if you play 4 hours, you have about a 10% chance of being down 20BB.
I think there are some technical assumptions that I have glossed over that may weaken the above. Maybe phzon or brucez can chime in.
Paul
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