I believe that the variance number can be used "directly" when calculating
ROR (risk of ruin) bankrolls. That is, ROR bankroll is directly proportional to
variance. Is this not so? If it is so, that seems to be a pretty useful way
to use the variance number--I have used it that way for many years.
Several years ago, in a Video Poker Times article (Hi, Dan!), I read about a
simple way to estimate ROR bankroll. I can easily do it in my head when I
come across a new 100%+ VP play in a casino.
It is: Bet X Variance / Advantage = Kelly Bankroll (approx. 13.5% ROR)
Example: $2 single line NSUDs with .60% CB. (Like a double point day at
Orleans)
$10 X 26 / .003 = $87,000 (It's an estimate, so two significant figures
are sufficient)
I usually triple this number, giving the bankroll for a 1/4% ROR (.135^3 =
.00246), which I consider to be pretty safe. In this case, I would get a 1/4%
ROR bankroll of $260K.
Brian
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In a message dated 8/22/2005 1:06:52 PM Pacific Standard Time,
jerrodankenman@yahoo.com writes:
Now you have these two numbers: 99.54% for ER, and
19.515 for variance. You can use the first number
quite easily; multiply your total coin-in by the ER,
subtract your coin-in from the result, and that's your
expected win or loss for playing the game for that
much coin-in.
The second number really can't be used very well
directly. If you have a zillion hands, you can use it
to find how likely your observed outcome is to fall
within certain parameters.
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