What is a Win Rate?

Discussion in 'Trading' started by oldtime, Nov 20, 2011.

  1. It depends on the ratio of bankroll to bet size. Win rate is very important.

    If you have only $2 and a win rate of 50% and you lose $1 you have probability of ruin 25% before you even see any profit. This si just a trivial example to illustrate the problem.

    For any starting capital C, the probability of ruin is a function of win rate, bet size and avg. win to avg. loss ratio.

    Actually, the probability of ruin decreases as a function of the win rate, often exponentially, so all this talk about win rate not being important is nonsense and usually propagated by some individuals who have no concept of trading in the context of probability theory.
     
    #11     Nov 20, 2011
  2. themickey

    themickey

    Is there a formula available which calculates probability of ruin?
     
    #12     Nov 20, 2011
  3. Many. But you don't need them. If you assume your probability of ruin is 99.99%, you are right within 95% confidence.

    The more interesting problem is the time it takes for 100% ruin.
    Is it 1 month, 1 year, 1 decade or 1 centrury?

    In this life 4 things are certain:

    1. Death
    2. QE
    3. Your wife will sleep with a younger man
    4. 100% Risk of ruin
     
    #13     Nov 20, 2011
  4. with me for example...:)
     
    #14     Nov 21, 2011
  5. themickey

    themickey


    5. Taxes
    6. Government agencies full of incompetents and controllers
    7. Sheeple lose more of their freedom as time goes on.
     
    #15     Nov 21, 2011