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Gaming Guru
Ability to Anticipate Bankroll Swings Is a Vital Gambling Skill20 August 2002
Volatility differs among games. And, within games, when there are choices, it varies according to propositions covered, numbers of bets in action, and amounts at risk - the latter particularly when players increase or decrease wagers as the action proceeds. "Normal action," in the context of upswings and downswings, is also highly subjective. Business as usual for Ethel may be bizarre for Fred. For this reason, and since games of chance are statistical as opposed to deterministic, bankroll swings are best expressed using confidence levels. Examples might be "95 percent confidence you'll be within $200 up or down in an hour," or "85 percent confidence you won't fall below $100 during 20 rounds." The accompanying table gives limiting swings at a conservative 97.5 percent confidence level. You'll likely be below these limits 97.5 percent of the time during and at the end of sessions of the durations shown. That is, after 400 flips, you won't go over 40 units ahead (behind) or have peaked more than 80 units up (down) in more than 100 - 97.5 or 2.5 percent of all games. Size of upswings and downswings which will
If you'd accept as "normal," a looser 85 instead of 97.5 percent confidence level, halve the values in the chart. So, within 25 tries, there's just 100 - 85 or 15 percent chance of soaring (or plummeting) more than 20/2 or 10 units; similarly, you shouldn't complete over 15 percent of all 25-flip session above 10/2 or 5 units to the good (or bad). Swings based on flipping coins must be tweaked for application to real games. House advantage raises the amplitude of losses and tempers that of wins. Longshots, small bets with big payoffs for low?probability results, raise the volatility; this implies that you're apt to go deeper into the hole waiting for a goose over the top. At video poker, for instance, this effect multiplies the figures in the table by 4.5. Betting five coins in a $1 game means one unit is $5. So a peak up or down of 4.5 x $5 x 120 or $2,700 within 900 rounds wouldn't overshoot the normal range for a 97.5 percent confidence level. Half as much, $1,350, would cap the swings during the course of 85 percent of all games. Volatility may be good or bad. Upswings are what make winners. Downswings, more than edge, send most losers to the lockers. The poet, Sumner A Ingmark, described this duality in his ditty: With an upward fluctuation, Recent Articles
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