The table shows the risk of ruin is 0.01% for 102 units, so would be just over 0.01% for 100. Perhaps this is too conservative, so the player considers playing 200 hands. The bet size is now $5000/200 = $25. The number of units is $1000/$25 = 40. Roulette requires no skill to Blackjack Risk Of Ruin Chart play, although it is helpful to learn the best Blackjack Risk Of Ruin Chart bets to make. Live dealer roulette is the most exciting game to Blackjack Risk Of Ruin Chart play on online casinos, but bettors can find other roulette games to Blackjack Risk Of Ruin Chart play online, too.
The Risk of Ruin (Also called the RoR) is a statistical model in trading which quantifies the probability a trader will eventually blow up and lose all of the trading capital in their account. It measures the risk of ruin based on the metrics of a trader or systems win/loss percentage and the percent of capital exposed to loss for each trade. The risk of ruin for a trader or system is one of the most important statistics to be aware of to understand the chances of losing your whole account eventually if you trade big enough for a long enough time. Ruin happens during long losing streaks as capital is destroyed.
The risk of ruin depends on win rate and risk per trade.
Three key questions must be answered.
What is your win rate? What is your risk of loss per trade? What are the odds of your longest losing streak?
The win rate is the expectancy of how many times you will have winning trades based on backtesting of a system or your historical record if you are a discretionary trader.
Your potential for risk of loss per trade is based on your position sizing and your stop loss placement. It is measured by a percent of total trading capital at risk. If you are trading a $100,000 account, with $10,000 position sizing, and a 10% stop loss on each trade then your risk of loss per trade is a maximum of 1% of total trading capital or $100,000 / $1,000 = 1%.
The longest losing streak projection is based on the odds you will eventually lose money in over and over again in a row over a large sample size of trades considering your win rate. This is called a drawdown.
The smaller the percentage of your trading capital you risk on any one trade the lower the risk of ruin.
The odds are that a trading strategy or system will eventually have a 60% win rate over a sequence of 100 trades and then see a losing streak of 10 trades in a row.
Probability of a losing streak based on win rate.
So the most important answer for any trader is “Will you survive a streak of 10 losing trades in a row?”
Below are the drawdowns of different risk% of total trading capital starting with a $100,000 account.
The drawdown in capital after 10 losses in a row of different total account risk%.
Keep in mind the returns needed on total trading capital after a drawdown just to get back to even.
From our look at the math above to avoid the risk of ruin it is good policy to only risk 1% to 2% of total trading capital per trade. (This is NOT position size this is risk based on stop loss placement combined with position sizing). Also a win rate of at least 50% to 60% helps limit losing streaks to a maximum of about 10 losses in a row over the long term.
Here are two formulas for calculating risk or ruin probabilities.
Blackjack Risk Of Ruin Charter
Risk of Ruin = ((1 – (W – L)) / (1 + (W – L)))U
W = The probability of a win.
L = The probability of a loss.
Blackjack Risk Of Ruin Charts
U = The maximum number of risks that can be taken before the trader reaches their threshold for ruin.
Here is another formula by Perry Kaufman:
risk_of_ruin = ((1 – Edge)/(1 + Edge)) ^ Capital_Units
For a deeper dive into risk management for traders check out my bookThe Ultimate Trading Risk Management Guide.
Basic blackjack strategy
The single most important thing that you need to understand about the game of blackjack is that it is a game of player decisions.
Unlike any other game in the casino, when playing blackjack your decisions can have an outcome on how the hand plays out and thus can contribute to the wins or losses of the players at the table. Because of this fact, there is a mathematically proven strategy that gives you the best advantage when playing, and this should be used every time you play if you want the best odds in the long run.
This strategy is known as basic strategy and is illustrated in the blackjack strategy chart shown below:
As you can see from the diagrams in the chart, basic strategy outlines exactly how you should optimally play when considering what you have been dealt in relation to the dealer’s hand. Many new blackjack players make the mistake of going with gut feeling and being afraid to bust when they play, but using basic strategy every time is the best way to give yourself favorable odds during play.
If you are familiar with casino games, you will know that the house has the advantage in every game in the casino, which is how they turn a profit. Blackjack is no exception, however is one of the lowest house edge games in the casino, which is why it’s such a great game for players to learn and play.
The house edge in a typical blackjack game is around 0.50 percent when a player uses perfect basic strategy during play. This means that for every $100 you bet, the casino expects to win $0.50 from you over an infinite number of hands. The reason why basic strategy is so important is because if you take this same example of a $100 average bet and apply it to an unskilled player, the house advantage can go as high as 2.5 percent or more, meaning that the house would expect to win $2.50 or more over time.
Because of this, it’s easy to see why playing with basic strategy is the best choice for players each and every time.