Re: Standard Deviation/Win Rate
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I really don’t understand how one can have any (let alone a $30 per hour) positive win rate (redundant I know) and still know that “…it is possible to have a two-year losing streak.”
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Perhaps a concrete example will help show how this is possible.
Assume your win rate is $30/hr at 15/30 holdem, and your SD is 10 times this -- or $300/hr.
Let's say you play 500 hours per year, or 1000 hours over 2 years.
Your EXPECTED win over this time is $30 x 1000 = $20,000.
Your SD over this time is $300 x sqrt(1000) = $9487. Let's round this to 10,000 to make the calculations easier.
Statistics tells us that there is roughly a 95% chance that your ACTUAL win rate over this time is in the range 20,000 - 2 * 10,000 to 20,000 + 2 * 10,000 -- i.e., between 0 and $40,000. But note that there is a 5% chance that your win rate is greater than or less than this range. Specifically, there is a 2.5%, or 1 in 40, chance that you lose money over this time.
So, it's not LIKELY that you'll lose money over this time, but it wouldn't be a freak occurrence if it happened.
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