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Old 09-17-2003, 02:35 PM
BruceZ BruceZ is offline
Senior Member
Join Date: Sep 2002
Posts: 1,636
Default Re: help with this formula

can someone show me how to solve this.
Bankroll = [-sigma^2/(2*EV)]*
my sigma is 12
my ev is 1

It's bankroll = [ -sigma^2/(2*EV) ]*ln(r)

It looks like you left out ln(r)? r the risk of going broke that you want. ln(r) is the natural logarithm from your calculator or Excel. If you don't have ln but you have log base 10, you can do log(r)/log(2.718) instead. So if you want a 1% risk of ruin, then

bankroll = [ -12^2/(2*1) ]*ln(.01) = (-144/2)*ln(.01) = -72*(-4.605) = 332 units.

Maybe you squared -12 instead of taking -(12^2)?
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