[pzhon]

Risk of ruin is a simple concept, but in practice you aren't sure of

[img]/images/graemlins/diamond.gif[/img] Your win rate.
Of course you may have an estimate, but small differences greatly affect the ROR. If you will change levels, you have to guess what your win rates will be at the other levels. You also have to guess whether games will get tougher or softer in the future, and what bonuses will be offered.

[img]/images/graemlins/diamond.gif[/img] Your standard deviation.
This is harder to figure out than you might expect. My SD estimates according to PokerTracker have oscillated wildly.

[img]/images/graemlins/diamond.gif[/img] What you will do if you hit a large upswing or downswing.
If you will step down, when will you move back up? What is your plan for taking shots at higher levels?

[img]/images/graemlins/diamond.gif[/img] How much is really in your bankroll (as opposed to your balance).
It's hard for me to imagine going on a huge downswing and losing my whole balance. If I did, I think I would put more money into poker. That extra money counts as part of my bankroll now.

With some simple estimates, I find my risk of ruin is under 0.01% (1/10^4), as long as I don't go crazy after I hit a hot streak. I'm not going to worry about calculating it more exactly until I hit a big downswing and it increases greatly.

So, are risk of ruin calculations useless? I don't think so. You can replace the bankroll with a session balance to get a session risk of ruin. You can use this when you are taking shots at a higher level or a different game. Your session balance can start at the amoutn you budget for trying the new level. You can use the session risk of ruin to determine how likely it is that you will have your balance cut in half, which might be the threshold you use for moving down in limits.