Two Plus Two Older Archives Profit per Standard Deviation
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#1
12-06-2005, 07:26 PM
 Guest Posts: n/a
Profit per Standard Deviation

(I'm pretty sure that this is the wrong forum, but I think I'm more likely to get a very nice response here.)

I wanted to compare the profitability of different types of poker, and I think the proper way to do it is to compare profit with standard deviation--essentially return relative to risk.

I'm a little unsure of how to properly define these numbers, though, because I'm not sure what constitutes a trial. It seems absurd to compare the standard deviation per hand of a ring game to the standard deviation per MTT.

Any suggestions?
#2
12-07-2005, 02:19 PM
 pzhon Member Join Date: Mar 2004 Posts: 66
Re: Profit per Standard Deviation

One reasonable unit of play is a table-hour. Slightly better might be a player-hour. This means you have to take into account how many tables can be played at a time, which may vary from player to player. Perhaps even more accurate would be a player-day, since 8-tabling might not be sustainable for as many hours in a day as 4-tabling.
#3
12-07-2005, 07:16 PM
 Guest Posts: n/a
Re: Profit per Standard Deviation

Yeah.. that was what I realized shortly after posting this. Thanks.
#4
12-07-2005, 11:33 PM
 AaronBrown Senior Member Join Date: May 2005 Location: New York Posts: 505
Re: Profit per Standard Deviation

Profit per Standard Deviation is known as Sharpe Ratio (after Professor William Sharpe, one of the pioneers of modern finance). In finance, you subtract the risk-free rate from profit, but this is insignificant in poker.

This makes sense if your bankroll is the limiting factor in how much poker you can play. If you have plenty of money but value your time, profit per hour makes more sense. If you have plenty of money and time, but can't find good high stakes games, pure profit is a good criterion.

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