Bankroll and risk
Risk of ruin
The probability of losing your entire bankroll before your edge has time to show.
Even a genuinely profitable bettor can go broke if the stakes are too large relative to the bankroll. Risk of ruin combines edge, variance and bet size into a single probability of busting out.
It is the reason conservative staking is not timidity but arithmetic: doubling your unit size does not double your growth, it multiplies your chance of never reaching the long run in which your edge pays.
See also
- Bankroll — The money set aside specifically for betting, separate from everything else you own.
- Variance — The spread of outcomes around your expected result — why good bettors have terrible months.
- Kelly criterion — A staking formula that sizes each bet to the size of its edge, maximising long-run bankroll growth.
- Flat betting — Staking the same amount on every bet regardless of how good it looks.