![]() ![]() But it takes a 100% growth to recover a 50% drawdown, and a 300% growth to recover a 75% drawdown. It takes 11% growth to recover a 10% drawdown. It takes a greater percentage growth to recover a previous loss, because drawdowns destroy the bankroll that could have been making you profits whilst you are winning. No one likes losing money when betting that much is obvious. If you’re such a skilled long-odds bettor, a 1-in-10,000 occurrence such as this would arguably require stakes of 0.1 units for a 100-unit bankroll to reduce the size of MDD to tolerable levels. For betting odds of 10, for example, whilst the expected MDD is 84 units, a quarter of the Monte Carlo iterations were 100 or more, with one of them as high as 302. The distributions of possible outcomes are hugely variable. The second chart shows the five models scenarios for variable odds with a yield of 10%. Averages are informative, but the shape of the probability distributions gives us useful additional information about the range of expectations under scenarios of good and bad luck. And in my 10,000 iterations nearly a third of them were 25 units or more, the highest being 73.
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