Very good article about Kelly criterion

[Wyte22]

Warning: This article is very very math heavy, if it hurts your head, don't click the link.

I am expanding my knowledge and I ran across this concept and thought the article was a great one to share.

Cliff notes of the article: Kelly is about comparing odds to BR/BI to determine what the optimal amount to bet is, and show profit in the long run. It also compares std dev and win rates to determine optimal bankroll requirements to move to the next level compared to a standard "Must have 40 BI" rule. This is only in play if your a winning player and you plan to move up based on math instead of moving up on principal of BIs only.

Formula for Kelly (when comparing two different stakes to determine optimal bankroll for the higher of the 2 levels) is: c = (s1^2 - s2^2) / 2(m1 - m2)

s1/s2 is std dev. and m1/m2 are your winrates for your expected 2 stakes.

Here is the Link: http://www.jimgeary.com/poker/letters/KELLY.HTM

Post replies if you have a good understanding of this I am new to this concept and would love to get to know more.

Note: In the article he talks about the rule of 72, it is an investment tool, it states that whatever interest you earn on your investment divide that by 72 and that is how long it will take for your investment to grow. To apply it to poker, you'd have to do

% BR (per game) /72 = # of times to double your bankroll

an exampled when investing, assuming your investment makes 10% a year every year and regardless of the market it makes 10%:

10/72 = everyone 7.2 years your investment will double.

[gerhardt]

The "rule of 72" is an estimation tool used by bankers, investors, realters etc. to calculate (in their heads) the number of years it takes to double an investment, or pay of a mortgage, so you're calculation is correct.

The excample in the artical is based on assumption that you win more than you loose. Lets draw it to the 5% of you're bankroll rule by chris fergusan. You start from $0 , and win $10 in a freeroll:

5% of $10 = $0.50..so using the 72 rule it would take +-36 years to make $10 000.00.
Not that simple because you win, eg. $2.00 with you're $0.50, and $5.00 with you're $1.50, and it gets bigger, faster as you go up, and that is where the calcules comes in.

Applying these rules to poker is a draw-back as the variations will differ from player to player.

[travz21]

Math is idiotic.

[gerhardt]

Why slam it, if you cannot handle it.
I would love to teach you the rule of Pi, Travs.

[travz21]

lol donkaments.

[ProtekYoNuts]

Where does the feel player fall in?

[Wyte22]

feel players don't study theory as heavy, so therefore this wouldn't ever apply to them