Gambler’s ruin

Detail heart of queenGambler's ruin is a famous term that describes what happens when a player with a small bankroll meets another player or a casino with a much bigger capital. It isn't hard to count out that the player with little money is in trouble, but there's also a lot to learn from this circumstance. Because one thing that Gambler's ruin learns us is that even if the player with lesser bankroll is more skilled and therefore has a positive EV, he will still lose if his total capital doesn't reach a certain level.

Gambler's ruin is also close associated with money management. A lousy money management will in most cases end with the player going broke – reason is just the law of Gambler's ruin.

The foundation of money management lays upon that the stakes being decreased if the funds are reduced. If this is neglected, all the remaining capital are in risk. Let's take an example:

You have $100 and playing a game there you expect to win 7 times out of 10. This will not hinder that you sometimes lose five games in a row. After five straight losses, you will face you bankroll halved to $50. Let's assume that you have a choice to switch into playing about $5 instead with the same EV as before. Should you do that or continue as before (you have no reserve if the remaining $50 are wasted)?

No, you should absolutely change to a game with $5. The risk of Gambler's ruin will in this case be diminished and when your funds have reached $100 or more you can again play with $10 stakes. This method is essential concerning money management, and you should have this in mind playing poker.

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