aaand we're at -1500.

(sorry for cutting up your post, by the way)

The problem is that you and dooglus calculated different things. He showed the relative change in your *invested* bankroll:


while you calculated the total of invested bankroll *plus* uninvested portion:



The problem in this unequal comparison arises when you start calculating, as you did in the end, what happens when several big losses are followed by wins (for the investor).

Take an extreme example: Several big losses drive the *invested* bankroll of the 1% investor to 0, while the <1% investor still has a non-zero amount invested. That's a possible scenario, and that's what dooglus' percentage calculation describes.

In that case, any further profits are going entirely to the <1% investor, unless the 1% investor "refilled" his investment. But in that case, your calculation isn't applicable anymore, because you assumed fixed initial investments.

So I don't think your example calculations already sufficiently show what you want them to show, but I admit they did make me think about the relevance of the new system as well.

I'll have to think about it some more, but I'm not sure anymore either if it makes a difference whether you invest, say 400 btc @ 0.25% or 100 btc @ 1%, assuming the 1% investor "refills" his investment up to the total of 400 btc.

That's still "only" twice as much as j-d's current bankroll. I'll leave it up to better mathematicians to calculate exactly how low the chance is that he'll break the bank before he is bankrupt.


EDIT: +3000 profit now

Yes and no. The strategy is essentially unimportant, every martingale or similar sequence can be analysed as an equivalent single bet. The relevant factors are size of player bankroll, size of casino bankroll, and desired profit of player. Not completely true. Forgot that maxbet size factors in as well.

In that sense, if a player's bankroll is orders of magnitude larger than the casinos bankroll, he could, with a very high likelihood, bankrupt the casino.

But that requires an utopically large bankroll of the player. While nakowa has, perhaps a bankroll the same size as the casino. Since we have maxbet size, his chance to drive j-d bankrup is exceedingly low.

Irrespective of that, he already *is* at a profit. The rational choice now, (as before), is simply to stop playing. The end.

On a much smaller level, I made the same mistake that I hope nakowa will make eventually: I didn't stop playing when I was ahead.

I mean, you shouldn't play a -EV game at all, technically, but say you did and you made a profit. Now you're *still* looking at a -EV game, so the advice to not play *still* holds :P

The only difference is that, if you were lucky enough to have made the irrational, but profitable choice to play (and won), then you could actually leave the game with a profit if you leave now.

For me, that profit was +100% of my initial bet. For nakowa it was much higher, both in absolute and relative terms. In the end, I started one martingale too much, and the profit was all gone. For nakowa, because his initial winnings were much much higher, it'll take longer to be eaten away. But there's a real chance he won't stop either before it's all gone.

I think the word you're looking for is "compulsive gambler".

Not anymore. House profit up to 1400, but wildly swinging up and down.

Glad to see we didn't chase our very own Moby Dick away :D

(wait... that analogy isn't exactly what we want.)

Oy gevalt. Aren't you an entitled little bugger.

Anyway, count me in as part of the "minority" who's in favor of being able to set their own risk percentage. I'll probably leave mine at 1%, but I see absolutely no reason why dooglus' brilliant idea of a market-determined maxwin shouldn't be implemented.

Did you ever consider that maybe we want to find a compromise, to keep those "weak hands" in?

Sure, they dilute your profits, you could say. But those unwashed mathematically uneducated masses sure add to the total bank size, this making the place more attractive for big players.

Right, I remember reading that post. I'm okay with making that distinction, calling it 'math' vs. 'psychology'. I will just continue to get cranky when decisions based on the latter category are called "irrational". (sorry for the outburst by the way. low blood sugar, I bet)

(ffs, I can't keep myself out of the discussion... compulsive gambling, compulsive discussing, it's all the same )

I don't disagree with your table, but as was pointed out before, there's no way to exactly quantify the counter-party risk here, so from what we *can* quantify (volatility, returns) Bitsinmyhead's point still stands.

And in any case, the point I tried to get across before was a different one anyway: the entire j-d system is dynamic, not static, and influenced by human reaction. Ignoring those (possibly irrational) reactions is *irrational* itself. Maybe the most relevant case: when bank size starts dropping because of the high variance, people get nervous and pull out, bank size drops further, people will get even more nervous, etc.

Granted, we weren't quite there yet yesterday, but we were getting close, with all those paranoid remarks like "Dooglus = nakowa", or "nakowa cracked SHA".

Can you please try to at least see my point, even if you ultimately won't agree with it: this entire discussion reducies the correct maxbet size to the Kelly formula, but doing so ignores an important aspect in managing profit and risk -- that not all actors asses risk the same way. All other things being equal, higher maxbet means higher variance, which means the bank can be brought closer to zero. Some of us (me included) are willing to sit that out and trust that the whale will eventually run out of luck, and will be harpooned by the 1% edge, but for other actors, this swing is too much. I'm not saying we have to agree with them, but it's not correct either to say they're acting "irrational".



I said no such thing. I said opinions are divided on this -- though not necessarily equally. Even if the ratio of opinions on this would be 2/3 to 1/3, it would ridiculous to claim that *all* the investors share the same opinion. By the way, please include me in "dissenting opinion": *personally* I would have preferred that maxbet stays 1%, or maybe goes to 0.5%, but *considering other investors and how they might react*, I was sort of okay with the decision, as long as it isn't permanent.

Plus, can we please not entirely ignore the fact that site profit went from around -0.1% yesterday back to about -0.03%? No guarantee yet that it'll all work out just fine, but we're certainly on the right track.

Bullshit. It's pointless to argue further on this, I'm out of the discussion. Seriously rampion, you lost a lot of my respect today (not that it really matters).

Actually, no, I'm only in this since April (I know, I know). But that's the period I meant by "historical precedence" for upward breakout.

I see. The circlejerk continues. Let me try again:

(1) Our favorite whale is back. Please stop repeating the argument that somehow Dooglus chased him away. That obviously didn't happen.

(2) Kelly value is not the "only rational value" to base maxbet on. It's dead simple: it's provably the correct value for optimal growth. That's all. If you don't see the difference between that and "the only rational choice", you're hopeless.

(3) You're still free to *prefer* that maxbet = Kelly value. But it's a preference, nothing more, nothing less. Right now, investors are obviously not of the same opinion about this. But you need to stop calling those who have a different preference from your own "irrational". It's disingenious, and rather insulting.

(4) The long-term solution seems to be clear: Dooglus will (probably) implement a market determined maxbet, i.e. investors choose their own exposure. The details are maybe still open (what's then percent range investors can chose? will there be a forced delay to limit wild maxbet swings?), but in principle, the idea is fantastic and should satisfy all.

(5) In the meantime, if you prefer maxbet to go up again, go ahead, lobby for it. But keep your arguments somewhat respectful (see points 2 and 3 above).

... and now something that I really feel needs to be said in all of this:

(6) Dooglus, you're doing a fantastic job. Most of us investors know this, even if we don't always show it. Maybe some of us didn't completely agree with your sudden maxbet reduction yesterday, but seriously, j-d is the first gambling site that I feel comfortable with both as an (occasional) gambler and as an investor. Keep that in mind please, whenever you start doubting your project.

Price is stable. Eerily stable, no? current price ≃ 24h average ≃ 30d average, on both mtgox and bitstamp.

What does that tells us? I'm not sure, to be honest. Looking at the historical precedence, I would expect a solid upward break out. But my intuition says it won't be that easy.

anyway, looks like our best customer is back

Look, we agree on the math. We even agree that unilaterally, without announcement decreasing maxbet was a mistake.

My point is: stop arguing *purely* from a mathematical point of view when the domain in question is the physical world, which is governed by mathematical truths only under a pretty heavy load of simplifying assumptions.

In simple terms: everyone go ahead, criticise the decision. But do it with a modicum of humbleness, not pretending that it was somehow "provably" wrong to make the call to reduce maxbet.

Didn't have your sig in mind... guess I'm just personally appaled by the more Rayndian mindset some in here seem to have.

Anyway, you're partly right. Most criticism towards (c)ripple (ooh, that's a smart one) isn't based on principles, but on, well, greed I guess. Just pointing out it's not only greed that can make you reject it. I like to think that I'm in this thing for roughly equal portions of idealism and greed. Maybe delusional.

For fuck's sake, finally. Thanks for putting this sentiment into precise words. Fuck Kelly criterion. Fuck "trust the math". Investors are humans. Pretending they are not, pretending there's a zero chance that the site will receive irreparable damage in trust if the bankroll starts approaching new lows is delusional.

Maybe the sudden change from 1% to 0.25% was not the most wise action. But people need to pull their head out of their ass and stop pretending leaving it at 1% was THE ONLY MATHEMATICALLY CORRECT ACTION DO YOU EVEN LIFT BRO.

If you open a casino in your platonic realm of mathematical objects maybe that's justified. In the real world, you better take into account your fellow human's irrationality, because otherwise you're being irrational yourself.

I see. You're in your 'lazy' period again. Probably no point then to attempt to convince you that, just maybe, if one of us bitcoincargocultists (which we are, admittedly) says he thinks the bitcoin protocol is worlds apart from Ripple on conceptual grounds he could, you know, mean it. Don't forget, if you would take that answer at face value, you could accuse them of being tinfoily Internet libertards. That's fun as well :D