this post was submitted on 24 Oct 2023
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[โ€“] [email protected] 12 points 1 year ago (3 children)

How is this video calculating that a 50% chance of 80% gain and a 50% chance of 50% loss yields a positive expected gain? An alternating string of heads and tails will drive your money to zero - a 50% loss (1/2) would be balanced by a 100% gain (2/1) in a fair system.

[โ€“] [email protected] 4 points 1 year ago* (last edited 1 year ago)

This is true if you're betting everything you have. By not having shrinking bets after losses you can tap into the net gains. Compare 1 win followed by 1 loss with $100 start:

Win is $100+$80 = $180

Loss is $180-$90 = $90

Compare with fixed bets of $50 with bank of $100:

Win is $100+$40 = $140

Loss is $140-$25 = $115

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