My takeaways would be:
- Never trust averages on their face
- Being consistent gives you an advantage
- Always be looking to reevaluate your situation and maximize what you can get out of it
limitedduck
joined 2 years 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
The key is not letting your losses affect your bet amount. With the gain being only 80% instead of 100%, betting your bank means 1 win and 1 loss leaves you with less than you started. Making your bet amount fixed between flips means 1:1 will instead give you a net gain. The Kelly Criterion says there is an optimal proportion of bank you can bet that will maximize this gain over many flips
What is wrong with it? That's exactly what he shows in the video. When betting it all, equal wins and losses is a net loss. The point is betting some fraction such that the gains overtake the losses