"PprWoman" <pprwoman.DeleteThis@aol.com> wrote in message
news:20030917132027.10780.00001027@mb-m29.aol.com...
> its a formula to calculate my bankroll and i also got a negitive number. i
> pulled this off 2+2 from brucez
I have taken a look at the post by Brucez on 2+2. You have mistated the
formula, which should be:
B = -(sigma^2/2*ev)ln(r)
where r is the risk of ruin. ln(r) is the natural logarithm. This value
can be looked up or computed using a scientific calculator. Let's assume
you want a maximum risk of ruin of 5% or 0.05 (and your values of sigma=12
and ev=1). The formula becomes:
B = - (12^2/(2*1))*ln(0.05) = -144/2 * (-2.996) = 215
If you are unfamiliar with logarithms here is a quick explanation. A
logarithm is simply an exponent defined by the equation (base)^(log x) = x.
In the case of the natural logarithm, the base is the constant e, a constant
which occurs naturaly in mathematics and nature. e is approximately equal
to 2.7183. For example, using common logarithms or base 10, log 100 = 2
because 10^2 = 100.
I hope this helps.
Paul
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