Quote from: Deprived on September 28, 2013, 09:57:07 PM

Quote from: dooglus on September 28, 2013, 09:47:01 PM

Quote from: mechs on September 28, 2013, 09:34:27 PM

Why would I invest 500 BTC at 0.25% when I can just invest 125BTC at 1% then and not have the CP risk for the othet 375 BTC?

Because you would get less variance.

Suppose a whale bets max bet and wins 20 times. If you invest 500 BTC at 0.25%, you'll still have 95% of your bankroll left:

>>> a=500
>>> for i in range(20): a *= (1-0.0025); print "%.2f" % (a*100/500,),
99.75 99.50 99.25 99.00 98.76 98.51 98.26 98.02 97.77 97.53 97.28 97.04 96.80 96.56 96.31 96.07 95.83 95.59 95.36 95.12

But if you invest 125 BTC at 1%, you'll have only 82% of it left:

>>> a=125
>>> for i in range(20): a *= (1-0.0100); print "%.2f" % (a*100/125,),
99.00 98.01 97.03 96.06 95.10 94.15 93.21 92.27 91.35 90.44 89.53 88.64 87.75 86.87 86.01 85.15 84.29 83.45 82.62 81.79

Your risk of ruin is much greater if you invest at 1% than if you invest at 0.25%.

Not sure that's true in the second case - as their BR is what they have left of the 125 plus the untouched 375 they have in cold storage.

Broadly speaking having the two risks is similar to (but not quite the same) as if the people wanting low variance did what they should have done in the first place - and withdrew 3/4 of their BR. But as they can't do BR management themselves, you're having to do it for them.

For those who want to avoid massive losses, the amusing thing is that a high risk level SHOULD be their friend. Their optimal strategy if they want to avoid large downswings is to invest a small percentage of their BR at a very high level risk level - giving them tiny CP risk AND a stop-loss to curtail losses if a whale hits a large winning streak. Of course they then also give up a lot in situations where a large down-swing is followed by a large up-swing - but until they accept they can't get the benefits of massive variance in an upward direction without accepting the reverse nothing is going to make them happy. Unless you were to specifically cater for them by allowing them to only cover small bets (where their money isn't needed) out of some sense of charity.

My analysis agrees with Deprived. If you have 500BTC to invest, and your options are either to put it all on the site at 0.25% or 1/4 of it at 1%:

20 wins for 500BTC investor @ 0.25%:

>>> a=500
>>> for i in range(20): a *= (1+0.0025); print "%.2f" % (a),
...
501.25 502.50 503.76 505.02 506.28 507.55 508.82 510.09 511.36 512.64 513.92 515.21 516.50 517.79 519.08 520.38 521.68 522.98 524.29 525.60

20 wins for 125BTC investor @ 1% (+375 coins kept in storage):

>>> a=125
>>> for i in range(20): a *= (1+0.01); print "%.2f" % (a+375),
...
501.25 502.51 503.79 505.08 506.38 507.69 509.02 510.36 511.71 513.08 514.46 515.85 517.26 518.68 520.12 521.57 523.04 524.52 526.01 527.52

20 loses for 500BTC investor @ 0.25%:

>>> a=500
>>> for i in range(20): a *= (1-0.002500); print "%.2f" % (a),
...
498.75 497.50 496.26 495.02 493.78 492.55 491.32 490.09 488.86 487.64 486.42 485.20 483.99 482.78 481.57 480.37 479.17 477.97 476.78 475.58

20 loses for 125BTC investor @ 1% (+375 coins kept in storage):

>>> a=125
>>> for i in range(20): a *= (1-0.0100); print "%.2f" % (a+375),
...
498.75 497.51 496.29 495.07 493.87 492.69 491.51 490.34 489.19 488.05 486.92 485.80 484.69 483.59 482.51 481.43 480.37 479.31 478.27 477.24

10 wins followed by 10 loses for 500BTC investor @ 0.25%:

>>> a=500
>>> for i in range(10): a *= (1+0.0025); print "%.2f" % (a),
...
501.25 502.50 503.76 505.02 506.28 507.55 508.82 510.09 511.36 512.64
>>> for i in range(10): a *= (1-0.0025); print "%.2f" % (a),
...
511.36 510.08 508.81 507.53 506.27 505.00 503.74 502.48 501.22 499.97

10 wins followed by 10 loses for 125BTC investor @ 1% (+375 coins kept in cold storage):

>>> a=125
>>> for i in range(10): a *= (1+0.01); print "%.2f" % (a+375),
...
501.25 502.51 503.79 505.08 506.38 507.69 509.02 510.36 511.71 513.08
>>> for i in range(10): a *= (1-0.01); print "%.2f" % (a+375),
...
511.70 510.33 508.98 507.64 506.31 505.00 503.70 502.41 501.14 499.88

alternating win/loss for 20 bets, 500BTC investor @ 0.25%:
>>> a=500
>>> sign=1
>>> for i in range(20): a *= (1+(0.0025*sign)); print "%.2f" % (a),; sign=(-1)*sign;
...
501.25 500.00 501.25 499.99 501.24 499.99 501.24 499.99 501.24 499.98 501.23 499.98 501.23 499.98 501.23 499.98 501.22 499.97 501.22 499.97

alternating win/loss for 20 bets, 125BTC investor @ 1% (+375 coins held offline):
>>> a=125
>>> sign=1
>>> for i in range(20): a *= (1+(0.01*sign)); print "%.2f" % (a+375),; sign=(-1)*sign;
...
501.25 499.99 501.24 499.98 501.22 499.96 501.21 499.95 501.20 499.94 501.19 499.93 501.17 499.91 501.16 499.90 501.15 499.89 501.14 499.88

Maybe over the long term there's more of a big difference?

If there's essentially no difference, then this new feature is just a fancy way of divesting a portion of your balance.