Risk of Ruin
The probability of losing your entire bankroll given your edge, bet size, and variance. Even winning strategies can go bust with poor sizing.
Like a profitable business that goes bankrupt from cash flow problems -- being right does not help if you cannot survive.
Why it matters
Risk of ruin is the hidden danger in betting. A 55% win rate still goes bust if you bet 20% per play.
How DMP uses this
DMP's unit-based approach and fractional Kelly recommendations keep risk of ruin well below dangerous levels.
Common mistake
Thinking positive EV means you cannot go broke -- you absolutely can with oversized bets.