๐งต Card counting
Edward Thorp is a mathematician and respected investor, partly responsible for developing the quantitative investing field.
But maybe more impressively, he developed a system of counting cards in blackjack that got him banned from casinos in the 60โs โฌ๏ธ
Edward Thorp is a mathematician and respected investor, partly responsible for developing the quantitative investing field.
But maybe more impressively, he developed a system of counting cards in blackjack that got him banned from casinos in the 60โs โฌ๏ธ
2/ In blackjack, the goal is to have a hand with a higher value than the dealer's hand, without going over 21. The value of a hand is determined by the sum of the point values of the individual cards
3/ Thorp's card counting system involves keeping track of the cards that have been played in a game of blackjack. This is done by assigning a point value to each card, with low cards (2-6) worth +1 and high cards (10-A) worth -1.
4/ As the game progresses, the player keeps a running count of the point values of the cards that have been played. For example, if the first four cards dealt are a 4, 5, 6, and Q, the running count would be +2.
5/ The player can use the running count to make more informed betting decisions. When the running count is high (more low cards have been played), the player has a higher chance of winning, so they should bet more.
6/ Conversely, when the running count is low (more high cards have been played), the player has a lower chance of winning, so they should bet less or even consider not playing at all.
7/Thorp's system also involves adjusting the size of the bet based on the remaining deck composition. For example, if the running count is +5 and there are 5 decks remaining, the player would divide the running count by the number of decks to get a "true count" of +1.
8/ The true count can then be used to adjust the size of the bet. If the true count is +1, the player might bet slightly more than their normal bet, as they have a slightly higher chance of winning.
9/ Thorp's system was highly effective at improving the player's chances of winning at blackjack. In fact, he was able to use it to consistently win money at casinos, leading to his eventual ban from many establishments.
10/ Thorp's work on blackjack card counting has had a lasting impact on the gambling industry. Many casinos now use multiple decks and shuffle them more frequently to make card counting more difficult.
11/ Thorp's contributions to the field of gambling and finance have earned him a reputation as one of the most successful gamblers of all time. In addition to his work on blackjack, he has also made significant profits through investing and hedge fund management.
12/ Today, Thorp is still active in the field of finance and is considered a leading expert on quantitative investing. His work has been recognized with numerous awards and honors, including the Mathematical Association of America's Lifetime Achievement Award.
13/ Despite his success as a gambler, Thorp has always emphasized the importance of using mathematics and probability to make informed decisions, rather than relying on luck or superstition.
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