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Isight insight: 1 pip = 2% (according to model).
Posted By: Taper_Mike
Date: Thursday, 18 December 2014, at 11:43 p.m.
In Response To: Isight insight: 1 pip = 2% (according to model). (Jeremy Bagai)
The dealbreaker for me on Isight's CPW formula is its large margin of error. On average, the error is slightly more than 4%. (I think that means plus or minus 4%!) In many cases, that is larger than doubling window itself!
I use the Isight CPW formulation, nevertheless, because I find it just as easy to calculate as the alternative Isight formula. I treat it as a doubling metric for money games, not as the CPW. Used in this way, it gives the exact same result as Isight's nonCPW formula.
Igor Erovenko explained to me that no linear approximation can ever be good enough to estimate CPW. Danny Kleinman's formula is a quadratric. That explains why it works so well. Both of the Isight formulas are linear.
When CPW at a given pip count (for the leader) is graphed as a function of race lead (in pips), the result is not a straight line. If it were, the relationship would be linear. Instead, the graph is curved. At any point, the slope of this graph is the value of a pip, i.e., %win per pip = delta(CPW) / delta(race lead).
The value of a pip, therefore, is the derivative (in calculus) of the CPW function.
Mike

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