Understanding Variance in Sports Trading and Betting

Understanding Variance in Sports Trading and Betting

Variance can be defined as the expectation of the squared deviation of a random variable from its mean, and it informally measures how far a set of (random) numbers are spread out from their mean.

If you struggled with that don’t worry your not alone. This definition doesn’t help those of us that are not very mathematically minded but there is a simpler way of looking at variance.

Variance is one of the key reasons why a lot of people struggle with sports trading and betting. It is something that I myself struggled with a lot when I first started sports trading and betting.

Understanding Variance in Sports Trading and Betting
Heads or Tails?

If we look at a coin flip there are two outcomes heads and tails. An equally weighted coin means that there is a 50% chance of it landing on either heads or tails. The nature of variance however means that if  we flipped a coin a 100 times it may land on heads 63 times and tails 37 times or heads 44 times and tails 56 times.

The results of a 100 coin tosses would not be exactly 50/50 very often.

We know however that with a fair coin toss the odds are 50/50. With a greater volume of coin tosses the number of heads and tails recorded should move closer to evens.

Understanding Variance in Sports Trading and Betting
Variance isn’t always negative and we sometimes do better then expected.

Understanding Variance in Sports Trading and Betting

Variance exists in sports trading and betting. There are several variables that we need to take into account when we looking at variance in our own betting and trading results.

We need to be aware of the odds that we betting/trading, the sample size of results that we have and what our expected edge is in the market we are trading or betting in.

It is important to develop a better understanding of variance as a sports bettor or trader. When we don’t understand something it often to leads to feelings of frustration and anger.

These feeling often have a negative effect on our sports trading. By breaking down and understanding the different aspects of sports trading we become better more profitable traders.

I am not an expert in probability and statistics it is something I am constantly learning about and trying to develop a greater understanding of. Luckily we live in an age were we can easily access articles and books published by experts in these fields.

Here is some recommended reading if you want to develop a better understanding of variance.

Variance and how to minimise it

Its all about variance

Luck vs skill in sports betting

 

 

Smart Sports Trader

Ryan Bruno is a former mixed martial arts and kickboxing competitor. He loves sports and making money online. After finishing university he played online poker and taught English for a living in Thailand for a few years. Upon returning to England his focus has been on making a living from sports trading, betting and arbitrage.

More Posts

Follow Me:
Twitter

About Smart Sports Trader 115 Articles

Ryan Bruno is a former mixed martial arts and kickboxing competitor. He loves sports and making money online. After finishing university he played online poker and taught English for a living in Thailand for a few years. Upon returning to England his focus has been on making a living from sports trading, betting and arbitrage.

Be the first to comment

Leave a Reply

Your email address will not be published.