The natural fluctuation in results around your expected value. High variance means bigger swings even with an edge.
Variance measures how much your actual results deviate from your expected value. Even with a proven 5% edge, short-term results can swing wildly due to variance.
Longshot bets (high decimal odds) have higher variance than favorites. A +500 bettor with 20% true probability might lose 15 straight bets and still be within normal statistical range.
Understanding variance is crucial for: choosing bet sizes (Kelly accounts for it), setting realistic expectations, and not abandoning a profitable strategy during a downswing.
The average profit or loss per bet if you made the same wager thousands of times. Positive EV means long-term profit.
Kelly CriterionA formula for optimal bet sizing that maximizes long-term bankroll growth based on your edge and the odds.
BankrollThe total amount of money set aside exclusively for betting or trading. Never money you can't afford to lose.