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Whether you are placing bets on high or low odds, variance is part of your betting activity.
Understanding the rules of statistical probabilities and variance in sports betting is an important step toward long-term success.
Both approaches of placing bets on high or low odds have major advantages and downsides.
In this article, I will mention the impact and the right handling of variance in sports betting by focusing on the mathematical betting strategy called value betting.
How do you reduce variance in betting?
To reduce variance in sports betting, several strategies and steps can be used such as betting on lower odds and increasing the number of bets placed.
1. Bet on Lower Odds
Correctly calculated lower odds mean a higher statistical probability of that outcome to win.
Because of this, you can reduce variance in sports betting by wagering on lower odds.
A higher statistical chance of winning in betting means a narrower, smaller deviation of final results from the overall average results.
Betting on lower odds has the fastest results when you want to reduce your variance in betting.
2. Increase the number of bets
The law of large numbers implies that betting results over a large sample size will be closer to the average real probability.
To reduce the variance in sports betting and even out the fluctuations you need to place more bets. A large number of bet samples will almost always generate the profits you expect.
To truly reduce variance, you need to make sure that the majority of bets you placed have a positive EV. Reducing the effect of variance and the fluctuations requires a big sample that can exceed 1000 bets placed.
There is an important relationship between the number of bets and odds when it comes to variance. To reduce the effect of variations the higher the average odds you use in betting the more bets you need to place.
3. Use bankroll Management
To reduce the effect of variance in sports betting you need to have an exact size of bankroll allocated for betting purposes only.
To decrease sports betting losses caused by variance you need a bankroll management system that changes your stake based on multiple factors.
The most effective staking plan to minimize variance is called the Kelly criterion stake sizing strategy. It considers many factors such as your current bankroll and the positive EV on your bet.
4. Analyze the betting history
in some situations defining the true probability of a sports outcome is hard.
To decrease the variance in such cases you can analyze a long sample of betting history and exclude underperforming bets.
You can achieve lowering variance with this method by finding markets, odds range, leagues, or sports where the average ROI is low.
By excluding them from your future bets, you can expect a smaller fluctuation and variance.
While these important steps can reduce variance, they can’t eliminate it. Sports betting will always have some level of unpredictability that causes fluctuations in your win rate.
What is the definition of variance in sports betting?
Variance in sports betting is the phenomenon and statistical measurement of the deviation of sports outcomes from the mean/average results.
In simple words, variance is the measurement of the spread of bets that have different results than their average true probability of winning.
Variance in sports betting shows and calculates the range of possible outcomes of a sports bet can have compared to its average statistical chance.
Advantages and disadvantages of variance in sports betting
Sports bettors use variance to define how odds ranges relate to each other and which can offer more profits, rather than using variance as a statistical indicator.
Advantages of variance:
The advantage of knowing the possible variance level, and spread of a group of betting odds is the ability to treat outcomes and results the right way.
When facing long losing streaks in betting while knowing the expected variance level of that odds range we can handle it with the right staking methods and emotions.
Disadvantages of variance:
One drawback of variance in sports betting is that it can give you the illusion of not having serious issues with your value betting strategy.
In reality, a variance in sports betting defined incorrectly can easily lead to losing your whole betting balance.
Variance can be calculated, and defined with wrong or incomplete sports betting historical data.
What is the importance of variance in value betting?
Understanding the concept and role of variance in value betting has a significant effect on your long-term success.
Variance significantly impacts your profitability and success in value betting from multiple points such as understanding fluctuations, risk management, and emotional control.
1. Understanding Short-Term Fluctuations
Understanding the phenomenon of short-term fluctuation in sports betting caused by variance helps in rationally making decisions.
Bettors need to understand and accept that a losing streak of 13-15 bets is possible even if using an average decimal odds of 2.
Knowing and understanding the concept of variance can help you accept the possibility of facing serious ups and downs while betting.
2. Having Long-Term Perspective
Long-term perspective should be kept in mind while value betting even when facing serious fluctuations in results.
Understanding the effect of variance can make bettors accept that even when beating the expected value of an outcome on each bet, they still can lose if the number of bets is low.
Accepting the possibility of fluctuations and big variances while value betting helps focus on the long-term results.
3. Have a Risk Management Strategy
Having a proper risk management strategy is an important part of managing variance in value betting. It can be achieved with several methods mentioned above.
Risk management while facing fluctuations in positive EV betting can significantly reduce the effects of variance.
4. Control your emotions
Controling your emotions is one of the most important factors in successful long-term value betting while facing variances.
Knowing the possible effects and boundaries of variance in a specific strategy can help you in controlling emotional responses to long losing and winning streaks.
Both winning too much and losing a big part of your betting balance can trigger emotional reactions.
Keeping in mind the role of variance in value betting can help you analyze your situation and stick to your plans and strategy.
5. Develop a Realistic Strategy
Developing a realistic betting strategy is also based on understanding the possible effects and barriers of variance.
By knowing the possible deviance levels of your value betting strategy and the risk tolerance you can have more realistic expectations about long-term results.
Bettors with a low-risk tolerance should focus on lower odds with higher positive EVs to achieve a smaller variance in sports betting.
6. Focus on the right sample size
Focusing on the right betting sample size can be achieved if understand the possible deviance level and variance of your strategy.
While focusing on high odds, having a bigger sample size is required to mirror the true profitability of your strategy.
Bettors who are focusing on smaller odds such as under 1.50 will face shorter and smaller variances and, therefore need a smaller sample size.
Which sports are the best for low variance in betting?
Team sports such as football (soccer) that have a higher predictability are best for focusing on low-variance betting strategies.
Bookies and traders can offer more accurate predictions on football because of the more accurate historical data and other factors.
Which sports have the highest variance in betting?
Bettors wagering on individual sports such as tennis and table tennis tend to face bigger variances.
It is caused by the higher unpredictability of performance and the bigger effect of uncertain in-play situations.
What is a high odds variance in sports betting?
High variance in sports betting refers to the phenomenon of facing high-level unpredictability and many possible outcomes of a bet.
It means that there is a big chance of facing big fluctuations in the profitability of betting activity. Wagering on high odds means the high possibility of losing many bets in a row.
Generally speaking, the higher the betting odds the longer a losing streak can get. It also means the level of deviance and variance is also higher when placing bets on high odds.
Focusing on high odds and expecting big variances requires a well-thought-staking strategy and emotional control.
What is a low odds variance in sports betting?
Low variance in sports betting is caused by a strategy focused on lower odds. These odds mean a bigger statistical chance of winning and a narrower range of potential outcomes.
Strategies based on lower odds tend to face smaller fluctuations and variance while the payout is also smaller.
Another downside of low-odds strategies is the higher stakes and betting capital required.
FAQ
Yes, you can lose your whole betting balance when facing a big variance. Long losing streaks and big variances in betting are normal when using high odds.
Generally speaking, a sample size of more than 1000 bets should be enough to make a proper analysis of variance and make proper conclusions.
