In today’s video we delve into Variance, a big sports trading problem.
Variance is a measure of dispersion that reveals the variability based on some data as a function of its mean. This mathematical data is obtained thanks to the sum of the squared residuals divided by the total of explorations. The variance is greater than or equal to zero in either case. It is without a doubt the real problem, even in a very positive and profitable strategy, it is a problem.
Risk / benefit. The risk is proportional to the benefit that can be obtained and the variance is not exempt. The higher the average odds we bet on, the higher the variance. And vice versa. A balanced odds is 1.9.
Emotions / doubts / mistakes. Being responsible and betting with your head are some of the keys to success. Making a profit can cause us to lose the north and start making a lot of bets or very strong bets. Errors pay dearly. The variance can cause us to make mistakes, and this leads to losses. A cyclical movement difficult to stop.
What can be done against the variance
- Analyze errors. Any player makes mistakes, it is inevitable. Analyzing the mistakes made will allow us to learn, gain knowledge, train and face them the next time from another perspective.
- See things in perspective.
- Have a predefined plan and adapt to it.
- Take a break. When things are not going the way you expect, when you enter a defeatist dynamic, it is best to take a break. Rest allows you to see things with perspective to avoid variance, error, losses.
Variance, a big sports trading problem