Variance, a term commonly used in statistical analysis, is a measure of the amount of variation of the values of a variable, taking account of all possible values and their probabilities.
The calculation is complicated. But fear not; it is easy to understand and appreciate variance as applied to the game of poker. By understanding it, you can become a more frequent and bigger winner.
According to Michael Wiesenberg’s Official Dictionary of Poker, variance is “the distribution of your (poker) results over a set of hands or sessions, or the swings in a positive (winning) or negative (losing) direction of cash flow.”
If you often make risky plays, expect to have a high variance, with wild swings in your results – usually losing over a period of time. Being more selective of your starting hands, expect lower variance, experiencing sessions closer to your average results – winning more. And there are other ways to deal with variance.
Look at it as simply the ups and downs during a session. If the poker gods often smile on you (good luck!) combined with your poker skills, you can expect to enjoy a positive variance. The more positive, the better! It’s sort of like a sine wave; the higher and wider the swings above or below the horizontal, the greater the variance.
The Hold’em Caveat: No matter how skilled you are, variance – ups and downs – is inherent in the game. As long as luck is a factor, there will be variance. There are other factors, too. One way to help you to go home a winner is to play in games that offer the least potential negative variance.
Since most hands you are likely to play are drawing hands (usually must improve to win the pot), it is wise to use the Hold’em Caveat (for more details, see Hold’em or Fold’em? – An Algorithm for Making the Key Decision).
With hole cards that barely meet or slightly exceed the criteria of the Hold’em Algorithm, stay to see the flop only in unraised, muti-way pots. In general, prefer tables at which the players are loose and passive.
If you are playing in a bricks-and-mortar casino or any venue where there is a rake and jackpot drop, or time-rental/seat charge, variance takes on even greater significance. More so in games where you are expected to tip the dealer when you win a pot. Add together these “costs to play,” they can total over $20 per hour per player at a full table of nine players. (It’s even more in short-handed games.)
The longer you play during a session, the more hands dealt, the greater your total “cost to play.” Assuming your variance – the swings both ways – is more or less the same as the session progresses; the more difficult it will be to make up for a loss.
This suggests you should quit early in a session while your variance has been positive and you are ahead – before the “cost to play” overtakes your winnings.
But, who wants to quit while the cards are going your way, and you are gathering more and more beautiful chips? That’s when money management becomes essential.
A major part of one of the Four Basic Rules we teach at our poker classes is how to use money management while playing poker. Basically, you set aside a portion of your winnings – your “play money.” Treat the rest of your chips as your “money in the bank.”
As you play losing and winning hands, replenish your “play money” while adding the rest to your “bank.” When the “play money” (sooner or later) is gone, it’s time to cash out – a winner!
In summary: Variance – ups and downs – is inherent to the game of poker. There are ways to reduce the swings, and gain more positive variance. To deal with increasing “cost to play,” the longer your poker session, money management is strongly recommended to preserve your winnings.
“The Engineer,” a noted author and teacher in Greater Los Angeles, is a member of the Seniors Poker Hall of Fame. Contact George at [email protected].