Standard Deviation

[mr_wendle]

I have read all the previous posts on SD but it still hasn't sunk in. Aside from all of the forumalas, what is SD. According to pokertracker my SD = 10.6585BB/100 hands.
What does this mean to me? Why does it matter? Ive also read the stuff about ex. -$20 - +$18. What does all this mean?
Thanks

[irchans]

Standard deviation is a measure of how far numbers differ from average.

Examples.

1. Consider the list of numbers {17,17,17,17}. This rather boring list of numbers has an average of 17 and none of the numbers differ from 17. The standard deviation of this list is 0 because there is no variance in the list.

2. Consider the list of numbers {15,17,17,15}. This list has an average of 16. All of the numbers differ from the average by 1 so the standard deviation in this case is 1.

3. Consider the list {1,2,3,3,4,5}. Now the average is three. When I first learned the term standard deviation, I expected the standard deviation of this list to be one because, on average, the numbers differ from three by one. The actual standard deviation is 1.3 if you use the formula, so just notice that it is approximately, the average deviation from the average.

Applied to poker, standard deviation measures how much your hourly results differ from your average hourly results. So if you have a win rate of 1 BB per hour and a s.d. of 10 BB per hour, then typically, each hour you win between -9 and +11 Big Bets.

The nice thing about knowing your hourly standard deviation is that you can determine your bankroll requirements, risk of going broke, amount needed to play for a few hours, probability of being cheated, and size of draw downs with simple formulas all using standard deviation.

Hope that helps.

[BruceZ]

Have you read this explanation? Many people have found it helpful.

[mr_wendle]

Yes Bruce, I did read it but still had a few simple questions. I learned a lot from your post but it didnt really sink in.
Thanks for your help.
Wendle

[pudley4]

SD measures how likely you are to get a result close to what you expect. 68% of your results should fall within one SD of your expectation. 95% should be within 2 SD. 99% should be within 3 SD.

You say your SD is approx 10.5 BB/100 hands. You also need to know what your EV/100 hands is. With these two numbers, you can calculate how likely you are to be ahead or behind after 100 hands, 1000 hands, 1,000,000 hands, etc. You can also calculate the most you can expect to be ahead/behind after 100, 1000, 1,000,000 hands.

For example: if you average 1 BB/hr, with your SD of 10.5, 68% of the time you can expect to be between -9.5 BB and +11.5 BB (after 100 hands). 95% of the time you'll be between -21 and +22 BB. 99% of the time you'll be between -31.5 and +32.5 BB.

[mr_wendle]