How Do you Calculate Your Variance?

[Festus22]

Is it as simple as taking your win/loss amount every hour and then calculating the standard deviation? Would one expect this distrubtion to be normal? We've all heard about 300 BB's as an extreme limit of what could be expected by random chance. Does this represent 3 standard deviations from some kind of nominal value? I would think it has to be time or hand weighted to provide a context. Anyone have some insight on all this?

[chrome_gnome]

Well variance is just the difference between the value in question and the mean of the set of values in the total population.

For example if you have 3 numbers like 10,15,25 as your three values. The mean of these numbers is arrived at by taking 10+15+25 and dividing by 3. This results in a mean("average") of 16.6667. The variance of each of the values is found by taking the value minus the mean. So the variance of 10 would be 16.6667-10=6.6667 and so on. If you use something like Microsoft Excel all you need to do is record your bankroll every hour while you play. Then enter the numbers in a column in excel and have the program find the amount each entry is +/- from the previous entry to find you hourly win/loss rates. Then just use the function icon, select the list of your win/loss rates and it will tell you the std deviation. It helps to have Excel calculate your mean as well since std deviation is a deviation from the mean and so it only makes sense when compared to the mean value.

In the above example if your bankroll was $100 and you played for three hours and at each hour your bankroll was $110, $115 and $125 you would get the 10, 15 and 25 values used in the begining example. Using Excel you would discover that your mean hourly rate was $16.6667 per hour and your standard deviation is $6.23.

Finding the variance is kind of a middle step and the number you get is not of much use directly because the units of it would be dollars squared which is why you have to take the square root to get standard deviation in a simple dollar unit.

I hope that makes some sense. Doing the calculations by hand is not that tough but getting a $20 calculator with statistics function keys or using something like excel makes it so much easier. All you need is to keep an accurate bankroll balance every hour. If you want you can also just keep a record of how much your up or down since that is the number your after eventually for the calculations. Its a personal choice.

If you need I can send you a sample excel file that has the above example in it if you want to know how to set up the cells.

Unfortunately I don't know the answer to your question about what is a high or low amount and what it is relative to. All I', familiar with is how to log the data and process it. Interpreting it is still something I'm learning.

[chrome_gnome]

After reading what I wrote the part about the units of variance being squared actually refers to when you have to square the variance numbers in order to calculate the std deviation of a group of values.

It would be easy to explain if I could just scan in a hand sample of the calculations. All of this trying to describe math operations is kinda hard [img]/images/graemlins/smile.gif[/img]

[BruceZ]

Here's my explanation of variance and standard deviation with a numerical example.

Use the formulas I gave in this thread for bankroll requirements. 300 bb is a rule of thumb, but it doesn't always apply.