Variance in Betting: why good bets still lose (and how to survive downswings)

A guide to variance, losing streaks, bankroll sizing and Kelly. Learn what to expect and how to keep your bankroll alive.

Open Max Drawdown Simulator

Plan and trade from one terminal with live data.

Try FairOdds Terminal

TL;DR

  • Even great (+EV) bets lose often — variance creates streaks.
  • Judge performance by long-term EV & CLV, not one week of results.
  • Use fractional Kelly (e.g., 0.25–0.5×) and expect drawdowns.
  • Plan risk with the Max Drawdown simulator before you scale up.

Related: EV Calculator • Kelly Calculator

1) What is variance — in one minute

Variance is the natural randomness around your expected value. With a small edge (e.g., +1–2% EV), outcomes bounce up and down a lot. You can be a good bettor and still run cold for weeks.

Key point: short-term results are noisy; long-term edge shows up only over hundreds or thousands of bets.

2) Why streaks happen (simple examples)

  • Fair coin, 50/50: long losing streaks still happen. In a few hundred flips you’ll regularly see 6–8 losses in a row.
  • Small edge, 52% at 1.95: EV ≈ 0.52×1.95 − 1 = +1.4%. You still lose 48% of bets — strings of 6–9 losses are normal over a season.
  • Long-shots: higher odds = bigger swings. A 4.00 price wins rarely; droughts can be long even if EV is positive.

3) Bankroll & stake sizing that survives reality

Size your bets so a normal downswing doesn’t kill the bankroll or your mindset.

  • Kelly (2-way): f* = (b×p − (1−p)) / b, where b = odds − 1. Start with 0.25–0.5× Kelly and cap per-bet exposure.
  • Be consistent: size bets as a % of bankroll, not fixed cash, so risk scales up/down automatically.
  • Simulate first: run your plan in the Max Drawdown simulator to see “ugly but realistic” scenarios.

Open Kelly Calculator

4) Drawdown: the risk you actually feel

Drawdown = the largest peak-to-trough drop in your bankroll curve. It’s the number that decides if you keep going or quit early.

Two strategies with the same EV can feel very different: the one with lower drawdowns is easier to stick with. Use the simulator to check how stake % and Kelly divisor change typical and worst-case drawdowns.

5) What to expect from +EV betting

  • Win rate < 60% is normal for many markets. Don’t equate “good” with “win almost every bet”.
  • CLV matters: if you regularly beat the closing line, variance is the likely culprit when ROI dips.
  • Sample size: judge strategies over hundreds of bets. A 50-bet downswing doesn’t mean the edge is gone.

6) Practical checklist

  1. Estimate fair probabilities (de-vig) and bet only when EV ≥ 1–2% on liquid markets (EV Calculator).
  2. Pick a Kelly fraction (0.25–0.5×), set a unit cap, and round stakes sensibly (Kelly Calculator).
  3. Run the Max Drawdown simulator with your EV%, hit rate, and stake % to preview pain.
  4. Track ROI, CLV and drawdowns. If CLV is positive but ROI lags, keep the faith and the sample size growing.
  5. Avoid tilting: don’t raise stakes to “win it back”. Follow the plan you simulated.

FAQ

“I’m +EV on paper, why am I down money?”

Because variance. Small edges need large samples. Check CLV: if you beat closing consistently, your process is likely fine.

How big can a normal losing streak be?

With ~52% hit rate, strings of 6–9 losses are common over a season. Long-shot styles can see much longer droughts. Plan for it in your stake size.

Should I ever use full Kelly?

Only if your estimates are very accurate and you can tolerate deep drawdowns. Most bettors use half- or quarter-Kelly to reduce volatility.