5 tactics to reduce variance

Do not index
Do not index
If you are value betting then at some point you are going to have a bad run of losses. Your first serious downswing might be at the start of your journey, a few weeks in or maybe even months in but one thing is for sure; it will come at some point.
 
Value betting is not like arbitrage betting, you are not guaranteed to win every time. Some bets will lose and those losses can string together but it’s important to remember that this is something all profitable value bettors experience.

What to do if you start with a bad run?

First things first; don’t panic this is not unusual. When I first started using the dropping odds strategy I was in the red for the first week and the way I got through that was by double-checking the math. I could see that my bets had positive expected value because I was beating Pinnacle’s No Vig Price by 5-10% every time I bet. Sure enough, it turned around just like the math told me it would.
 
Money is made over many thousands of bets not just the first 100 or 200. Value bettors reach statistical significance at around 2000 bets meaning to be sure that a strategy is successful or not you need to stick at it for at the very least a couple of months.
 
That being said there are proven ways to reduce variance so read on to learn the techniques I implemented to reduce it in my one betting strategy.

How to reduce variance

1. Bet on shorter odds

Whenever I speak to bettors who are just starting, whether that be with our software or not, I always tell them to keep their betting odds range low.
 
If you are placing value bets on things that are (relatively) likely to happen then you are not going to string together so many losses. While this will not have any effect on your profit at the end of the day, what it is going to do is smooth out your results meaning you might even be able to get some sleep in between betting sessions.
 
I recommend you don’t bet on anything above 3.0 if you are trying to minimise variance.
 
Pinnacle Odds Dropper allows you to set an odds range for your alerts to help you with this…
notion image
 

2. Place more bets

Before writing this article I asked POD users, ‘How do you try and reduce variance in your betting?’ and the overwhelming response was volume!
 
The more bets you place the closer and sooner your bets will converge with your mathematical edge.

3. Don’t place more than one bet on the same game

Placing more than one bet on the same game concentrates your risk as those bets can be correlated and expose you to steeper losses.

4. The Kelly Formula staking strategy

One of the main advantages of having a good staking strategy is that it can reduce variance. There are a few respectable staking strategies in circulation but the most widely used to reduce variance is the Kelly Formula.
 
What the Kelly Formula is going to do is make sure that your bet size is optimal after taking into account the length of the odds and your mathematical edge.
 
You don’t need to know the nitty-gritty maths of it you just need to know how to implement it. Luckily there are many Kelly Formula calculators online that can help.
 
When I switched from fixed unit betting to the Kelly Formula I noticed a significant reduction in my variance so I recommend you give it a go too.
notion image
💡
If you want to reduce variance even further then consider fractional Kelly

5. Set a maximum bet

Deciding not to bet over a certain amount of money or a certain % of your bankroll on any one bet is going to limit your risk concentration and stop you from taking losses that you don’t feel comfortable incurring in one go.

Stick to a data-driven strategy

Sticking a data-driven strategy is going to keep you focused on making logical bets.
 
One of the worst things bettors do is start to deviate from their data-driven strategy once they hit a bit of variance. I see it all the time and it is painful to watch.
 
Using Pinnacle dropping odds alerts to find value at soft bookmakers is going to give you focus and a clear route to high ROI betting.
 
Making sure to beat Pinnacle's NVP (No Vig Price) through upswings and downswings is vital.
Pinnacle’s NVP comes with every alert on Pinnacle Odds Dropper
Pinnacle’s NVP comes with every alert on Pinnacle Odds Dropper

Managing your emotions

Managing your emotions during a downturn is one of the most important things you can do otherwise you could end up straying from your data-driven strategy and start placing foolish, speculative bets in the hope of reversing things.
 
The reason I haven’t put managing your emotions as a step to reducing variance is that if you start placing negative EV bets then your downswing will start to become what is mathematically expected so it’s important to make sure that you don’t start getting emotional and placing non-data driven bets when you experience a very normal downturn.
 
If you need to go for a walk then go for one, if you need to take a short break from betting that’s fine it will mean you can come back to betting with a clear frame of mind and it will allow you to continue on your data-driven path with discipline.

Summary

  • Don't panic during downswings, variance is normal in value betting
  • To reduce variance:
    • Bet on shorter odds under 3.0
    • Place more total bets
    • Don't bet multiple times on the same game
    • Use Kelly Criterion staking strategy
    • Set maximum bet size
  • Stick to data-driven strategy like beating Pinnacle's no-vig prices
  • Manage emotions during downswings
    • Take breaks if needed
    • Don't make non-data-driven negative EV bets
  • Be patient, reaching statistical significance takes around 2,000 bets
 

Sign Up to Pinnacle Odds Dropper with our 21-Day Money Back Guarantee

Sign Up