Introduction

When I first met Kevin Laverick many years ago, he said that wins and losses are exactly the same.

At the time I didn't understand how that could be true, but he's absolutely correct!

Kevin is one of the pro traders in our team. He's been trading for more than 20 years and has seen it all. Wins and losses, ups and downs, good and bad.

In this lesson, I'm going to explain how variance works and why wins and losses are the same.

What is Variance?

In the first lesson, I explained the concept of value using an example of a coin flip.

Now, let's say that you and your friend are going to flip the coin 100,000 times. You agree with your friend that you will win £1.10 for every correct call and lose £0.90 for every wrong call.

Over many flips you will make a profit - guaranteed.

Because of the 50% probability, you will expect to end up very close to 50,000 heads and 50,000 tails.

However, you will never see a sequence of heads, tails, heads, tails alternating throughout the 100,000 coin flips.

You may very well call 'heads' 10 times in a row to start with, but watch the coin land on tails for all of them. That's called 'variance'.

If that happens you will be £9.00 down (10 x £0.90) but comfortable knowing that by the end of the 100,000 coin flips you will be nicely in profit.

Wins and Losses are the Same

That's why Kevin is correct that wins and losses are the same.

Every time Kevin enters a bet or trade, he's comfortable that value is on his side. Whether that particular bet/trade happens to win or lose makes no difference at all, it's just another value bet/trade.

If Kevin hits 5 losing bets/trades in a row, he knows it's variance which will correct itself long-term.

However, if you're a new trader, you will definitely start to doubt yourself after 5 losses in a row!

That's absolutely normal because you don't have the long-term confidence in your betting or trading just yet and the experience to know what's variance and what's something actually going wrong.

While the probability of coin flips is very simple to calculate, football matches are much more difficult to figure out.

Our algorithms at Trade Your Bets do a fantastic job of calculating value and, over time, your trust in them will grow. Before long, you'll accept the inevitable variance and be more comfortable with it.

It's yet another reason why it makes sense to start with very small stakes!

Dealing With Losses

Every football bettor and trader on the planet has losses and there are no exceptions.

Any football match can finish 0-0, 5-5, 4-0, 1-2 or any other score and it's not possible to cover every single outcome, so how could anyone avoid losses?

They can't... it's impossible.

Until the day you find a crystal ball or a genie in a lamp, you are going to have to control liabilities and accept losses when they happen - just like everyone else.

The alternative is to chase losses, blow your bank and fail.

You don't want that!

Once you're more experienced and you know that you will end in profit long-term, it'll be much easier to accept a loss.

To start with though, you're going to have to learn to detach yourself emotionally from losses.

You can't afford to get angry or frustrated as that will affect your ability to make good decisions.

You'll try to recover the loss as quickly as you possibly can, jumping into the next available match having done no research and staking far too much.

You may get away with it a few times, but sooner or later you are done for. Finished.

Mindset

As always, it goes back to mindset.

Every bet and trade has to be a sound investment based on solid stats.

Just as you cannot become complacent when you hit a few winners, you have to move on from losses with a clear head.

Wins and losses are the same thing, remember?

In the coin flip example above, the coin has no emotion as it spins up into the air before landing on heads or tails. Every single flip has a 50% chance of heads and a 50% chance of tails.

Each flip is exactly the same and that's how you have to treat each bet and trade.

If you feel hard done by because a penalty was missed with the last kick of the game and you lost money, the universe doesn't owe you a winner to make up for it.

Yes, things will tend to even out long-term but the next bet or trade you get into has to be rock solid.

Remember...

If you get into a losing run, stop digging.

Lower your stakes, stick to lower-risk bets/trades and keep your work ethic going, doing the things you have always done.

Don't be tempted to go with accumulators or high-risk bets in an effort to get a big win.

Losing runs are just that; they will not go on forever.

You are a part of an amazing community and we support each other. If you need to talk to someone, open up your email and start writing!

Value and Variance

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