Variance generally refers to the swings that your poker bankroll will take over time. It is the true measure of whether you are a winning or a losing player. Winning players have a positive variance – and have added money to their initial bankroll, whereas losing players’ variance is negative. They have less money in their bankroll, or may have gone broke.
Poker players like to say that even poor players can win sometimes, but over the long haul, the skillful players will come out ahead. Variance, therefore, also refers to how good a player you are.
Finally, variance can be used to describe the profitability of a specific game. Some games are loose. The players are wild. The pendulum of profitability swings up higher and down lower. Therefore, you can say that this game has lots of variance. However, a tighter game might have less of a varying degree of profitability yet is easier to beat and better for you to play in.
Variance is related to another concept called expected value. Expected Value (EV) is commonly used when calculating pot odds. It considers how much you are expected to win if you make a particular play. It judges the overall profitability of the play. Some plays have a higher expected value than others because they win more often or bigger than others.
Expected value can also be applied to your bankroll. For example, if you are playing in a game that is out of your price range – where you don’t have at least 100 times the big blind - you will have a lower expected value than if you had sufficient funds to play. Lack of cash impairs your decision-making which negatively affects your money-making ability. Everything else being equal, you can assume you’ll lose more money than usual if you’re playing with scared money.
Expected value and variance go hand in hand. They help you decide which hands and which games to play. Expected value and variance also help determine whether you are a losing or a winning player and can make a big difference in how you proceed in your poker-playing life.