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Standard Deviation, Variance, and Volatility

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Many gamblers use the terms standard deviation, variance, and volatility interchangeably when referring to the risk level involved in playing different slots. So let’s first have a look at what standard deviation is to see whether the term’s meaning overlaps with that of variance and volatility.

 Standard Deviation

 Determining Means and Standard Deviation

 The Concept of Variance

 The Concept of Volatility

The Concept of Variance

Variance is another broadly used term in the gambling circles and denotes the square of a given game’s standard deviation, i.e. Va = SD2. Conversely, you can compute the SD by taking the square root of the variance. Both variance and standard deviation are basically measurements of the same thing.

Gamblers, casino operators, software providers, and gambling authors commonly prefer to use the term variance for brevity and simplicity. It is easier to say a slot has ‘low variance’ than to use the expression ‘low standard deviation’.

Volatility Levels in Online Slots

A slot’s volatility level gives you an idea of how often you can expect to win and how large or small your payouts would be. In other words, volatility levels indicate the degree of risk associated with playing online slots for real money.

It follows that knowing a slot’s volatility level gives players an approximate idea of what they can expect in terms of prize size and hit frequency.

This information helps them make better-informed decisions when selecting slot releases based on personal style and bankroll size. Online slots are normally grouped into the following three categories depending on their volatility level.

Low-Volatility Slots

Low-volatility slots produce smaller but more frequent payouts. Matching combinations occur every five to ten spins on average so the risk of bankroll depletion is lower.

2. High-Volatility Slots

High-volatility slots involve a higher degree of risk of depleting your session bankroll. While payouts are significantly larger, winning spins are few and far between.

Such slots have the potential to yield massive prizes but you need a large enough bankroll to weather out the longer losing streaks and endure the greater variance.

3. Medium-Volatility Slots

Medium-volatility slots are a blend of the previous two types. Here the payouts are of average size and occur relatively frequently. Such slots are the perfect fit for spinners who want to incur lower risk while having a decent chance of landing relatively large payouts.

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