- Volatility is significant because it is fundamental when it comes to an understanding the type of dynamics of a slot machine: it determines the interaction between the two temporal factors that make up the personality of any game, that is, the times you bet, and the times you get a prize.
- A few times now we’ve discussed slots that let you pick from various bonus options, such as Dancing Drums or Golden Egypt, where you can choose between more spins with less benefits, or less spins with more benefits. At the time I reviewed them, I mentioned that it’s a simple question of volatility.
- Slot Machine Volatility Calculation
- Slot Machine Volatility Calculation Formula
- Slot Machine Volatility Calculation Indicator
- Slot Volatility Index
Slot machines include their payouts on their pay tables, but they don’t include the probability of achieving any of the winning outcomes. In some countries, the payback percentage is posted on the machines, but not in the United States. To make things even worse for a slot machine player, the random number generator program can be set.
You’ve probably noticed that slots results aren’t very consistent. You might win hundreds of dollars in one session, then lose the same amount in less than an hour the next.
Slot machines offer wild results in comparison to, say, blackjack or baccarat. These games see you win almost half the time on a fairly consistent basis.
Slots have both high volatility and high variance when compared to other casino games. But what exactly do these terms mean, and how do they apply to slot machines?
Keep reading as I cover more on volatility and variance, along with how they impact your chances of winning.
What Is Variance?
Variance is a measure of the distribution of long-term results. Simply put, it measures how far results can vary from the statistical average.
Variance shouldn’t be confused with standard deviation, a square root of variance that more closely measures the average distance of results. It instead measures how likely results are to change, rather than offering a hardline number like standard variation.
The weather is more likely to change in Michigan versus Hawaii. Therefore, Michigan’s weather has higher variance.
One more characteristic of this term is that it doesn’t get bound by any particular time, such as a week or a month. It considers the long-term likelihood of change.
What Is Volatility?
Volatility is very similar to variance in that it measures the distribution of results. However, the key difference is that it’s bound by a specific time.
Measuring the difference in weekly car sales within a single month refers to volatility. Variance, on the other hand, doesn’t require that results be limited to one month.
Volatility is a good way to measure short-term changes in a set of statistics. It helps you figure out what kind of risk you’re taking in the short run.
How Do Variance and Volatility Factor Into Slots Results?
Slot machines have both high variance and volatility when compared to other casino games. They have a wide variation between prizes, which means that they don’t pay out as consistently as most games.
Here’s a simple pay table to explain:
- 3 Lamborghinis = 10,000 coins
- 3 Ferraris = 2,500 coins
- 3 Audis = 500 coins
- 3 Mercedes = 250 coins
- 3 Hyundais = 50 coins
- 3 minivans = 25 coins
- 3 rusty pick-up trucks = 5 coins
You can see that this pay table has big and small payouts. Given the fact that the game offers prizes worth 10,000 coins, it must make up for these wins by paying less frequently.
Compare this to an even-money roulette bet, such as red/black. You get paid 1:1 on red/black and have a 48.65% chance of winning (on European wheel).
Volatility comes into play when considering that you never know how an individual slots session will go. You could win a massive six-figure prize, depending upon the game. You could also lose $1,000 in a couple of hours.
This unpredictability excites some gamblers. It’s a big reason why they continue spinning the reels and hoping to win big.
Variance factors in when considering that slot machines are also risky from a long-term perspective. While they’re programmed to offer a certain return to player (RTP), they still deliver widely varying results from player to player.
Some slot machines may not reach their given RTP until millions of spins. They can be quite unpredictable, even over a long period of time.
This high variance and volatility makes it difficult to manage your bankroll with slot machines. While you should still come up with a strategy, your bankroll management plan can still go off-track rather quickly.
You have to be prepared to deal with this unpredictability in order to embrace slot machines. As long as you’re fine with this, though, then you should have lots of fun playing these games.
High vs Low Slots Variance and Volatility
Slot Machine Volatility Calculation
I just discussed how slot machines feature much more variance and volatility than the average casino game. But there’s also a division among each slot machine in these categories.
Some slots are designed with less variance, while others are extremely unpredictable. It pays to know how to spot high and low variance so that you can choose the type of slot that’s right for you.
Some games feature of a volatility rating within their pay table. Pragmatic Play slots, for example, show a rating ranging from 1 to 5 lightning bolts, with 5 volts indicating the highest volatility.
I’ve never actually seen a slot machine with a variance rating. However, the volatility rating can give you an indication of the variance.
Unfortunately, not all slot machines offer these helpful tools. You instead must look at various factors to predict what the variance and volatility will be.
Here are the key aspects that you want to focus on:
- Jackpot size – A larger jackpot indicates high volatility/variance
- Number of bonus features – More bonuses allude to higher volatility/variance
- Number of small payouts – More small prizes indicate lower volatility/variance
You’re not guaranteed to figure out volatility and variance simply by judging these factors. However, they at least give you some method of determining which slots are more unpredictable than others.
Again, variance and volatility aren’t necessarily interchangeable terms. The former indicates a distribution of long-term results, while the latter measures results within a specific time span.
But considering that slot machines aren’t precise in their ratings, you’re not going to get a clean measure of these factors within each game. Assuming a slot even offers a volatility rating, then you basically have to use this for an indication of the variance too.
Will Understanding These Terms Help You Win in Slots?
Understanding slots volatility and variance helps you choose games that best fit your bankroll management plan. If you have a small bankroll and want it to last, then you should pick games with low volatility and variance.
The chances are that you don’t want to play a game with high variance and volatility. Extreme unpredictability increases the chances that you could quickly lose your bankroll.
However, certain aspects of high-volatility slots are attractive. You may love games that offer big jackpots and lots of bonus features. In this case, you also have to weigh how a game’s unpredictability will affect your bankroll.
You can get lucky with erratic games and win a big jackpot. However, it’s important to realize the increased risk you’re taking as well.
Knowing variance and volatility doesn’t, by any means, increase the chances that you’ll be a long-term slots winner. RTP, which I’m going to discuss shortly, is a better measure of this aspect.
That said, knowledge of these terms doesn’t necessarily improve your odds of winning. However, they’re good concepts to understand with regard to weighing bankroll management versus your desire to play for jackpots and bonuses.
Other Slots Tips
It’s wise to mix your knowledge of variance and volatility with basic slots tips. Common strategy improves your chances of being profitable with slot machines.
At the very least, you can minimize the amount of money you lose with proper strategy. Keep the following tips in mind to give yourself a fighting chance with slots.
Find Slot Machines With High RTP
Return to player determines how much money a slot machine will pay over the long run.
A slot with 96% RTP will theoretically pay back $0.96 for every dollar wagered.
I emphasize the word “theoretically” here because slots don’t offer such clean payout distributions. Much of this has to do with volatility and variance, which are both quite high in slots.
Nevertheless, you should always consider RTP when this information is available. Most online slots have publicly-listed payout percentages, allowing you actually to see your chances of winning.
Unfortunately, land-based slot machines don’t offer the same luxury. You instead have to go off of vague RTP based on coin denominations.
Here’s a loose guide on how much each coin denomination pays:
- Penny slots = 88% to 91% RTP
- Nickel slots = 92% to 94%
- Quarter slots = 94% to 95%
- Dollar slots = 95% to 96%
- $5 slots = 96% to 98%
Long story short, higher RTP means that you have a better chance of winning money. And while volatility might affect how much you truly earn, it’s always worth using payout percentages as a strategy tool.
Understand the Game Rules
I’ve talked to many new slots players over the years who are confused by how the betting process works. They’ll insert $20 into a penny slot machine and be amazed when the money is gone in five minutes.
Here’s where understanding the rules behind a slot come into play. You want to know the betting options and other rules thoroughly.
Many land-based and online slots these days require you to play all of the available lines. If you’re on a 30-line slot, for example, then the minimum bet will likely be $0.30.
You should also look through the help/info screen to figure out how bonus features work. Doing so is particularly helpful when you need to know specific instructions for playing a bonus round.
Looking at info screens isn’t anybody’s idea of a good time, but a few minutes spent here will help you make the right bet sizes and have a better overall time with slot machines.
Develop a Bankroll Management Plan
Most slots players go into a session with no plan for managing their money. The same gamblers risk losing their bankroll quicker and possibly dipping into funds that they need for bills.
Taking just a little time to develop a bankroll management plan helps prevent these problems. This process isn’t as intimidating as it sounds, either.
You can get started by considering how much money you can comfortably lose with slots. Obviously, the goal is to win, but you also have to be realistic about the possibility of losing your funds.
Slot Machine Volatility Calculation Formula
The next step is to figure out your hourly losses. Most slot machines cost between 200 and 300 bets per hour — at least until you get a big win, anyway.
Here’s a sample bankroll management plan:
- You have a $1,000 bankroll
- You’re making $0.25 bets
- 1,000 / 0.25 = 4,000 betting units
- You’re playing a volatile slot
- You expect to lose 300 units per hour
- 4,000 / 3000 = 13.33 hours
- Your bankroll will theoretically last for 13.33 hours
Have a Stop-Loss Limit
You likely want to get as much play as possible from your bankroll, but this is difficult to do when you don’t have a stop-loss limit in place.
A stop-loss limit refers to a specific amount of losses that will convince you to stop playing. If your limit is $150, for example, then you’d quit your session immediately after dropping this amount.
The point of a stop loss is to preserve your gambling funds for several sessions or more. Here’s an example:
- You have a $400 bankroll
- You want it to last for at least four sessions
- 400 / 4 = $100
- Your stop loss should be $100 or less
Setting a stop-loss limit is a personal matter that depends upon your specific goals. Consider how many sessions you want your bankroll to last for and use this to determine your stop-loss point.
Join the Slots Club
The good thing about playing online slots is that you don’t have to do anything special to join the rewards program. Most casinos automatically enroll you in their VIP program as soon as you begin placing real-money bets.
Land-based casinos are different, however, because they require you to join the slots club physically. If you’re not a member of the club, then the only comps you can look forward to are free drinks.
Therefore, you should seek out the help desk upon visiting a brick-and-mortar casino.
You can also go to their website and see if there’s a way to sign up online. Whatever the case may be, you want to be sure and join the program so that you get a slots club card. Your bets and rewards will get tracked once you insert one of these cards into a slot machine.
You can look forward to plenty of great deals based on your play, including free meals, hotel stays, free play, and/or cash back.
Conclusion
Variance and volatility are often used interchangeably in the gambling world and beyond. However, they differ somewhat in terms of how they get used.
Variance measures the distance in long-term results, without any set time parameters. Basically, it’s a way to measure the change in the long run.
Volatility also measures the distance in results. But its measurement comes with a time limit, such as one week or month.
Both concepts are useful in the slots world.
- Variance can show how unpredictable long-term wins and losses can be.
- Volatility can reveal the unpredictability of short-term results.
Some slots actually offer a volatility rating, which gives you a simple way to judge how erratic they are. Most don’t, though, which means you need to look at the jackpot size, bonus features, and the number of small payouts to make a judgment.
I’m not aware of any slot machines that feature a variance rating. You’re therefore left using the same volatility factors to predict variance.
These concepts are worth knowing because they can help you pick slots that fit your bankroll. For example, a low-volatility slot gives you a better chance of surviving with a small bankroll.
Of course, you also want to remember basic slots tips, too. Looking for games with high RTP, joining the slots club, and coming up with a bankroll management plan can all pay dividends.
Slot Machine Volatility Calculation Indicator
Combining a strong knowledge of variance and volatility, along with these tips, will boost your chances of winning money and picking games that are right for you.
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