Variance and Downswings in Poker. Losing $1,500,000

Variance is something in poker we have to embrace as it is unavoidable. Downswings, unfortunately, are part and parcel of this.

We need to understand that we're not alone in going through this, and even the biggest and best players in the world experience variance and downswings in poker.

Pokercode Founder Fedor Holz recently recapped his 2021, which was a losing year for him on the felt. We've taken a few snippets from that video to help explore variance and downswings, so we know how best to deal with and put into perspective when these inevitable experiences occur.

Volume

We all fall into the trap of talking about downswings or bad beat stories, the stronger of us, this is a small moment of weakness that rarely occurs, but for some of us, this is an all too common talking point.

Volume plays such a significant role, though; we can find ourselves complaining about downswings over such a small amount of time, be it some live tournaments short stretches online.

Time ≠ Volume

An excellent example of this Fedor eludes to is in 2015 or 2016. He played maybe 4000-5000 online tournaments. A decent sample size where it is unlikely that a winning player will have a substantial downswing.

In 2021 he played 500 online tournaments, so in an entire year, he played fewer tournaments than essentially in 2 months of a serious grinding year.

So always think about how many tournaments or how many hands you've played, as you're likely just having a spell of short term (volume, not time) variance.

Buy-ins

Consider how the buy-ins or stakes you're playing impact your relative downswing.

Losing $5,000 may seem insane to a lot of people.

If you're multi-tabling $5/10 online or playing a big day of online tournaments with an average buy-in of, say, $500, this number is easily in the possibility of what could be lost.

If you lose $5,000 pretty quickly playing $1/2 or with an average buy-in of $50, maybe it's time to reaccess and sees what's going on with your game.

So keeping track in terms of buy-ins as opposed to absolute numbers is critical, as even though a $5,000 loss may seem like a lot at the stakes mentioned, it's 5-10 buy-ins, and the upside is potentially massive.

Win-Rate

Win-Rate. The third and final part of the puzzle.

So many people become lost as realistically the possible variance is almost incomprehensible to our brains.

The complexity of trying to understand how over similar sample sizes, differing win rates can affect variance isn't something simply logical to understand.

When win rates are incredibly high, variance becomes much lower, so over a small sample size, the variance can seem almost non-existent.

When win rates shrink, this situation flips on itself.

Fedor explains this well:

• When he's playing higher buy-in events, the games are more challenging, and his ROI (Return on Investment) decreases.
• When he plays lower stakes, the level of opposition goes down, games are easier, and his ROI increases.

The issue is that the buy-ins in the more challenging events often are so high that they take up a high $ value of overall tournament buy-ins whilst often being a much smaller number in terms of events played, further amplifying the variance.

Losing $1,500,000 in 2021

Fedor explores these topics in more detail than we've covered in the video below. To understand this topic further and see where Fedor takes a deeper dive into the numbers, give it a watch.

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