Friday, August 15, 2014

The Law of Averages

The law of averages is often quoted for an optimistic view of a player’s future. When applied to poker, it basically says that after a string of bad beats or weak hands, you are due a lucky break or strong hand. This positive luck supposedly makes up for the negative luck (unluck?) and maintains average luck. I’m all for optimism, but lets be a realist here.

The law of averages is useless with small samples. If your memory alone can keep track of your poker hands, it is a small sample size. If you work with the statistics of months of quantified luck (I call this profits and losses) you will eventually see an average.

For example, if your long-term stats show that you typically win $5 in an hour of play, and your most recent hour nets you $50, you can expect the next hour to be closer to $5 then to $50. This is called regression towards the mean. $5 is the mean, or average. If you think of the “law of averages” in terms of returning your hourly profits to $5/hour regardless of what ever hot or cold streak you just came off, then you’d be correct. It’s just that no one thinks of the law of averages like this.

As a rule, disregard the waves of fortune and misfortune from day to day and focus on playing good cards. Only detailed records can give you any insight on what to expect in the future.