# Expected Value (EV) and Variance

**Expected Value** (or EV) is a measure of what you can expect to win or lose per bet placed in the long run. Expected Value is without variance.

**Variance** measures the difference from the expected value. (How far a set of numbers are spread out from their average value.)

**Real value** is your actual result which includes the variance.

Let’s take an example with a coin toss:

The probability of a coin to land on Heads is 50%. But assume you were to bet €10 on Heads at odds of 2.10.

- If you win you profit €11
- If you lose you lose €10

To calculate the **expected value** of the bet you can use this formula:

*(profit per bet * probability of winning in decimals) – (loss per bet * probability of losing in decimals)*.

In this case: (€11 * 0.5) – (€10 * 0.5) = €0.5

Therefore you would expect to make an average profit of €0.5 for each €10 bet, because *the odds offered are better than the implied odds* of the coin toss.

However, after only one toss you would have either lost €10 or earned €11, not won €0.5. So if you only place 1 bet, the **variance** will be huge.

Variance is particularly high when the sample size is small, for instance at the start of your value betting career. If you place a couple of thousand bets, the variance will have far less effect and your results will over time move closer and align with your expected value.

**Key takeaway**: It’s important to see value betting as a *long-term* way to profit. The number of bets, as well as using a staking and max bet strategy, play an important role to reduce variance.

You can read more about the variance and expected value of value betting on the Pinnacle blog.