What is volatility or variance?

The world of online casinos excites at first glance, but at the same time overwhelms with a whole bunch of unknown terms. One of them is volatility, which is one of the basic building blocks of the game strategy of any seasoned player. Why is it important and how can you use it to your advantage? Read on to get a grasp on all you need to know.

What is volatility and variance?

If you want to take your gaming strategy to the next level, you will need to familiarize yourself with two basic concepts, namely volatility and variance. In fact, these are synonyms that you usually come across in the world of finance, but they quickly found their place in the world of gambling. Both terms express the risk associated with the variability of winnings, specifically as to how often and what amounts players can win on slots. Volatility is calculated based on long-term data, so it cannot be expected to accurately reflect the outcome of your game. In general, games with high volatility offer high winnings, but they don't happen often. On the other hand, low volatility games provide significantly smaller wins, but they come more often. In short, volatility is used to estimate the risk associated with a particular game.

Volatility and slot machines

Slot machines are an integral part of online casinos, which is evidenced by their great popularity among players. For them, volatility can generally be divided into three levels, which we will describe below.

Low Volatility – Low volatility slots are ideal for players who like stability. The frequency of wins is quite high, but their value is low. The game is thus less exciting, but on the other hand, you don't have to worry about high losses.

Medium Volatility – Medium volatility slots provide a balanced ratio of risk to potential reward. The amount of winnings is therefore fair and appears at a reasonable rate. In general, this is a suitable choice for players who are looking for a balanced and at the same time more exciting gaming experience and for those wanting to play for higher amounts.

High Volatility – High volatility slots are for those players looking for a rush of adrenaline. At the same time, they must reckon with a low frequency of wins, which, however, can climb to very high amounts Playing such slots is riskier, and often leads to higher losses.

Volatility Level of risk  Potential win Frequency of wins
Low Lower Lower Frequent
Medium Average Average Occasional
High Very high High Rare

Using the volatility rate, you can easily manage the level of risk during play. If you don't plan on betting big, don’t go straight for high volatility slots. It is better to choose less risky options with low volatility, with which you will not hit the jackpot, but you will minimize the risk of a big loss.

Volatility vs RTP - Why pay attention to them?

In addition to volatility, you will also come across the term RTP (Return to Player) in connection with slots. The latter monitors the return of the given slot machine, or the amount it will pay out to players from the money bet in the long run.

The RTP is always given as a percentage, and it usually ranges from 92% to 98%. Simply put, the higher the RTP, the higher the ratio of the wagered amount should be paid to you in the event of a win. Theoretically, a slot machine with an RTP of 95% will return to players CZK 95 for every one-hundred-crowns bet.

However, it should be noted that this is an average value calculated based on multiplayer games played over a longer period of time. Therefore, the actual amount of winnings may vary significantly during short-term play. Both volatility and RTP are important to consider when choosing a suitable slot.

Through volatility, you can easily control the risk you are exposed to, while with RTP, you can see how high your potential winnings can be. In terms of risk, it is recommended to choose slots with low to medium volatility and a high RTP, ideally above 97%.

Choosing the right slot based on volatility

Now that you know what volatility is and how it works, you can start choosing a slot machine that will suit your gaming strategy. Below, we will look at several points that are worth considering when choosing a slot machine.

Off-setting risk

Always pay attention to the level of risk you are taking when playing slots. If you are a conservative player, look for slots with low volatility. These comes with low winning amounts - this can be partly compensated by a high RTP.

Conversely, seasoned players with a high-risk tolerance will appreciate high-volatility slots that, with a bit of luck, can give them big wins. On the other hand, the probability of winning here is very low, which can lead to significantly higher losses.

Player's personal goals

In addition to risk, consider your personal goals, on which you will base your game strategy. First of all, make it clear to yourself if you want to play just for fun, or if it should be a long-term activity, the goal of which is profit. With the first variant, there is no need to overthink your budget or the RTP - on the contrary, focus on the volatility and the amount of the winnings you are aiming to get.

For longer-term strategies, it's good to also focus on RTP and a more sustainable way of playing. In the long run, it pays to stick to low to medium volatility, which you can intersperse with higher volatility slot play from time to time. Whatever strategy you choose, remember that only in a minimum of cases it is worthwhile to invest only in high-risk bets.

Bankroll management

When playing in online casinos, one of the most important aspects is the bankroll, or budget, that you intend to work with. Always set a limit in advance of how much money you are willing to bet and ultimately perhaps willing to lose.

At the same time, it is important to keep to this limit regardless of how the game unfolds. Otherwise, you can quickly get into trouble. For slots with low volatility, you can get by with a smaller budget, on the other hand, for slots with high volatility, it is better to enter the game with a higher initial investment.

TIP: If you want to check the effectiveness of the ATM, test it first with free spins.

The effect of volatility on casino bonuses

The volatility of slot machines plays a key role not only in the frequency and amount of winnings, but also in the availability of popular casino bonuses. In general, the more risk you expose yourself to, the bigger bonuses you will get - however, each casino sets its own rules.

High volatility slots usually offer more attractive casino bonus packages to motivate players to be more intrepid and take even more risks. High numbers of free spins are common, but the casino rarely offers them to you. You can reach bonuses much more often with less volatile slots, which, however, tend to have a lower number of free spins available, which also leads to smaller wins.

Myths associated with volatility

Volatility is a complex concept for most novice players that they do not know how to work with at first. In addition, several myths haze the real facts. Read on to bust these myths once and for all.

  1. Higher volatility guarantees winning

Higher volatility does not automatically mean a higher chance of winning. On the contrary, it indicates that if you win, you are more likely to secure a large amount. Unfortunately, with higher volatility, the frequency of wins is much lower.

  1. Slots with low volatility are not profitable

Low volatility slots won't offer you big winnings, but they're likely to yield higher returns in the long run. So, if you are among the long-term players who are patient and at the same time like stability, slots with lower volatility may be the right choice for you.

  1. Volatility decides your win or loss

Volatility, like RTP, is a long-term indicator and therefore has no direct effect on the outcome of individual games. Each spin on the slot machine is independent and completely random. Therefore, it is better to see it only as an indicator that will help you estimate the level of risk of a given bet, and not as an automatic confirmation of a win or a loss.

  1. High volatility slots are always a better choice

High volatility slots are no better or more profitable than low volatility slots. The choice of slot machine should always correspond to your individual preferences and game strategy. Moreover, remember that slots with high volatility offer high winnings, but at the same time come with a higher probability of loss.

Volatility is one of the decisive factors associated with the level of risk and profitability of bets on specific slot machines. However, your entire game strategy should not be based solely on volatility. It is best to take volatility into account as one of the important indicators that will help you evaluate the risk and potential of a given bet. In addition to it, also focus on the RTP and reviews of individual slots.