— the natural swing of results around their . Even a winning strategy goes through long negative stretches: that's normal, not a bug.
Simple picture: a 3% shows up over thousands of positions, not ten. On a small sample, luck dominates; on a large one, the edge surfaces.
Variance is the path, edge the destination. Mistaking it for a flaw in your method pushes you to change everything at the worst moment — right before the average reasserts itself.
Takeaway. Variance isn't fought, it's sized: positions small enough to survive the bad runs. See drawdown and in the glossary. Read next: risk of ruin, the number that decides whether you survive.
Definition drawn from the Yoseri glossary. Educational outlet — nothing here is investment advice.
The Lexicon · Glossary
Find this term and its reference definition in the full Yoseri glossary.