What is volatility in a slot machine? This is the question that we’ll be answering today. In a nutshell, the degree of volatility will tell you a bit about the game you are playing and the risk versus reward to expect.
While it’s great to have some cool casino promo codes no deposit, understanding how online slots work will equip you with enough knowledge to avail of your bonus.
What is volatility?
Usually, if we hear the word volatile, we might hear it in the context of a person or a particular market; “I heard Chris is a bit volatile when he’s under a lot of stress” or “I’d invest in cryptocurrency but I think the market is too volatile.”
Volatility is a measure of how likely something is to change very quickly and is often used to refer to the chance of a negative change. If Chris is volatile when he is under stress, it means that he is prone to sudden outbursts that are out of character, and they are probably negative behaviors like shouting or slamming his fist down. If the cryptocurrency market is too volatile for an investor, it means that person doesn’t like the chances of a sudden drop in the value of crypto coins.
Taking a step back to examine gambling math
Gambling math underscores every casino game and slot machine that you come across, and there are some core concepts that we need to talk about before we even touch on volatility.
First up, let’s take a look at absolute probabilities. If we are flipping a coin to see whether it comes up heads, the probably of this occurring is 1 in 2, or 0.5. If we are playing five card poker, the probability of getting four of a kind is 0.000240, significantly less than our coin toss. People who have a good grip on their gambling game of choice will also have a good idea of the absolute probabilities of outcomes in their heads.
The next concept we need to explore is expected value. This is how much we can expect to win or lose from an event or game. It’s calculated by adding each and every outcome’s absolute probability multiplied by how much you stand to lose or gain for a single event. For instance, if the coin flipper paid out $1 for every heads, but you lost $1 for every tails, i.e. odds of 1:1, the expected value would be zero. Expected value = (0.5 x $1) + (0.5 x -$1) = 0. If this was increased to $2 for a heads win, i.e. odds of 2:1, the expected value would be fifty cents, (0.5 x $2) + (0.5 x -$1) = 50c. If you played this particular game ten times you could expect to be up $5. However, we all know that casino games have a house edge. What this means is that the expected value of an event or game will always be negative.
Introducing: Volatility in gambling
The volatility of each event or game refers to how likely it is that a player will earn more or less than an expected value, given how many events or games are played. This is calculated in terms of standard deviations.
For example, If we are flipping a coin 10 times, the standard deviation is pretty high, you might get seven heads and three tails. This would indicate high volatility or variability. But if you flipped it 1000 times? It would be much closer to 500 heads and 500 tails, so that’s a low standard deviation, or low to medium volatility or variability. There are also concepts like ergodicity and the Kelly Criterion to dive into.
When we talk about the Return to Player (RTP) of a slot machine, that is the chances of you winning as the spins tend to infinity. A 96% RTP indicates eventually you will be down 4%. This is the long term expected returns. However, the volatility may be different.
Volatility in slot machines
The volatility in a slot machine refers to the variability in winnings and fluctuations, and you can usually tell a lot about the volatility in a slot machine by its pay table. For example, if the payouts for given combinations are large as compared to the bet size, it’s safe to say that the machine has high volatility. Similarly, if the payout for the highest combination is significantly higher than other payouts, that particular win has high volatility. For machines offering lower payouts overall, this would have a lower volatility.
So what’s better?
That all depends on what style of gameplay you would like to experience. For lots of players, the excitement of a high volatility game is what keeps them coming back for more, even though the risks are higher, too. With these types of games, you’re likely to lose more quicker, however. For those players that would like to play for longer with small wins along the way, a lower volatility machine would be a better bet.