Binomial distribution
The pattern of results from a fixed number of independent yes-or-no tries with the same chance, such as 20 sales deals at 25% each. It gives the chance of every total, not just the average.
In plain English
With n tries at chance p, the average number of successes is n × p, but any single round can land well away from it. The spread is widest when p is near 50% and narrower near 0% or 100%. If the tries aren't independent, because they share a common cause, the real spread is wider than the binomial says.
Uncle Gary explains
Twenty deals at 25% each give an expected 5. Exactly 5 close only about 20% of the time; 3 or fewer about 22%, and 7 or more about 21%.
Why it matters for your money
Twenty trades with a 25% hit rate will often produce three winners or fewer. Before judging a method on one period, work out the spread it would produce if it worked exactly as claimed.
Where we tested it
Related terms
All glossary terms. Educational content, not financial advice.