Independent events
Events where one result doesn't change the chances of the next, like coin flips. Believing a win is 'due' after a losing streak is the gambler's fallacy.
In plain English
A coin has no memory. After five heads, the next flip is still 50/50. Many real things are roughly independent, which means streaks happen far more often than people expect, and they don't mean anything has changed.
Uncle Gary explains
At the casino, the roulette wheel lands on red five times in a row. Uncle Gary puts his whole drink budget on black, because black is 'due'. The wheel has not heard of Gary.
Why it matters for your money
Even a decent strategy has long losing streaks. Quitting it mid-streak, or doubling up because a win is 'due', are both expensive mistakes.
Where we tested it
- How Many Bad Days in a Row Before the Universe Is Against You?
- Lesson 4: Probability Without Tears
- How Long Does It Take to Form a Habit? Why Your Routine Lasts Four Days
- What Are the Odds of Winning the Lottery? And Does It Have a Pattern?
- Why Do Bad Things Happen in Threes?
- What Are the Odds of Being Struck by Lightning? And Does It Strike Twice?
- Why Does It Always Rain on the Weekend?
- Lesson 20: The Binomial Distribution: How Likely Is 6 Out of 10?
Related terms
All glossary terms. Educational content, not financial advice.