Why Hot Streaks and Cold Streaks End

## What Regression to the Mean Is Regression to the mean is the statistical tendency for extreme measurements to be followed by more moderate ones on subsequent measurement. It was first described by Francis Galton in the 19th century: the children of very tall parents tend to be tall, but not as tall as their parents. In sport, it appears everywhere. The team that concedes five goals in one match is unlikely to concede five in the next. The striker who scores in seven consecutive matches is unlikely to maintain that rate indefinitely. Extreme performances contain an element of luck, and luck does not persist. ## The Betting Opportunity Markets often fail to discount regression correctly. After a team scores eight goals in one game, the over market in their next game is overpriced — the crowd overweights what just happened. After a goalkeeper makes a sequence of error-strewn performances, their team's odds shorten more than the true probability warrants. The value lies in fading (opposing) the extreme. Not always — sometimes the extreme reflects a genuine step change in quality. But systematically, markets overreact to the exceptional. ## How to Apply It Ask: is this extreme result more likely to represent a genuine permanent shift, or a temporary spike? Indicators that it was temporary: - The extreme result was against unusual opposition quality - The underlying performance metrics (expected goals, possession) were more moderate - The key performer who drove the extreme is known to have high variance output