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You split the ciphertext into n slices, where n is your provisional keylength.

So if you're testing to see if the keylength is 3, you split the ciphertext into three slices, where slice 0 has letters 0,3,6,9,12,...slice 1 has letters 1,4,7,10,..., and slice 2 has letters 2,5,8,11,...

The for each slice we do a frequency count, and then calculate the Incidence of Coincidence of that slice, and then we average the IC's for the n slices.