Sunday, January 22, 2012

Equity = Our Piece of the (Pot) Pie

“The smart money was on Goliath.” 
– David Spanier

One of the "a-ha" moments I've had this past year is that of the concept of total equity. The more I think about my total equity in a hand before acting, the better my decisions seem to be. Equity is comprised of two things: pot and fold equity.

Let's say we have AKs and our opponent holds JTo preflop. Per pokerstove, our pot equity in the hand is 65%. Most people (incorrectly) state that this means we have a 65% of winning the hand. While this is indirectly true in a heads-up example, it actually means that our theoretical share of the current pot is 65%. If the pot is $100, our current theoretical "share" is $65. This is the amount "owed" us at this particular instant on this street in the hand.

Our pot equity changes throughout the hand as cards are dealt on each street and our own hand strength changes. This means that our share of the pot changes. In this example, if the flop comes J-T-4, our equity drops drastically, as our opponent has made two pair and we only have a gutshot and two overcards. In this case, our instantaneous share of the pot is now just 22%, or $22. If a Queen comes on the turn, however, our equity jumps back up to 91%. In other words, our share of the pot at this point in time is now $91 if the pot size is $100.

The higher our pot equity at any given point in time, the more we should be trying to build Value in the pot by betting. Conversely, the lower our pot equity, the less we should be betting to build Value. A good rule of thumb is that if you think you have more than 50% equity in the hand at any given point in time, you should bet to get as much money in the pot as possible.

But what if we have less than 50%? We still might want to bet because of something called fold equity.

Fold Equity is our share of the pot that is due us if our opponent folds. If there is a 10% chance our opponent will fold to our bet, and the pot is $100, our fold equity worth is $10. While pot equity is relatively easy to calculate (e.g., via pokerstove), fold equity is sometimes quite hard to quantify, as it depends on psychological factors of your opponent, the amount you bet, what your own image is, etc.

Our total equity is the pot equity plus the fold equity. If you stop and think about your poker decisions in this simple way, it should make your decisions a lot easier. Just ask yourself how much equity you think you have, and then act accordingly. High total equity generally means bet, while low equity usually means pot control and/or folding. Said another way, protect your piece of the pie...

{Of course estimating pot and fold equities depends strongly on making good reads. Like I said a few posts ago, the R is for Reading step in REDi is the most important thing by far...}

Und schliesslich, kein Poker in Deutschland gestern (translation: poker didn't quite work out last night). My cousin-in-law took me to half a dozen little pubs and bars early in the evening, showing me the back alleys and local haunts of this little Germany city. By the time we finally dropped by the casino at 10pm, they had started just one high-roller table with a 1-2 hour wait. Ergo we watched a bit and then went back to crawling pubs. Even with no poker, it was an entertaining evening, and I got to see many different varieties of what my cousin calls the "aborigines" of the town. It was also a good chance to practice my German, as my cousin's English got progressively worse the more he drank. Too much fun, food, foolishness, and alcohol. Fortunately, I have the day off today to recover.

All-in for now...

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