## Thursday, July 19, 2012

### Thinking In Terms of Equity

Waaaaaay back on January 1st of this year, I posted my Poker Resolutions for the upcoming year (re-read it: here). Number #17 on the list was "Think of poker decisions in terms of Equity and EV."

Recently I received an email from a reader that said, in part:

You've explained equity to me at least 10 x if not 100. I see it on stove. I see it in ICM. I read it in Miller. P 110.

Okay, so what is Equity? And why does it matter?

In simple terms, Equity is your share of the current pot at that moment in time. In more complex terms, it's, well, a little more complex to explain. Let me try.

There are essentially two types of Equity we're concerned with in poker: Pot Equity (sometimes called Hand Equity), and Fold Equity. Your Total Equity in a hand, therefore, is simply your Pot Equity plus your Fold Equity. Let's look briefly at each:
1. Pot Equity. Let's say you're dealt AKo and your opponent holds JTo. Using PokerStove, we can see that before a flop is dealt, your (Pot) Equity is 65% vs. your opponent's 35%. People frequently assume this means your chance of winning the hand at that moment in time, and while this is a reasonable way to think of the situation, it's not technically accurate. What the 65% number actually represents is your theoretical "share" of the current pot at that instantaneous moment in time. If the pot was \$100, then \$65 of it "belongs" to you in the long run (i.e., if you were to run this scenario out a few thousand times). If the flop came out J-T-4, however, your Pot Equity on the flop would plummet to just 21%, because your opponent flopped top two pair; your share of a \$100 pot at this point in the hand is now just \$21. If the turn brings a Queen, your Pot Equity is now back up over 90%. And when the river drops another Jack on the board, your Pot Equity, or rightful share of the pot, is now a big fat goose egg, i.e., Zero.