Back to Basics (Part 6): True Equity

Equity is a term that’s thrown around a lot in poker. There’s pot equity, fold equity, and all kinds of other terms that you’ll hear, and while you might have a vague idea of what they mean, they’re not often explained in a way that illustrates exactly what’s going on and exactly why they are important. As a part of the Back to Basics series, we want to look at a great model for thinking about equity in its many different forms. This model can help you to find your way when you aren’t sure what you should be gunning for in any particular situation.

The Money Bucket Model for Equity

Here’s the model that we want to think about for equity. There’s a large bucket, and people are playing a game. A bunch of people put money in the bucket, and then they come through and take some money out again. You win at this game if you put in a smaller percentage of the money than what you take out. It’s that simple.

Notice: When I’m teaching someone poker from the ground up, this is one of the first things that I teach them because it’s such an extremely useful model.

This might seem like an over-simplification of equity, but this is exactly how it works in poker no matter what kind of scenario you’re talking about. Here we’re going to look at a few different situations, how equity impacts those situations, and how you can use the money bucket model to understand them on a higher level.

Fold Equity and Bluffing

For our first example of how the money bucket model works, we’re going to look at a pure bluff. We’re head-up in a pot of $6, and I’m going to make a pure bluff into it for $4. How often does Villain have to fold for our bluff to be profitable?

If we follow the money bucket model, we’ll notice that there’s a total of $10 in money in the bucket after we bluff. We put in $4 of it, so we need to average getting back more than $4 of it for our bluff to be profitable. That’s 40 percent of the total money in the bucket after our bluff, so we need our opponent to fold more than 40 percent of the time for our bluff to be profitable.

This is how we can use the money bucket model to understand fold equity.

Calling an All-in and Pot Equity

With this second example, we’ll see that the same model can be used to analyze a completely different type of situation. Some opponent shoves into us on some board, and the pot is $20 when it’s our turn to act. We can call for $8. How often do we need to win to make this call profitable?

After we call, there will be a total of $28 in the money bucket. We are putting in $8 of that which is 8/28 = 28.6 percent. We need to get out more than 28.6 percent of the money out of the bucket on average for this to be profitable, so that tells us that we need to be winning at least 28.6 percent of the time for our call to be profitable.

In this example, we see how the money bucket model is used to understand pot equity.

Multi-way Pot Equity and Value Betting

We’re going to look at a third example that doesn’t come up too often in no-limit hold’em, but that does come up a lot in limit games. Since it will help to drive this point home, we’re going to include it here.

It’s a $1/2 fixed-limit hold’em game with five players on the flop, and we’re on the button. The pot is $10 when the flop is dealt. The first player to act bets $1, and everyone calls. You have KsJs on a board of As7s6d, so what do you do? The right answer is that you should raise.

It’s very unlikely that any of your opponents are going to fold to a single bet after the flop action. Since it’s five-way on the flop, you are putting in 20 percent of the money that will go in on that street with your raise. However, since you have the nut flush draw, you have well over 20 percent of a chance to win, and since there aren’t really any circumstances where you’ll fail to see the river, this is a great place to raise profitably.

Again, the money bucket model allows us to understand pot equity, except this time it’s in a situation that’s atypical for no-limit players. In our next example, we’ll look at a form of value betting that you’ll probably be more familiar with.

Simple Heads-up Value Betting

You’re on the river in a no-limit hold’em game. The pot is $22, you have $14 behind, and your single opponent has you covered. He checks to you, and you have to decide if you want to shove for value or not.

If you go all-in and get called, then you will be putting in 50 percent of the money on the river. This is like putting in 50 percent of the money in the money bucket model. To make this bet profitable, you’ll need to get back more than 50 percent of that money. This means that for your value bet to be profitable (compared to checking), then you’ll need to win more than 50 percent of the time that the opponent calls.

The Common Thread

We’ve covered four different types of equity in four different situations, and they can all be understood through the same money bucket model that we started with. This also covers the four basic starting lessons that most players go through when they start working with me on poker.