The reward/risk ratio
The term ‘gambling’ is often confused with ‘risk assessment’. Entrepeneurs invest in the belief that the value of the investment will eventually outweigh the cost. But that is insufficient. If you invest £100,000 and make a profit after a year of hard work of just £5,000; then you would have done better putting your money in the bank and spending your time doing something more productive.
Successful business men make accurate assessments of reward/risk ratio. Sometimes they may get lucky or, alternatively unlucky. That is why they prefer to spread their risk. Poker players make similar calculations. But then we all know, poker is often more like real life than life itself.
Tuesday, February 28, 2006
Sunday, February 26, 2006
Raising on a Morton's Fork
You have 9D8D. There has been a bet before the flop which you called. The flop is AD 9C 3D. There is a bet. Against one opponent you must have either the best made hand or the only flush draw.
Such a possibility I refer to as an example of Morton’s Fork, after the income tax inspector in medieval times. He worked on the principle that if a member of the gentry were living in apparent poverty, he must be concealing his wealth. If he were living high on the hog, then he could again afford heavy taxes.
In such circumstances you are entitled to raise. You are either winning or have a strong drawing hand. Your opponent needs such as A-8 or A-A to be favourite against your holding. Even if the worst comes to the worst, you are better than 2/1 against winning the pot.
Wednesday, February 22, 2006
Playing loose and aggresive
In all wagering activities you should try to buck the market. If the stock market is high, that is the time to sell. You may miss the final flourish before shares plummet, but you cannot time things perfectly.
When betting on a horse, you should be looking for a bet which is good value for what you perceive to be the horse’s chances.
When playing poker, the playing may be slow and cautious. You should play loosely and aggressively. But be careful, the last thing you want is for your hand always to be up against the lone best hand at the table. If the game is vigorous and loose, you should play more defensively and tighter.
Wednesday, February 08, 2006
The extended gap concept
If the betting comes to you in poker, then you should bet or raise provided your hand is in the top 50% of all hands. However, another player interferes and raises £100 into a £100 pot before it is your turn. Clearly you must reassess your action and take note that you are getting 2/1 odds. Thus you should pass unless your hand is in the top 33%. Sklansky calls the gap between 33% and 50% the gap concept.
Then you should reraise if your hand figure to in the top 50% of all hands you don’t pass. Thus you raise if your hand is in the top 16%. The gap between 16% and 50% I refer to as the extended gap concept. I would have preferred to use the term ratchet principle, but Sklansky got there first. This applies to all poker games, but what such percentages mean is partly up to you.
