Understanding the odds
Poker is about taking calculated risks..
Depending on the cards you have in hand, you have to manage your capital (the chips) and invest a certain amount with the hope of winning more, so long as doing so is worthwhile. The best way to determine if the risk is worth your investment is by asking yourself two questions:
1 – How much should and can I bet now, and during the next rounds of betting?
2 – What is the return on investment? Will I win enough to make up for the risk I'm taking?
It's only after answering these questions that you should get involved in a pot.
The concept as explained above is just a glimpse into the world of understanding the odds. The most important thing to remember is that you should not only focus on what you risk losing. Instead, ask yourself what are the odds you might win and if so, how much. What counts is not the risk you are taking, but knowing that the risk is statistically “the right investment to make”.
Take a game of heads or tails for example. The odds are obvious: you have a fifty percent chance of winning the coin toss. Let’s say that you risk $1 on each flip. You know that you risk losing $1 each time. Now ask yourself what it is that you risk winning. If your opponent is offering you $1.20 for each time you win the toss, it’s a good risk to take. In this case you could safely raise the stakes. However, on the other hand, if your opponent is offering you 95 cents each time you win, you should get out of there as fast as possible. Because you will win as many coin flips as your opponent, your winnings will not cover your losses. Statistically, you will end up losing everything in the long run.
In poker, whether you play for peanuts or for big bucks, you cannot avoid taking risks. You have to calculate risk in relation to the potential return on investment. Your chances of financial return on investment have to be better than the statistical risk of losing the hand.
Odds and statistics are sciences that dictate randomness. Knowing your odds and statistics will help you to control risk and to reduce the importance of luck the long run.