Firstly, as this is an advanced level article, before reading this article we strongly recommend reading some more basic articles on the concept of Odds, such as: Reverse Implied Odds Explained, Introduction to Calculating Odds and Percentages & What are Pot Odds and How to Use Them.
Risk versus reward is the essence of poker. In poker, we express this equation in mathematical terms, such as: “The pot is 2:1 in my favor.” This means that there is twice as much money in the pot as is necessary for your call to be a correct play. However, this relationship only applies to the “current odds,” and is only correct if you are the last to act and there is no further action to follow.
Both risk and reward can increase or decrease if some action is still to occur after your turn. If another player calls after your turn, your odds have just changed. You have either won or lost money, depending on the play. Furthermore, the odds of your play change if there are more betting rounds to come. If any of these future bets happen to increase your rewards for the hand, then your risk/reward ratio has just become more profitable, and the implied odds of your current bet have just improved. However, if the future bet has a negative consequence for your play, then your risk has increased more than your potential reward, and your initial bet has lost value due to reverse implied odds.
Example 1 – Simple Odds
Got it? Great! Now we need to know how to evaluate these types of situations as accurately as possible. Let's say you're the last one to act in a heads-up, facing an all-in. You have $50 to call and there's $100 in the pot. You have odds of 2:1, if your hand has a 33.3% chance of winning the hand, your call has neutral equity. If your hand has a 34% chance of winning, your play becomes profitable. If it has a 32% chance, however, it becomes detrimental to your win rate.
Example 2 – Implied Odds
Now let's say you're facing the same $50 bet on the flop, holding a nut flush draw and a two-handed straight draw, you know that if you win the hand you'll take down a big pot, but at the moment you can't beat any of your opponent's possible hands at showdown. You have $150 left, $100 if you decide to call. Your opponent has $100 left after you bet, the pot is $100. Let's assume you know that your opponent will bet the remaining $100 on the turn.
Now, disregarding any turn decisions for now, your odds on the flop are no longer 2:1, but 4:1. Since you need about 12 cards to make your hand, that is, a 3:1 chance of hitting by the turn, the difference between the current odds the pot is offering you and the sum of the current odds and implied odds you are receiving has turned a 2:1 play, a fold, into a call, a profitable play with 4:1 odds.
This example is simple but illustrates a situation involving nut draws and all-ins. However, calculating implied odds correctly in routine poker situations can be a complex task. Most players tend to mistakenly assume that they will achieve higher implied odds than is actually possible. On the downside of this expectation, you can cause a hand that is not so good to draw dead on future streets, and still face unfavorable betting with this type of hand. You can also be kicked out of the hand by plays such as overbets, at times when you have a hand that is only average.
Pay attention in all types of situations
Keep in mind that implied odds are calculated by adding or subtracting the expected value of future bets, not the nominal value of the bet. Therefore, if future bets have a negative average expectation, you will have lower odds than the current situation offers you. However, if you have a positive average expectation for the following streets, your odds will increase. By how much depends largely on the situation.
Implied odds can be increased not only by the strength of your hand, but also by any advantage you may have over your opponent in later stages of the game. If you see that you can profitably bluff on the turn, for example, your implied odds increase. If you know that your opponent is likely to give you a free card on the river, your implied odds will be higher than if you knew that he never gives you free cards. Any action that gives you a future advantage increases your implied odds.
Estimate your odds correctly – don’t set yourself up for failure
It is important to estimate your odds correctly. Many players only look at the current odds and make mathematical inferences based solely on these immediate odds and the strength of their hands, ignoring any future potential of the hand, whether positive or negative. This causes them to fold many hands in situations where implied odds make seemingly bad hands, if analyzed only by the current odds, become good opportunities for profit. Conversely, if they ignore the reverse implied odds, they can end up setting themselves up for a trap on future streets.
I estimate my odds by looking at the current odds, then thinking about how the hand is likely to play out and estimating my implied odds. I emphasize current odds because they are guaranteed, while implied odds are not. Since current odds are guaranteed, the higher your percentage, the stronger the play. Having guaranteed odds of 8:1 is better than having 2:1 with 6:1 implied odds. However, even assuming that in a more detailed calculation your expected values tend to be the same in the long run, you are less likely to make mistakes using guaranteed odds of 8:1.
Good hand reading + feeling + correct range = success
Estimating implied odds requires good hand reading and a good feel. Correctly understanding villain's range and how he plays that range is not an easy task. Therefore, recognize that what you are making are estimates that are susceptible to error. However, be sure to always include these estimates in your odds calculations.
Always be aware of your decisions. Keeping an eye on your game helps you make better decisions, which will undoubtedly lead to a bigger bankroll!
Article translated and adapted from the original: Poker Strategy With Roy Cooke: Effectively Using Pot and Implied Odds
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