Brain%20Teasers

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Brain Teasers
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Answer
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Quantitative Finance Society

• Gambling Strategies Statistics

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Announcements
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Trade Pitches
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Market Update The Macro View
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Gambling Strats Stats(No-Limit Texas HoldEm)

• Basic Rules
• Expected Value (EV)
• Hand Odds
• Pot Odds
• Betting
• Position
• Implied Odds, Bet-Sizing, C-betting/Floating/Tripl
  e-barreling
• Fold Equity, Fold vs Call vs Re-raise
• Board Texture, Other Plays with Bets
• Poker Statistics, Adjusted EV
• Putting your opponent on a hand range
• VPIP, PFR, other metrics for reading your
  opponents play style
• Analogies to Markets Trading

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Disclaimer

• The concepts covered today will only be touched
  upon lightly, so do not follow them blindly and
  assume they will work. Just like investing, there
  are lots of intricacies about when to use certain
  strategies at the right time, but were just
  trying to give a broad overview of things to
  know, and if youre interested you can read more
  (recommended sites twoplustwo.com COTW Concept
  of the Week lt-GOOD READ, deucescracked.com)
• Variance. In poker, just like finance, past
  results do not indicate future returns, and there
  will be up and downswings even if you are correct
  in theory. There is no foolproof strategy. The
  market can stay irrational longer than you can
  stay solvent.

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Basic Rules

• Standard 52-card deck, 2-10 people
• Dealer button, small/big blind
• 2 hole cards each, community board, your handtop
  5 cards (chops)
• Standard Poker Hand Strength
• Royal/straight flush
• Four of a kind (quads), Full house (boat)
• Flush, Straight, Trips, Two-pair, Pair, High
  Card
• Betting Pre-Flop, Post-Flop, Turn, River

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Expected Value Hand Odds

• Chance of having a hand
• AA (or any pocket pair) .45
• Any pocket pair 6
• AK (any suit) 1.2 same for any two card
  combos
• AK (suited) 0.3
• 2 suited cards 23.5
• 2 connected cards 15.7
• Suited connectors 4

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Expected Value Hand Odds

• Probabilities of hitting the flop
• With any two cards
• Flopping a pair 27
• Flopping two-pair 4
• Trips 1.3
• With a pocket pair
• Hitting a set 11
• With suited cards
• Flopping four-to-a-flush 11
• With connected cards
• Flopping four-to-a-straight 11

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Expected Value Hand Odds

• Matchups
• Over-pair 80-85 win/15-20 lose
• E.g. AA vs 66, AA vs J7
• Domination sharing a card, one higher, 75
  win/25 lose
• E.g. AJ vs A7 (one card same, one bigger)
• Pair vs one over-card 70/30
• E.g. QQ vs A9
• Slight favorite 60-65/35-40
• E.g. A8 vs 79
• Coin-flips 55 win/45 lose
• E.g. A3 vs 79 (high cardlow card vs two middle
  cards), 66 vs AK (pair vs two over-cards)
• Adjustments 3 or so for straight/flush
  potential (suited/connected/gap cards)

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Expected Value Hand Odds

• Post-Flop Drawing Hands
• Rule of 4 If you have 9 outs, your chance of
  hitting by the river is 4x the outs, so 36
• Rule of 2 If you have 4 outs on the turn, your
  chance of hitting on the river is 2x outs, so
  8
• So if you have two clubs, and the flop has two
  clubs, you have 13-4 9 more clubs to hit so
  your chance of having a flush by the river 36

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Expected Value Pot Odds

• Sum all the money that people have bet this is
  the money in the pot
• Say the pot is 6. Its you vs another person,
  post-flop. He bets 3 (pot is now 9). What are
  your pot odds?
• You have to pay 3 to win 9, so thats 3/933.
  You have to win 33 of the time to break-even.

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Expected Value

• Combining pot odds and hand odds
• Same scenario, 6 pot, 3 bet. You have
  four-to-a-flush. Is it profitable to call?
• Pot-odds 33 (3/9)
• Hand-odds 9 outs 36
• 36gt33, so youll win more often than is needed
  to break-even. YES! (positive EV)
• Problems/assumptions/missing factors?
• You may have more/less outs than you think, if he
  has the same draw, or if a pair is strong enough,
  or if he already has the nuts
• If you hit the draw, you can win more money later
  (implied odds)
• If you miss on the turn, it may not be profitable
  to call more bets
• Raising can be more profitable than just calling
  (fold equity)

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Expected Value Implied Odds

• Adjustments to pot odds, based on more money that
  you can earn from future betting rounds.
• Same example, but he bets 4 instead. So your pot
  odds are now 4/10 40, but your hand-odds are
  still only about 36 (assuming you must hit the
  flush to win, otherwise lose). Do you call?
• If you hit, you can possibly win his whole stack
  if he keeps betting his pair
• If you miss, theres little downside because you
  can just fold
• What if there are 3 other people in the pot?
• Even higher implied odds, because the odds of 1
  of the 3 people calling you is higher than just 1
  person
• Problem dont get overly optimistic
• People will see the flush on the board and wont
  call with a pair
• If you miss on the turn, you will likely fold to
  another bet

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Betting Position

• Position is everything it gives you information
• If youre first to act/early, you dont know the
  strength of anyones hand. If you bet, you have 8
  people behind that might raise.
• If youre on the button, people have
  folded/limped/bet, so you have an idea what
  people have, and can make plays accordingly.
• Example You have A5, you raise, 1 caller. Flop
  comes A98 suited. You have top pair but a weak
  kicker. He has position. What do you do?
• If you bet and he re-raises, he probably has a
  better ace, and you will have to fold.
• If you check and he raises, he still probably has
  a better ace, so you have to fold. If he checks
  too, he might have a flush draw.
• Now instead, you have position. He checks.
• Sign of weakness! You should bet because he
  probably doesnt have a better ace.
• What if he bets? You can safely fold.

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Bet-Sizing

• Maximizing profit Remember in the pot/implied
  odds example. The pot was 6. If you only bet 3,
  then the flush draw is going to call you. If you
  bet 4, then a loose player might call while a
  tight player might fold.
• Bigger bets increase chance of folding
  (obviously), but bet appropriately so the odds
  are slightly in your favor, but that people might
  still call. You want the flush draw to call the
  4 bet, because its positive EV for you.
• If you bet 5, nobody will call you, and you
  lose potential profit.
• At the same time, if you bet 3 or even less with
  your top pair, then youre losing potential
  profit because drawing hands would have called a
  higher bet, and now more weaker hands will call
  you and probably suck out on you.
• Bet consistently If you bet 4 one time and 3
  the next, the opponent will think you have a weak
  hand when you bet 3 and will re-raise you.

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C-Betting, Barreling, Floating

• C-betting
• If you raised pre-flop (and everyone just
  called), you should continuation bet (c-bet) on
  the flop in most scenarios, because you are
  showing the most strength
• E.g. you bet, 2 callers. You have A9. Flop comes
  J95. Nothing dangerous and you have two overs.
  Both people check. You should bet, and they will
  probably fold.
• Double/Triple-Barreling
• Say one person calls that raise. Turn comes
  something useless, like a 2. He checks again. You
  should bet AGAIN to get him to fold, since he
  keeps checking and showing weakness. Maybe even a
  3rd time on the river, if nothing dangerous comes
  out (and definitely if you hit).
• Floating (bluffing technique, representing
  strength)
• Say youre the person that check-called flop in
  the above example. You have nothing, like K7. On
  the turn you just bet. This is good because the
  PFR likely c-bet with anything, so you can get
  him to fold.

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Fold Equity, Board Texture

• As you can see from that last example, your hand
  gets more value if you bet because you can get
  people to fold.
• This is why re-raising is better than calling
  most of the time too. (E.g. Pre-flop, you should
  3-bet/4-bet AKs/KK/QQ to get more value, and to
  fold out weaker hands)
• This also boosts your implied odds. If the board
  looks really scary (3 to a flush, 3 to a
  straight) you can bet big with anything and a
  pair might fold because he is afraid of the
  straight/flush (playing board texture)
• Taking into consideration present/implied odds
  and all possible scenarios, KNOW WHEN TO FOLD and
  dont be too optimistic

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Leveling/Psychology

• Given all the above betting strategies, if a
  person bets strange/unconventional bet sizes,
  what does it mean? What level is his
  gameplay/mind at? E.g. he goes all-in pre-flop
  and you have JJ
• Level 1 he is just betting his hand (he has
  AA/KK/QQ/AK)
• Level 2 he is considering your reaction, so he
  is trying to price you in/out (he is bluffing)
• Level 3-infinity he knows that you might think
  its a bluff, so he has something good but is
  trying to induce a call
• Etc.
• Is it better to assume that people know nothing,
  or people know everything/some things?
  (weak/strong/semi-strong efficient markets)

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Stats, Hand Ranges Adjusted EV

• VPIP essentially, of hands played
• PFR of hands raised pre-flop
• Using VPIP/table-image/bet-sizing to put the
  opponent on a range of hands that they might play
  in that certain way. These are SUBJECTIVE
  PROBABILITIES that depend on PSYCHOLOGY.
• With this knowledge, calculating a new EV
• You have AJ, flop is A89. Pre-flop you bet and 3
  callers. On the flop you bet, two fold, one
  caller. The caller has a VPIP of around 25.
  Given that he called twice and hes loose, he
  probably has a straight draw or a weak ace.
• Say he has an equal chance of either hand. Your
  new hand odds are .5(90 chance of your AJ
  beating a weaker ace).5(68 chance of you
  winning if he doesnt hit the striaght) 79

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Analogies to Markets/Trading

• Reading the skill of opponents Efficient
  Markets Hypothesis
• Hand ranges and subjective probabilities
  stochastic interest rate/price modeling
• Knowing when to fold and raise
  closing/increasing a trade position. Discipline,
  sticking to your thesis
• Being able to handle variance, huge upswings/
  downswings without getting emotional and still
  playing with positive EV. Not being attached to
  money, but being attached to winning.

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Questions?