Note: Not at the old Poker1 site. A version of this entry was first published (2005) in Poker Player newspaper.
It’s easier to understand the nature of poker if you think about price.
Caro’s Law of Poker Economics states: “Poker is the art of trading chances. To win, buy chances at a low price and sell chances at a high price.” In fact, that simple truth defines the core of poker success.
Perhaps you’ve heard people talk about the secret to success in the stock market. They’ll say, “Buy low, sell high.” Sometimes they’re dead serious when they say this, and sometimes they’re just amusing themselves, because they realize there’s no real way to know for certain – at the moment of purchase or sale – whether a stock is low or high. It may seem low, but could go lower; and it may seem high, but could go higher. If either of those things happen, buying “low” didn’t work, because your purchase lost value; and selling “high” didn’t work, because you sold too soon and would have earned more by waiting. Still, the concept is profound in its simplicity.
Retail business is based on the notion that you need to buy merchandise at the lowest price you can and sell it at the most profitable price. Poker is the same way, but instead of buying and selling physical merchandise, you’re buying and selling chances.
Let’s examine what this means.
What does it mean to “buy low” in poker
I’m betting most people don’t think they’re buying anything when they play poker. But they are. When you sit down to play poker seriously, you’re not out to just win pots. You’re out to win pots only if the price is right and the risk is warranted. Again, it’s the same as in any other business where you buy and sell. You’re looking for the best price. If something is too expensive, you won’t buy it at all.
In poker, you’re looking for good deals. You’re out to buy opportunity. If you’re serious about winning, you sit in a game believing you have an expectation of earning a profit. And profit is all about price. Buying low means you called a bet with an advantage. You bought a chance, and you paid a cheap price.
Now here’s a really important concept, and I want you to think about it long and hard: Tight players usually overprice their chances, so you should seldom buy from them; loose players usually underprice their chances, so you should often buy from them. Got it?
Let me get sidetracked for a minute. We’re talking about “buying” here, which means calling when an opponent has bet. We’re not talking about the fact that you can raise a tight opponent more liberally, because they fold more often. In that sense, you can play some hands more often against a too-tight opponent than a too-loose one, but those hands tend to be specifically your bluffs. Conversely, you play more medium-strong hands against loose opponents, because they often call with even worse hands. Against them, the secret isn’t bluffing more, it’s betting semi-strong hands more.
Anyway, back to today’s discussion.
Like I said, tight players overprice their hands. When they wager, they have stronger hands, on average, than typical players would have in the same situation. Because of this, you need a stronger-than-usual hand to call. Remember, whenever you call, you’re buying an opportunity. The purchase is always speculative, unless you have a hand that can’t possibly be beat. So, in essence, you’re paying to take a chance. And against tight players, chances are sold at a premium, so you need to be selective about when you buy.
A million calls
Keep in mind that you want that chance to be profitable in the long-run. A chance is theoretically profitable whenever you would expect to make money if you could make the same call with the same hopes and the same doubts a million times. If the expected outcome for each one of those million calls averaged together is greater than nothing, you’re getting a good deal. If it’s considerably greater than nothing, you’re getting a bargain.
But, if you call tight opponents with the same hands with which you call loose opponents, you’ll lose money, except on your better hands. That means that your call is overall worth less than nothing. And since nothing is the break-even point, that means you’re losing money. You paid too much. You didn’t buy at a low-enough price. Your chance wasn’t worth the money.
So, you can see, in poker you are truly buying chances. And you need to get a good deal in order to win.
Selling chances high
The other half of this concept is selling. When you have an advantage over your opponents, you have something to sell, and you need to get your most profitable price. In limit games, there’s usually only one price (unless someone is short of money). It’s whatever the designated betting increment is. In a $200/$400 game, for instance, it will be $400 on later betting rounds. That’s the only price you can sell an opportunity for, so that greatly simplifies your decision. It’s now a matter of determining whether you’ll get a good deal if an opponent calls. If you will, you should often bet. If you won’t, you should often check.
What’s this “often” stuff? I hear you. You’re saying that if you’ll get a good deal if an opponent calls, you should always bet, not often bet. But that’s not true. Sometimes you might check because you can lay a trap and get an even better deal later – sort of like advertising a product at below cost to get people in your store in hopes they’ll buy something much pricier. And if you’ll get a bad deal if someone calls, that doesn’t necessarily mean you shouldn’t bet. Remember, they might not call. You’re offering them a good price to call the bet, so you’re offering to sell a chance at the pot unprofitably, but you’re hoping your opponent doesn’t realize this, will decline the purchase, and will make the mistake of folding. This happens – especially in limit games — when you’re weak or bluffing and also when you have a hand that will likely win if called, but will be more profitable if you take the pot right now. So, you see, you shouldn’t always bet, even if your opponent will get a bad deal by calling. And you shouldn’t always check, even if your opponent would get a good deal by calling.
Expensive, but not too expensive
But, in general, think of poker as a game where you want to buy chances cheaply and sell them expensively. In no-limit, this comes into play all the time. You don’t necessarily want to move all-in to protect a strong hand, you want to sell that hand at it’s most profitable price. Maybe all-in really is the most profitable price, but usually it isn’t. If you overprice the chances you’re selling in no-limit, you’ll get a call once in a while, but you probably won’t make as much profit as you would selling for less and getting lots of bad calls averaging more modest profit each.
It’s all buying and selling. Life. Business. Poker. You buy. You sell. And ultimately you succeed according to your skill at the game of price – which just happens to be today’s word. – MC