Lessons From Poker

Concepts you can apply to your life

Richard Costa
Sep 4, 2018 · 8 min read
Photo by Chris Liverani on Unsplash

During a year or so I was really into poker and played often online, specifically the most famous variant of poker: No Limit Hold’Em. I really liked it as a sport and as a fun hobby at the same time. Gradually it became clear that it was a different kind of game: as luck played such a strong role (compared to other sports/games, say chess for example) there were considerations that you had to take into account that made the game really interesting. The aspects of the game itself are various and I have to leave the focus on the scientific/mathematical aspects of poker for another time. Here I’d like to just highlight some things I learned while I played it.

E.V. : Expected Value

Poker is a probabilistic game: luck is present and it will affect how you play the game. There is a concept from probability theory called “Expected Value” which is defined as follows:

Definition of Expected Value

Too much math? I know. I’ll break it down in layman’s terms: Expected Value is nothing more than a sort of average, but with different weights for different outcomes. In the case of poker, we would say a decision or strategy would be +EV if it yielded a positive expected value when considering the good and bad scenarios (the x’s) and the likelihood of each one happening (the p’s). Also there’d be -EV situations and there is where you would lose money if you repeatedly applied that same decision or strategy. A simple example to illustrate: suppose that you have a good hand and that there is a 30% chance that you’d earn $80 with that hand and a 70% chance that you’d lose $30. The expected value would be E = 0,3 .(80$)+ 0,7 .(-30$) = $3. So you should expect to earn, on average, $3. In this example sometimes you will earn more than that, sometimes you will just lose money but on average it is a decision that will make you money.

This can be put into practice in real life as a way of writing down a list of pros and cons and then assigning values to them. This should be useful because when we write down the pros and cons of a situation we are still treating all pros as cut from the same cloth. When you weigh the outcomes (e.g. the cons of a situation) you can compare better with the pros and see if the final result is a positive one.
Of course, you don’t need to actually assign numbers and make calculations, but just have in mind that some pros are better than others and some cons are worse than others, so at the final result where do we stand? That can help you a lot when making more difficult decisions: just weigh more consistently your pros and cons!

Mindset

I don’t think there is exactly a poker mindset per se, but I did come across the term several times while reading poker articles and learned some ‘traits’ that professional poker players have. I’ll list what I believe were the most important ones:

  • Focus on the short term decisions in order to earn in the long term;
  • Patience so you can actually achieve the long term results;
  • Adapt as new strategies develop;
  • Resilience to bad luck and also not overestimate yourself when you’re winning, since you know luck always plays a role;
  • Focusing on decisions rather than the results themselves (the most important aspect of the poker mindset in my opinion);
  • Do not let your emotions intefere with your decisions processes.

I don’t think there is a right mindset for doing things, but those traits I mentioned seemed to be found in a lot of successful professional poker players, so that must be for a reason right? Furthermore if you do the contrary of the items in the list it is guaranteed that you will fail at poker. Also they seem very good advice to apply in your projects and your life!

The Law of Large Numbers

The law of large numbers basically says that if you do the same experiment a large number of times the average of the results should become closer and closer to the expected value as you increase the number of trials. To exemplify: if you are using a losing strategy you might win during the first 50 hands, but if it really is a losing strategy after 1000 hands things might start to even out, and eventually you’ll be broke as it is expected.

This law together with a bias for remembering only when we were on the bad side of luck (a.k.a. selective perception) is why people believe online Poker sites to be rigged. When you play thousands of hands, you find yourself so much in similar situations that a situation that happens 5% of the time feels like it is happening way more often than that. You can have aces (the best hand before the other cards are turned) and still lose: that should happen, on average, a small percentage of time. But sometimes you’ll lose with aces three, four times in a row and start wondering how is that possible.

If you adopt the right strategy, no matter how many losing strikes you have, things should even out and you become a winner in the long run. Actually a study suggests skill dominates luck after 1,500 hands.

The bottom line? We have cloudy judgment regarding to probabilities and even when things aren’t going well enough, give enough time and try again as many times as you can. It will eventually even out and you’ll reap the goods, that is as long as you’re using a good strategy.

Variance

Variance is a statistical concept which can be understood as, roughly speaking, how numbers are spread out away from the average value. The more variance, the more you should expect individual values to float around further away from the average one. Note that variance is not the same as expected value nor the average value. To illustrate:

Photo obtained from Wikipedia

We can see that in the two samples above the average value is the same: 100, but see how different they are spread out for the “blue” sample and for the “red” one. The blue sample has more variance than the red one.

Variance is the reason poker can be attractive to new players because of the chance of beating strong players (in a tournament for example) at any given time. Variance brings the luck aspect to the game which makes it fun to play but also has its downfalls. You are going to go through losing streaks inevitably; and those losing streaks can last for quite some time. That’s why sometimes it feels more like lottery than sport, but different forms of poker have different degrees of luck in them (see here for a comparison of the variance in different formats of poker). So your aim in poker as in life is to do everything in your competence to decrease the variance whenever you find yourselft into such situations!

Controlling emotions and learning to deal with bias

Poker can be addictive (that’s why it is also called gambling by some people; see this study for example on the health aspects of poker). Since it involves money it doesn’t come as a surprise that people can lose some control over it and be broke. As part of a good mindset, do not let emotions interfere with important decisions, specially those which can have a special negative result. That is not to say you should be a cold stone, souless person. But if you do think only in terms of ‘emotional reasoning’, unless you have an extraordinary intuition, things will fall apart, and quickly. Learn to avoid thinking that because you’re winning you are inherently a winner at that activity without strong evidence, otherwise you might find yourself hostage of the confirmation bias, which is basically when you see what you want to see. Also 'selective perception' was mentioned and it is one bias very easy to fall for as well. There are other biases that play a role in poker, but I guess those are two of the most important ones. So if you get serious about poker and other enterprises you’ll eventually have to deal with emotions and your biases and learn at least to check your own reasoning once in a while.

Learn first how not to lose

A lot of players (myself included) would be eager to play the game, trying to emulate the pros we saw on tv or on the internet, trying to earn the maximum amount of money we could and then lose it all after some hands played. Poker doesn’t always reward good players let alone the lousy ones. But it will punish hard for mistakes. The variance will catch up eventually if you just play badly, not thinking about your decisions. Since you can lose money even if you play what is thought to be corret by most players, you have first to learn to avoid the traps and not lose money in the long run. This puts you ahead of so so many players you would not believe it. The majority of players are there just for the gambling, the fun, so learning not to lose is the first step to start winning. This is true for other areas of your life. Before you jump in with both feet in some enterprise, try and learn how people actually failed at it before you. That can save you so much trouble.

Decisions are as important as results

Finally, this is to me the most important thing I learned and the one that definetely impacted me more than anything else mentioned here. If you could take only one concept from all of what has been discussed is this one: make the decisions the central thing in your life, not the results. Aim for better decisions.

Too long, didn’t read?

To sum it up, take risks knowing how much they can affect you. If you can’t know exactly how much, make rough estimates: it’s better than just purely guessing. Make decisions based on principles and/or strategies you believe to be true and not only on results you or others achieved. Your goal should always have a winning strategy, not a winning day or week: those should follow as a consequence. And yes, sometimes things are just unfair and you will be out of luck. You should accept the role luck plays in our lives. Be cool and deal with it while maintaining a positive mindset. Do not fool yourself, pay attention to how biased we can be in your own judgements and try as many times as possible to achieve your goals when you have a solid strategy.

Richard Costa

Written by

Read, learn, write, repeat. Physics grad student. Contact: scosta.richard@gmail.com costarichard.wordpress.com

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