Probability

Often known as the circumstantial side of “luck”, probability plays a key role in most everything we do in the outcome.

Poker is a great way to get educated on probability, although, for most, it is an expensive way to learn. With 52 cards in play in a fair game, sometimes you can know there is just one card in the deck that can make your hand and by counting the cards you haven’t seen, say, in Holdem that would be 52 – the two in your hand and the cards on the board. You can determine the probability of making that hand by dividing the number of cards that can make you from the ones you haven’t seen, in this case, 1 in 47.

Not very good odds. From Bayes to Nate Silver all the way to Texas Dolly, poker can teach you a lot about how probabilities play out and experience what that means.

Suffice to say,  in the above example, you make your hand one in 47 times in that same situation. Luck comes in as to what’s in the pot when that 1 in 47 comes vs. when it doesn’t.

The same thing is true in all Probability. You gather the information you know and make the decision that matches the numbers. That is what is called Smart Money.

Often, the greatest successes we know of came from not only beating the odds but going against them. Those make for good stories, but not good decision making in the long run.