When I was in college, I played indecent poker. I often joke that I majored in Economics and played poker. I devour lots of books, articles, forum posts, and instructional videos to improve my skills.
At times, the obsession and fascination with poker may resemble more of an addiction. I used to play from late afternoon until early morning at sunrise. That’s usually my cue to sleep a few hours before I have to get up for class.
However obsessive I may be, I have to admit that there is a depth of addiction that I will never be able to grasp.
My obsession with poker is driven more by the fun and intellectual challenge of getting it from other people, than by the money side. Although, I often use that money to keep score.
I became a profitable player through study, practice, and a diligent review process. But I didn’t play for big money, mainly because I didn’t have that kind of money as a student.
What I love about poker is that it bridges theory and practice in a way I can’t find anywhere else. I can read about a new concept and apply it to cyberspace the same day. And almost immediately, I can see how that affects my results in real time.
Over the years I played the game, I learned a lot of lessons that really stuck with me. Poker has shaped the way I see the world and the way I make tough decisions.
Here are some valuable lessons that I learned
1. Relative Performance Is More Important Than Absolute Performance
In The Theory of Poker, David Sklansky wrote what he called The Fundamental Theorem of Poker.
Every time you play a hand that is different from the way you play it if you can see all your opponent’s cards they get; and every time you play your hand the same way you play them if you can see all their cards they lose.
In an imperfect information game like poker, you aim to make better decisions than your opponents. You gain an edge by minimizing your mistakes or maximizing the mistakes of others.
If you get to the point of showing your cards you just need to have a better hand than your opponent to win.
That awareness extends to business and other aspects of life. You don’t have to have the best product to beat your competition, you just need to have a better product.
Maybe you even have the same product, but better marketing or positioning can make the difference between winning and losing.
In many ways, your advantage in life is your relative strength compared to others.
2. Probabilistic Thinking Is More Useful Than Result-Oriented Thinking
When it comes to decision-making, it’s easy to convince yourself that you’ve made the right choice when the results are in your favor. But if you don’t, you can believe that you’ve made the wrong decision, or even been unlucky.
Often times, short-term results can be very random and beyond our control. What is more important is the decision-making process itself. That’s the part you can control. You want to make decisions that have expected and positive results. Even if the results are not what you want, you can take comfort in choosing the option with the highest expected value (EV).
Let’s say you know that a biased coin has a 60% chance of landing on the head and a 40% chance of landing on the tail. If someone offers you an even (1 to 1) bet, and you have to bet, your best bet is to pick the head. Even if you fail, you still have to believe that you are making the best choice based on the information you have at the time.
The example may seem rather simple, but it is a solid foundation for understanding the concept. If you want a real challenge, try to convince lottery winners that they made bad decisions by gambling the lottery.
Thinking in terms of expected value (EV) and learning to separate random results from your decision-making process are the cornerstones of making the right decisions. Knowing that a result is only one of many results helps you maintain some level of objectivity.
If most of the decisions you make are positive in terms of expected value, and you manage your risks well, you will end up winning. And you will minimize the effect that torture plays
3. Maximize Your Winners and Minimize Your Losers
In many ways, this is playing with the hand you’re working with and trying to make the most of it. There are situations where you can push harder and play more aggressively. And others where you need to be more careful and even give up, to take loss guarantees and prevent the possibility of a very large loss.
You need to learn at how to recognize the situation and play according to it. You don’t have to play every hand you handle and you don’t have to play it the same way every time.
In situations where you excel, you’ll want to persuade players to put more money into the pot. And in situations where you fall behind, you may try to do the opposite.
Being a profitable poker player means you need to find a balance where your winners outnumber your losers. It is equally important to maximize your winners as much as possible to minimize your losses.
You should focus more on harnessing your strengths where it is much more profitable. But be aware of your weaknesses and work to ensure that they meet standards that don’t get in the way of your success.