life lessons from poker
5Stephen Fowler
1thiccythot
5Jay Bailey
1sjadler
3xpym
2CronoDAS
2CronoDAS
1sjadler
1Knight Lee
0zahaaar
7Max Niederman
3Stephen Fowler
6tslarm
3[anonymous]
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I think it is worth highlighting that the money in poker isn't a clear signal, at least not over the time scales humans are used to. If you're winning then you're making some hourly rate in EV, but it is obscured by massive swings.
This is what makes the game profitable, because otherwise losing players wouldn't continue returning to the game. It is hard to recognise exactly how bad you are if you play for fun and don't closely track your bankroll.
For anyone who hasn't played much poker and wants to understand the kind of variance I'm talking about, play around with the following variance simulator.
https://www.primedope.com/poker-variance-calculator/
If you're a recreational playing live cash, and you only play every second weekend, you might see 10,000 hands each year.
If you're also also spending a little time studying and remain in control of your emotions, you might beat the game for 10bb/100. This is not an easy feat, and puts you ahead of most people you'll see at the table.
You can still expect to be losing 3 out of every 10 years.
video games < poker < trading < life in terms of money as a signal, which reflects increasing complexity of each
also, it's not unheard of to to beat live games for 30-100+ bb/100
I do remember when I was learning poker strategy, and I learned about the idea of wanting to get your entire stack in the middle preflop if you can get paid off with AA - was a very fundamental lesson to young me! That said, there's a key insight that goes along with the "pocket aces principle" that is missing here, and that's bankroll management.
In poker, there is standard advice for how much money to have in your bankroll before you sit down at a table at all. E.g, for cash games, it's at least 2000 big blinds (20x the largest stack you can buy). This is what allows you to bet all-in on pocket aces - if your entire bankroll is on the table, you should bet more conservatively. The point of bankroll management is to allow you to make the +EV play of putting your entire stack into the middle without caring about the variance when you lose 20% of the time.
To apply this metaphor to real life, you might say something like "Consider how much you're willing to lose in the event things turn out badly (e.g, a year or two on a startup, six months on a relationship) and then, within that amount, bet the house."
(To make slightly more explicit for folks less familiar with poker, there’s a distinction between what you’d consider your bankroll - your money allocated for poker across many sessions - and the amount you’d buy-in for in a particular session. You likely wouldn’t want to buy-in for your full bankroll in a single session (if you even could) because the risk of getting fully wiped out is too high. If your bankroll is lower, you should be playing at relatively lower stakes to reflect this.
These ideas are also related to the Kelly criterion of bet sizing / bankroll management in gambling more generally.)
Avoid results-oriented thinking
People often say some variation of "this was a mistake" after misfortune strikes them, but while this conclusion isn't always wrong, their analysis is inadequate. Pretty much everything you do in life involves risks, sometimes you make a losing bet, and this is completely fine! And, on the flip side, having a crazy gamble pay off doesn't necessarily vindicate it.
If you're reasonably sure that your decision was +EV when you made it, the only reason to reconsider it is discovering new information that you should've known in advance, whereas its outcome is irrelevant (but very emotionally salient, naturally). In the long run, random variance evens out.
If the universe hands you the metaphorical equivalent of pocket nines, but you also think it's the best opportunity you're ever going to get for a long time, do you go for it anyway? (To stretch the poker metaphor, you can imagine that each player's cards are dealt from different decks, and yours is missing two of every card higher than 9.)
Something stupid I once did in a casual poker game:
I was holding literal pocket aces. I didn't actually go all in (I was hoping I could get someone else to bet heavily and lose instead of just buying the blinds) but that's not necessarily the dumbest part. The really stupid part is that, when the river was dealt, it was the fourth card of a suit that didn't match either of my aces and the one other person that hadn't folded started betting heavily. Obviously he has the flush and I don't, but I didn't want to abandon the giant pot and be forced into folding goddamn POCKET ACES for pete's sake! So I fell for the sunk cost fallacy, and my pocket aces lost to the flush I was pretty sure my opponent had. :/
Thanks for writing this up, enjoyed reading it! From my read of this, you might enjoy the book Games: Agency as Art. There’s an interesting chapter that’s essentially about the allure of clear feedback signals, a score to increase, etc, (and the downsides of this) which resonated a lot with me, & it feels similar to what you’re describing about money as signal
I think betting the house on pocket aces may be good advice if you really know what you're doing, but if you're just learning the ropes this strategy would be unforgiving. What if you think you have the perfect obvious startup idea, bet everything on it, and it turns out to be a "tarpit idea?"
I agree with the fold pre principle though. I think it's good to research very many opportunities/ideas, but investing in them can be an insidious trap and it's easy to underestimate how hard it is to pull out later on.
You talk about two common mistakes in judging risks: taking big risks with bad odds (breaking the “fold pre principle”) or playing it too safe with good odds (breaking the “pocket ace principle”).
- In poker, these ideas can clash. If you follow the “fold pre” rule and always fold bad hands, then when you finally play your pocket aces, other players will likely just fold. Plus, if you’re up against 5 players with pocket aces, your chances of winning not so high. So, I don’t think these are universal combo rules. It always depends on who’s at the table, the blinds, and the stack sizes.
- When it comes to marriage, friendship, or work, I can’t imagine anyone sizing up their partner or job like they’re pocket aces or 7-2 offsuit! I doubt you’d ask someone out or take a job if you thought of them as 7-2. I’m not even sure you can rate things like that in life.
I totally agree that sunk cost is a big problem (it’s a common thinking trap), but you can’t just boil it down to “fold pre” or “pocket ace” principles. It's oversimplification.
When you say you often see people playing bad hands, that’s just your view. Let me tweak a saying: “Don’t judge someone until you’ve played their cards.”
In today’s digital world, going for a “pocket ace” strategy, like picking an obvious, “strong” business or idea -throws you into crazy competition. Everyone’s chasing those aces, and it’s super expensive to even get in the game. But now, with tech being so cheap and accessible, you can take a small risk and play something like suited connectors. Those “weaker” ideas might just turn into a royal flush - what startups call a unicorn! So, I’d say young people should play their “bad hands” and go for those wild, less obvious bets. Haha!
In today’s digital world, going for a “pocket ace” strategy, like picking an obvious, “strong” business or idea -throws you into crazy competition. Everyone’s chasing those aces, and it’s super expensive to even get in the game. But now, with tech being so cheap and accessible, you can take a small risk and play something like suited connectors. Those “weaker” ideas might just turn into a royal flush - what startups call a unicorn! So, I’d say young people should play their “bad hands” and go for those wild, less obvious bets. Haha!
Good business ideas everyone knows about are aces on the board, not pocket aces. The pocket aces are ideas with alpha, not merely good ones.
"So, I don’t think these are universal combo rules. It always depends on who’s at the table, the blinds, and the stack sizes."
This is an extremely minor nitpick but it is almost always +EV to get your money in pre-flop with pocket aces in No Limit Holdem, regardless of how many other players are already in the pot.
The only exceptions to this are incredibly convoluted and unlikely tournament spots, where the payout structure can mean you're justified in folding any hand you've been dealt.
The only exceptions to this are incredibly convoluted and unlikely tournament spots
If I may nitpick your nitpick, it's possible to justifiably fold AA preflop in a cash game, right? Say you're on a table full of opponents so bad that you're almost guaranteed to win most of their money by the end of the night just by playing conservatively, but the stakes are very high and you could lose your entire bankroll by getting busted a few times. Depending on the exact details (maybe I need to go further and say your entire bankroll is on the table, or at least you have no way of accessing the rest of it tonight), I think you could legitimately nope out of a 9-way all-in pot preflop without even looking at your cards.
Or, for a case that doesn't depend on bankroll management: let's say you're on the big blind (which is negligible compared to everyone's stack size), everyone is all in by the time the action gets to you, and you have an extremely good read on every opponent: you know Andy would only ever push preflop with AA, and Brenda, Carl, Donna, and Eoin would not have called without a pocket pair. I haven't done the exact maths, but if the others all have unique pairs (including Andy's aces) then I think your AA has negative EV in a 6-way all in; if you can't rely on the pairs being unique, I'm not sure whether that tips the balance, but if necessary we can work that stipulation into the story. (Let's say Andy still definitely has the other two aces, but Brenda acted first and you know she would have slowplayed a really big pair and would have tried to see a cheap flop with a small pair, whereas Carl wouldn't have called without Kings or better... and Donna has a tell that she only exhibits with pocket 2s...)
(I'm saying this all for the fun of nitpicking, not to make any serious point!)
edit: I guess there's a simpler case too, if we're talking about cash games in a casino! You just need to be playing heads up against Andy (who only ever shoves with aces), and for the rake to be high enough relative to the blinds.
1(I'm saying this all for the fun of nitpicking, not to make any serious point!)
A more realistic case is that you are on a huge tournament bubble with the shortest stack and 2 players in front of you have gone all in, and although calling with AA would be +EV in a cash game, if you take into account ICM considerations, it's no longer worth it for you personally to join them (if the bump from 3x-ing doesn't matter that much bc maybe all other players' stacks are bigger than yours).
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