I play poker and trade options, seeking edges from study, reflection and analytics.

Hidden Variance

Hidden Variance

When cards are turned face up, the hand's story is clear. Perhaps you played skillfully, maximized the situation’s value. Or variance placed all the chips in the middle on your behalf. Maybe you were ahead when the money went in, but variance had other plans.

When the ranks and suits remain hidden, the story is harder to see. For average players, poker’s hidden variance may make the game’s obvious challenges insurmountable. Sharps understand these dynamics and use them to tilt the odds in their favor.

Last month, I set out to complete a 100 hours challenge: play no limit hold’em cash games, #justgrind out of a lean financial position, then play more and write about the experience.

 The related Keep note. This rough format is often the transition between thought and strategy and/ or blog post.

The related Keep note. This rough format is often the transition between thought and strategy and/ or blog post.

I thought patience, discipline and my skill edge would eventually produce 2015/ 2016-like results, but the challenge stalled. The small sample was enough to indicate hidden variance was preventing profits.

As games persist and evolve, they get tougher.

The money available in regional poker rooms decreases the longer they are open. Maturing games behave similarly. At Horseshoe Southern Indiana and Jack Cincinnati, the 1/2 NL games are noticeably tougher year/ year reflecting fewer weak players and smaller edges.

Profitable players thereby experience lower win rates. How much lower? My win rate playing 1/2 NL at Jack approached the mid $20’s per hour, over hundreds of hours, in 2015/ 2016. Take away twenty percent, and you can still pay bills with volume.

Playing enough depends on factors like game availability, work discipline and bankroll maintenance.

Could you relocate if the games necessitate moving? Keep your session and hour counts up? Ensure life inputs don’t diminish your ability to handle short-term variance? Assuming you maintain your skill edge, this highly personal mix is foundational to poker professionalism IMO.

A negative change in your life inputs may neutralize your skill edge.

Choosing to play based on a skill edge in a vacuum is imprudent. That’s why I termed my challenge at 64.5 hours, down $116. Determining your overall edge requires experience, honesty and ongoing reviews of hand histories and session analytics. As I play more poker, it’s getting clearer that a skill edge, without supporting elements, isn’t threatening anyone at the table.

You must be the one inflicting variance on your opponents.

The bet sizing work noted above is an example of inflicting variance. Critical success factors like mental clarity, emotional control, adaptability and confidence must also be present to execute. A position of weakness off the table is generally preventative.

During a recent stretch of big hands played aggressively, that frustratingly lost, a friend reacted via text saying, “Take an honest look at these spots.” She was implying I might not be assessing my equity correctly. It was an infuriating comment in the moment!

The marginal spots played passively destroy profitability. Not, generally speaking, the spots in which you’re confident enough to risk all your chips.

This concept is familiar If you’ve read Poker’s 1% by Ed Miller. If you care too much about the chips on the table, then you won’t bet and call enough to win.

In my last session, the table was shocked when a player, facing a bet on the river, showed a set of aces and folded. There were multiple straight possibilities and a backdoor flush on board, but he had been losing and rebuying for hours. Knowing this regular, an aggressive, thinking player, I empathized emotionally and understood his action -- my previous three sessions dramatically consumed my physical bankroll (and then some), effectively ended my 100 hour challenge and sparked yet another mental iteration of my poker future.

How a hand is played can vary based on recent history.

Consider a hand I “played” that session → Jack Cincinnati's poker room was full, for a big Halloween night high card promotion. The game was 1/2 no-limit hold’em cash. Effective starting stacks were $290 (heads up, I was covered). I had just $100 more in my pocket, and we were a few hours from the big midnight drawing... In the cutoff, I limped behind two players with 9c6c. The villain in the hand, a tight/ solid player on the button, raised to $10. The blinds folded, and both limpers then I called. Four players to the 9s6s7c flop with $43 in the pot. We checked to villain who bet $25. I called. Heads up to the 2c turn with $93 in the pot. I checked/ called villain's $50 bet. River 2h with $193 in the pot. I check/ folded villain's $50 bet.

I was seeing “monsters under the bed” (an overpair) on the river after playing the hand too passively on every street. I missed clear bet-sizing clues and pot odds that warranted a river call as played. Just before midnight, villain told me he had QsJs for a missed draw. I knew my overall edge had been further compromised by recent history, and this hand proved it.

(A few minutes later, the limper on my right won the night’s big prize, $6,600 with the ace of clubs, our lucky table's highest card; I got a $660 table share.)

So, how do you proceed if your overall edge is impaired? I’ve written, “It's often easier to just get better at poker.” Getting better at poker in 2017 might mean switching gears.

If someone said you should play a mature poker variant, with shrinking edges, tables and player pools, little structure and lots of hidden variance, what would you say? Those in the know seem to be moving to limit and pot limit variants and/ or playing tournaments. 

Counter to the widely accepted notion that variance is greater in poker tournaments than cash games, I assert the opposite is true for most no limit hold'em players today.

Choosing when and where to play ends with tournament registration whereas game selection and quitting are ongoing, in-session cash game decisions.

I think this an underrated challenge for cash game players, especially now, that tournament players simply do not face.

Tournament stages/ structure and independent chip model (ICM) dynamics provide clues to opponent ranges and strategies and necessitate aggressive play.

With more available information about players’ holdings and less susceptibility to falling into passive patterns, tournament players are more likely to bet and call enough to win.

In some casinos (e.g. Jack Cincinnati), a portion of cash games' promo drop pays for tournament promotions and overlay.

When promotion money is taken from cash games, it reduces players’ win rates until returned. If only a fraction comes back, then the hit to profits becomes permanent. Conversely, it's a boon to beneficiaries, tournament players in this case, in the form of lower variance.

For years, I played poker to become a winning player. Since, I’ve played for profit. Moving up (and out) has been a deeper exercise. 

He deals the cards as a meditation
And those he plays never suspect
He doesn’t play for the money he wins
He don’t play for respect
He deals the cards to find the answer
The sacred geometry of chance
The hidden law of a probable outcome
The numbers lead a dance…
The mask I wear is one
But those who speak know nothing
And find out to their cost
Like those who curse their luck in too many places
And those who fear are lost…
But that’s not the shape of my heart
— Sting
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