The idea of ‘fold equity’ can seem quite daunting but in reality, it is a fairly simple concept.
Essentially, fold equity is the extra amount of equity you gain when you factor in how likely your opponent is to fold. Working out the correct amount of fold equity relies heavily on your ability to read an opponent. In other words, you need to be fairly certain of your chances to get an opponent to fold. The formula to work it out is as follows:
Fold equity = (probability opponent will fold) x (opponent’s equity in the hand)
Let’s look at a working example:
Imagine you are playing against your friend Cool Hand Joe. You are dealt 6♣ 6♥, while Joe is dealt J♠ 10♦. This is a classic coin-flip situation where your chance of winning the hand, at this point, is almost 50:50. In fact, your exact chance of winning is roughly 51%. Therefore, if there were $100 in the pot, your pot equity would be $51 ($100 x 51%).
However, this doesn’t take into consideration the likelihood Joe will fold if you bet or raise all-in. So let’s say you know there is a 50% chance your friend will fold to an all-in bet. The fold equity in this example would be:
50% (probability opponent will fold) x 49% (opponent’s pot equity) = 24.5%
Therefore your total equity in the $100 pot would be roughly $75 ($51 pot equity + $24 fold equity).
Obviously, the greater the chance that Joe will fold to a bet, the greater your fold equity will be. That’s why it is really important to get a good read on those you're playing with when working out your equity in a pot.
In reality, it is very hard to work out your equity at the table because you can’t see what your opponents are holding. However, understanding the concept of fold equity can help you to make more profitable decisions.
Perhaps the most common situation where fold equity is used to maximum value is when a player is one card away from hitting a flush or straight. For example, let’s say you are playing Cool Hand Joe again. You are holding 5♦ 6♦ and Joe is holding K♥ Q♣. The flop is dealt and contains K♦ A♦4♠. Now in this situation, you have only a 40% chance of winning the hand compared to 60% for Joe. Now, you are fairly confident that Joe is 50% likely to fold, if you bet a sizeable amount. This increases your total equity in the pot from 40% to 70%. Therefore, it would be more profitable in the long run to make a semi-bluff bet in this situation.
A final word of warning…
When playing against really loose aggressive players, your fold equity will likely be close to zero. This is also the case against players with really short stacks (very few playing chips) in tournaments. Short-stacked players are less likely to fold, as they need to take more risks.