The Poker Face of Wall Street

THE ART OF UNCALCULATED RISK ♠ 21

high-card hands). Most poker theory focuses on individual other players and would tell you to go in with an ace only against other players who play too low a proportion of aces. But think instead about what happens if you play every hand as if it’s impossible for any other player to be holding an ace. If anyone comes into a multi-way pot holding an ace against you, they will lose money. You’ll lose money, too. If you defend your niche with vigor, you can become the designated ace player. Other players will rationally fold aces against you, leaving you alone in a profitable niche (you don’t care what they do when you’re not in the pot). If everyone knows you only play aces, no one wants to be holding an ace against you with other players in the pot as well. The table as a whole would be better off if someone challenged you, but no individual player would.

Okay, I admit that winning poker is not this simple. There are problems with this strategy—for instance, you’re too predictable. Or you might lose so much money fighting over the ace niche that it’s not worth winning, or you might pay a lot of money and lose the niche. You might encourage opponents to wait for ace/king or suited ace hands. My point isn’t to play all your Texas Hold ’Em hands with aces in them; it’s to remember that the game is not a sequence of independent hands, like spins of a roulette wheel, but a session in which it makes sense to invest money early to acquire a favorable position. A poker session is not a series of independent battles against individual opponents; success requires finding and defending a profitable niche at the table that it is in no one player’s interest to dispute.

I will talk more about the forest than the trees, but you have to know trees as well. You still have to play each hand and each other player individually. But there’s also a level above the forest—call it the ecosystem. Winning poker requires knowing why other people are at the table and how you got there yourself. If you want to play random-walk poker, without an unrealistically large bankroll or playing for trivial stakes, you need to understand the credit structure of the poker economy. If you plan to link a significant part of your life to the game, whether in terms of hours devoted or in terms of financial importance, I have some important things to tell you about the history and direction of the game considered as a financial institution.