The idea of “fold equity” may sound daunting, but it’s actually a pretty simple concept.

Essentially, fold equity is the extra amount of capital you get when you consider how likely your opponent is to fold. Calculating the correct amount of fold equity is highly dependent on your ability to read your opponent. In other words, you must be absolutely confident in your ability to get your opponent to fold. The calculation formula is as follows:

Fold equity = (probability that your opponent will fold) x (your opponent’s capital in hand)

Let’s take a look at a working example, provided by mmc 996:

Imagine playing against your friend Cold-blooded Joe. … You are dealt 6 ♣ 6 ♥ and Joe got J ♠ 10 ♦. This is a classic coin toss situation where your chance of winning in a hand is almost 50:50 right now. In fact, your exact chance of winning is roughly 51%. Thus, if the bank had $ 100, your capital in the bank would be $ 51 ($ 100 x 51%)

However, this does not include the possibility that Joe might fold if you place a bet or go all-in. It turns out that there is a 50% chance that your friend will fold when betting all-in. The fold equity in this example would be: 5

50% (probability of discarding the opponent’s cards) x 49% (capital in the opponent’s bank) = 24.5%

So your total pot equity of $ 100 will be approximately $ 75 ($ 51 pot equity + $ 24 fold equity).

Obviously, the more chances that Joe will fold when betting, the higher your fold equity will be. This is why it is really important to learn how to read your opponents well when calculating the capital in the bank.

In fact, it is very difficult to calculate your capital at the table, because you are not given the cards of your opponents. However, understanding the concept of fold equity can help you make better decisions.

Perhaps the most common situation where fold equity is used for maximum value is when a player is one card short of making a flush or straight. For example, let’s say you are playing Cold Blooded Joe again. You are holding 5 ♦ 6 ♦ and Joe is holding K ♥ Q ♣. The flop is dealt K ♦ A ♦ 4 ♠. Now in this situation, you only have a 40% chance of winning the hand compared to 60% for Joe. Now, you are fairly confident that Joe will fold 50% of the time if you place a big bet. This increases the total capital in the bank from 40% to 70%. Therefore, it would be more profitable in the long run to make a semi-bluff bet in this situation.