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It's a bad risk, in life as in poker, either to be a small favourite to win or a big underdog to lose. The Lloyd's of London "names", for example, were a big favourite to gain a limited return on their money. But if the venture went wrong, they were huge underdogs and could be wiped out. And so it proved.

Expert card player player Stewart Reuben cited a good example of this principle from Texas Hold 'em. Suppose you are dealt 5-5 against one opponent who has raised the opening bet. You are a small favourite to win the pot against two high cards, but a big underdog against a high pair. It is 50-50 which your opponent has.

Suppose there is pounds 100 in the pot from the antes. He bets it and you call. Half the time you will be favourite to win the pot and half the time a big dog. In round terms you are staking pounds 200 to win pounds 400. For the first pounds 100, 55 per cent x pounds 200 = pounds 110 gain. For the second pounds 100 you outdraw his high pair about one in five times. This yields 20 per cent x pounds 200 = pounds 40 return.

The net return is pounds 150 for a pounds 200 stake.

Of course poker is never as precise as this. Stewart's advice is to assess very cautiously the downside risk of marginal situations. In the example of a pair of 5s against a strong hand, a prudent player will also take a look at his opponent's chips in order to determine the potential loss on the rest of the hand. Normally 5-5 needs to improve to trips to be safe.

In tournament play, playing off short chips, it is tempting to go all- in with the tiny pair, rather than wait for the antes to eat you up. But with a big stack, you should not risk a substantial portion of your holding in a marginal situation.

Hands may also come up when you are a small favourite with virtually no chance of being a big dog. Yet against two opponents, it may still be correct to pass. For example, in seven card stud on card four you have a pair of aces against two opponents each of whom probably has a four flush. You have a 52 per cent edge on each opponent. The probability of your hand standing up against both is only 27 per cent. You can't stand the heat. Get out of the kitchen!

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