Compound interest is one of the most important fundamental concepts of personal finance and business. Invest money in a vehicle that earns 10% a year (as an example), and keep re-investing the earnings, and the account will grow at an exponential rate.
You earn 10% of your original amount, plus 10% of that 10% of earnings, for a total of 11% the next year (compared to the original amount). It doesn’t take long before you’re doubling your original amount with no extra effort.
Mistakes in Poker
Most mistakes in poker are small. They’ll end up costing you a fraction of a big blind every hundred hands or so. However, if it’s a situation that comes up often, it can cost you more than a big blind every 100 hands, which is going to have a massive impact on your winrate.
Many of these are simply playing the wrong hands at the wrong times. As you improve as a player, these mistakes have less of an effect due to better decision making both pre-flop and post-flop. Regardless, they are still mistakes.
How Mistakes Compound
Maybe you make a loose call pre-flop with a small pair or suited connectors in a bad position. Unless you’re playing against awful players, it’s going to be hard to play either profitably out of position in most situations. This means that it was a mistake, but a small one.
Now the flop comes and you hit a draw or still have your low pair. This is where mistakes start to snowball. It’s really easy to convince yourself that you have implied odds to try and hit your draw, even when it’s not true. In reality, you likely don’t have the right odds to simply call a continuation bet (ignore for the sake of example that raising might be an option). This is another mistake, and a mistake that is going to cost you a significant amount more than pre-flop, because now the pot is much larger. In other words, you’ve compounded your mistake.
Now we’re at the turn and you’ve missed your draw. Again, you convince yourself that if this player fires two rounds, there’s a good chance they’ll fire three if you hit. You call another large bet, which is also a mistake. This bet is now somewhere in the range of 6 times larger than the pre-flop raise. Your snowball is now much bigger, you’ve compounded your mistake again.
Finally, the river comes. The first situation is that you hit your draw, but now you check hoping to shove all-in over a bet, but the player is scared of the potential draw that completed and checks back. Oops, your implied odds may have been way over-estimated. This confirms your previous mistakes.
The second option is that you whiff on your draw, but now feel an inkling of fancy play syndrome creeping into your clicking finger as you realize how much money you’ve already committed. You start to reason that he could also have a missed draw or weak pair and make an untimely large bet that seemingly came from nowhere. You’ve created an avalanche. What started as a very small mistake, costing you a fraction of a big blind over time has cost you most of your stack. Making an avalanche like this once in a while can turn a solid player into a losing player.
If you haven’t figured it out yet, you cannot under any circumstance compound your mistakes. Pots get exponentially larger in poker, especially in no-limit, which can turn small mistakes into huge ones.
Treat every decision independently of any previous decisions in a hand. Don’t worry if you’ve already made a mistake, just don’t compound those previous mistakes.