You use pot odds for the ability to make a call or folding. You use Pot Equity to determine the ability to make a call or raise.

Pot Equity is your percentage chance of winning the pot at any time vs. the percentage of the pot that is your share. For instance, if the pot was at $100 and there were five players, each player would have a 20% equity in the pot and would need equal to or better than a 20% chance of winning to continue.

Pot equity useful for determining three things:

1. If you fold, how much of the pot you give up. Fold forfeits your share of the pot and pot equity is how much your share is worth… so, for instance, if you have 5 bets in the pot, you would be right in folding a draw that only has a 10% chance of hitting. You shouldn’t call in this case… you are protecting 0.5 bets, number of bets / chance of making your draw = number of bets you can call or raise.

2. When you deliberately slowplay and give up a free card, your opponent’s combined pot equity measures how much you’re risking if that card beats you. For instance, if your opponent only has a 10% chance to hit his hand, a hand that beats you, but you are only giving him a .5 bets to make his hand, then this would be worthwhile if you felt that you could win more than 0.5 bets extra from him as a result (perhaps cause you think he might call or try to bluff even if he doesn’t hit).

3. When you have a strong hand (particularly before or on the flop), your pot equity determines if you should bet or raise for value. For instance, you have a nut flush draw which will hit 35% of the time. As before, you have 5 players with 20% to call… therefore you have a pot equity edge of 15%. The more flop raises, the more money you will make.

Simply put, your chances of winning the hand need to be equal to your percentage share of the pot for it to be a worthwhile investment of staying in the pot. When your chances of winning or greater than your percentage share of the pot, then you can gain value by raising.

I hope that made sense. I’ve had a hard time explaining this one.

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