How to Calculate Pot Odds and Equity: Equity

As we mentioned in part one, the ability to calculate pot odds will only get you halfway to where you need to be. Once you have the odds, you need to calculate your equity in the pot, and then compare the two.
The previous article explained how to calculate pot odds in your head at the table. This next concept, though every bit as important, is much easier to master, thanks to some simple shortcuts.
Hand Equity
Count Your Outs: In order to calculate your equity (your odds of winning the pot), you need to first know how many outs you have to make your hand. This becomes quick and simple with a little practice and a little memorization.
Remember: There are four cards of every value, and 13 of every suit.
If you have an open-ended straight draw, there are two different values of cards that will give you your hand: 2*4= 8 outs. If you have a flush draw there are 13 cards of that suit. You hold two of them, and two of them are on the board: 13 - 2 - 2 = 9 outs.
Remember to remove the outs of cards cheat poker you know (on the board and in your hand), and to not count outs twice (for example, if you have an open-ended straight flush draw, you have 15 outs).
When counting your outs, you need to remember the idea of anti-outs (and possibly even blockers). If by making your straight you also complete the flush of your opponent, then those straight cards are not outs to your hand, and cannot be counted as such.
The possibility of a flush draw on the board can turn a profitable eight-out straight draw into a six-out straight draw, rendering your odds insufficient.

The stronger a read you get, the more accurate your equity calculations can become.

To learn more about anti-outs and blockers, check out this article.
If you're unable to make an astute deduction of the value of your opponent's hands, err on the side of caution and always assume that they have the hand most dangerous to your own.
If there's a flush draw, assume they have the draw; if the board is paired, assume they have a full house or, if you're lucky, just trips. It's less expensive to wrongly fold a hand than to wrongly call off your whole stack.
Equity Shortcut: The easiest way to get juice cards your equity is to remember this simple rule:
On the flop, multiply your outs by four.
On the turn, multiply your outs by two.
This means with an open-ended straight draw (eight outs) you have a 32% chance of making your straight with two cards left to come.
For hands on the flop with a large number of outs (>8), the previous shortcut gives a slightly incorrect answer. There's a simple formula you can remember to get a slightly more accurate figure:
(number of outs * 4) - (number of outs - 8) = Equity
This means the equity of an open-ended straight flush draw (15 outs) would be:
(15 * 4) - (15 - 8) = 53%
Without this little formula, the percentage would be higher by seven points, giving us an artificially large result. If your equity calculations are wrong, you will be unable to make informed decisions on the day.

Matusow's notorious for his real results not reflecting his equity in any way.

Putting the Two Together
Now that we know the equity and are capable of calculating the odds, how can we tell if it's a good call or not? In the previous article, we got our odds as a ratio (the final example ended with the cut-off being offered 2.3-1 odds, and after the cut-off called the button was offered 3.3-1).
It's impossible to compare apples to oranges, so we need to convert our equity percentage from a percent into a ratio. Doing that will require some of the same techniques described in the previous article:
32% is most easily described as having 32 out of the total 100. 100 - 32 = 68. Since you're looking for your odds, and not the odds of your opponents, your ratio is 68-32. Use the techniques from the previous article and you'll get yourself a final ratio of 2.1-1.
This means your odds of winning the pot are 2.1-1 against. For you to make money, you need to have pot odds higher than that ratio. If you're sitting with your open-ended straight draw (32% or 2.1-1), your odds example from the previous article gave the cut-off odds of 2.3-1, meaning the cut-off would have just enough pot odds to make this call.
If you put yourself on the button with your open-ended straight draw, and the cut-off calls, your odds become 3.3-1. You only needed 2.1-1 to make money, so the call has become very profitable in the long term.
Although this result is correct, it's only half of the odds spectrum you will want to take into play, as you haven't taken any consideration of the implied odds.
Implied odds change the game of No-Limit Hold'em greatly. In fact, having a very large amount of implied odds can render a call correct, even though pot odds would render it absolutely incorrect.
To learn more about implied odds, and how they can affect the choices of you and your opponents, check out this article here.
(For another method of calculating your equity in a pot - one you may find easier - you can check out this article.)
As you can see, equity and pot odds hang on a bunch of relatively simple calculations. All that they require is some memorization of the formulas and techniques, and a little bit of practice calculating them in your head. For some people this will be much easier than for others, but everyone can do it if they spend a small amount of time practicing.