word type: acronym
- Independent Chip Model (ICM) in poker is a method of representing your equity at any given time of a tournament.
Independent chip models were developed as a way of analyzing the expected value (EV) of push/fold situations in single table tournaments (or Sit-n-Go's aka SnGs, STTs). It sometimes comes into play when discussing later-stage MTT strategy, too.
Simply put, ICM is a way of representing your equity in a tournament based on the remaining stack sizes and the payout structure. Essentially, it calculates what your chips are worth in a dollar value based on how your stack and the payouts would influence your finish on average. In practice, ICM calculations will allow you to to compare the amount risked by making a specific play to the potential reward (should it work successfully).
Understanding A Basic Example
What most novice players fail to understand is that at the bubble, when ICM comes in most handy, your gain in equity by folding is usually much smaller than the equity you gain from putting your chips in the middle.
For example, let's say you play a $10 10-handed SNG on PokerStars that pays out 50% to 1st, 30% to 2nd, and 20% to 3rd. Starting stacks were 1500 chips, but you're now four handed with stacks as follows (including ICM calculations):
You: 3375 chips = $25 Equity
Player 2: 3375 chips = $25 Equity
Player 3: 3375 chips = $25 Equity
Player 4: 3375 chips = $25 Equity
So, let's say you move all-in and bust Player 4. Your equity is now $38.33c, an increase of $13.33. However, in order to get this added equity you had to risk $25 to gain $13.33. It might not seem too significant, but it means that you were laying equity odds of 2-to-1 against yourself. In addition, Player 2 and Player 3 gained $5.83c in equity by merely not being involved in the hand.
The most important thing to take form this example is that since your risk will always be bigger than your gain, you need to have a pretty big edge to correctly get involved in a big pot near the bubble.