Poker Equity is a mathematical aspect to the poker game that clearly explains why you should bet or check in certain situations during a poker game.
Your equity is basically the amount of the pot that ‘belongs’ to you based on the odds you have to win at a particular point of time in the hand expressed either as a percentage (probability of winning) or expected value (amount of pot * probability of winning). Negative equity, or loss in equity, occurs when contributing to a pot with a probability of winning less than 1 / (number of opponents matching the contribution+1).So if there is 50% chance that you are going to win, you have 50% equity in the hand. It's as simple as that. Learning about poker equity is important because you want to get your money in when you are ahead (have equity) and minimize how much you invest when you are behind (little or no equity). This is also known as getting value for your hand. Now, let’s take an example.
Say, Player 1 holds Jd & 8 s. Player 2 holds Kh & 7s. After the flop, the board is 5h, 6h & 7d. If both hands are played to a showdown, Player 1 has a 45% chance to win, Player 2 has a 53% chance to win and there is a 2% chance to split the pot. The pot currently has 51. Player 1 goes all-in for 45 reasoning Player 2 has to call to stay in the game. Player 1's implied pot odds for the all-in bet are 32%. Player 2's simple pot odds for the call are also 32%. Since both have a probability of winning greater than 32%, both plays (the raise and the call) have a positive expectation. However, since Player 2 has more equity in the pot than Player 1 (53% vs. 45%), Player 1 would have been better off playing the pot as cheaply as possible. When Player 1 went all-in, he gave up the difference in equity on the money she contributed to the pot.
In short, having an understanding of poker equity is important because if you can identify situations where you are ahead, behind or somewhere in the middle, then you can make your betting decisions accordingly. This is simply known as maximizing your wins while minimizing your losses.