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Position is a key concept in poker and is particularly important when playing Pot-Limit or No-Limit. Its importance increases when playing flop games like Hold'em or Omaha because your position remains the same throughout all betting rounds.
Deciding Which Hands to Play
When you are sitting in early position you will be acting early in the hand and, as such, will not have as much information as the players acting in later position. Occasionally, you will call with a hand when acting early only to see the pot raised and reraised behind you. Consequently, you might be forced to fold a hand you already invested money with.
If you are acting late, you know what pot odds you are getting on the hand and also have the advantage of acting late in upcoming betting rounds. This means you can play more hands when sitting in late position than in early position.
When deciding which hands to play, position is always a factor you have to consider. For example, when playing Hold'em you should play extremely tight "under the gun" (first to act preflop) and add hands as your position improves.
Sitting in late position will provide you with more bluffing opportunities. For example, if all players check in front you have the option of betting or seeing the next card for free.
Late position also offers more opportunities to semi-bluff. This means betting or raising with hands that may not necessarily be the best, but have plenty of outs to improve to the best hand. If everybody has folded and you are sitting in late position, you can raise with hands that you would never call with from an early position because you have a chance of winning the blinds and antes uncontested.
Tight or Loose Game
If the game is very loose and there is not much preflop raising, position does not have as much influence as in a tight-aggressive game. This is due to the fact that you can now play drawing hands from an early position and remain relatively certain that you will get the correct odds and the pot will not be raised. If the game is tight-aggressive, you will have to play very tight from an early position.
Let's take an example from Hold'em, when having the worst position can cost you the pot:
You hold the A♥ 5♥ and your opponent, who has the better position, holds the 7♣ 8♣. You are heads-up and the flop is K♥ 9♦ 6♥. You bet as a semi-bluff with your flush draw and overcard to the board. Your opponent calls with the open-ended straight draw. The turn is the J♠, which is of no use to either player. You bet again in hopes that your opponent will fold a pair of nines or sixes. Your opponent calls again and the river is the 2♣. You check and your opponent bets.
There is no possibility that you are going to call that bet with just ace-high, so you are forced to fold the best hand. In other words, you just lost a pot because you had a worse position than your opponent.
Loose or Tight Players
Ideally you want to have the loose-passive players to your right and the tight-aggressive players to your left. The loose players will call with too many hands and provide you with better pot odds since you act behind them and have position on them. Essentially, this position gives you a greater opportunity to capitalize on their mistakes. Having the tighter players to your left means you have a chance of stealing their blinds and of winning more pots by betting into them with bluffs.