Fold equity = % villain folds.

If in a certain spot villain folds 20% of the time, we have 20% fold equity. This % can be found by analyzing villain's range, and analyzing how he will play that range. For instance, if villain has a range consisting of 20 combos, yet we believe he will fold 6 of those combos to a raise, and continue with the other 14 combos, then we have 30% fold equity in this spot [6/20 = 30%].

Fold equity is most commonly used to determine the EV of bluffing/semi-bluffing. Say we feel that villain will fold 40% of the time to a cbet. Well if we bet pot, assuming we have 0% equity when called, this is a -EV bet. Because in order for that bet to be profitable, we need him to fold 50% of the time [Bet / (Bet + Pot) or X/2X]. However, if we feel he will still fold 40% of the time to a cbet, and we bet 1/2 pot, then it's a profitable bet because with that size he only needs to fold 33% of the time for our bet to be profitable.

However, the above is assuming we don't have any pot equity when called, and that we have no other way of winning the pot on future streets. However, we might still have a profitable way to play the hand if we don't feel he will fold often enough to our cbet. Such as we feel he will fold only 30% of the time to a 1/2 pot cbet, when we would need him to fold 33% of the time for that cbet to be profitable. However, we feel that when he calls, his range will be relatively weak (as we expect him to raise his strong hands) leaving him folding fairly often, say 70% of the time, to a turn cbet. Then even though the flop cbet was slightly -ev, because the turn is going to be massively +ev to 2barrel, it's still a profitable line to take.

Also, our equity when called must be taken into effect. In order for a 1/2 pot sized bet to be profitable it must work 33% of the time. But this is only if we have 0% equity when called. The more pot equity we have when called, the less often the bet has to work because we still have other ways of winning the pot.

So say we have a gutshot on the turn and are contemplating checking behind to see the river, or betting as a semibluff. With 4 outs, we have ~9% equity when called. Given this pot equity we only need villain to fold 24% of the time to a 1/2 PSB, instead of the original 33%. And if we have 20% pot equity when called, then he only needs to fold like 10% of the time to have a breakeven bet.