I'm best known in the poker world for my tournament success. I've won four World Series of Poker bracelets, including the World Championship in 1996. With as much success as I've had in tournaments, however, I still prefer to spend most of my time in cash games. If I were to limit myself to tournaments, I'd miss out on some of poker's most interesting aspects.
In tournaments, you're constantly moving. The tournament director may move you so that he can balance tables, or your table may break. So, even if you've been attentive to your opponents' tendencies, there's a good chance that you won't be able to exploit the information you've gained. In a cash game, however, you have far more time with a set of players. When I play a cash game in a casino, I might spend eight, 10, or 12 hours with the same group, so I have a longer time to study my opponents and exploit their weaknesses. If I'm going to be playing with the same people for hours, I can create a table image that will benefit me over the course of my session. For example, when I first enter a game, I might make a series of unprofitable plays - some strange bets or bluffs. These plays may lose me a little bit of money, but they affect how everyone thinks of me for the rest of the session. Even if I shift to a more solid mode of play, some players will retain the idea that I'm a nut case. In a tip I provided a few weeks ago, I showed how developing this sort of table image can be used to great effect by representing a bluff.
In a tournament, however, it's tough to profit from that kind of persona. You can spend an hour getting everyone to believe you're a maniac only to be moved to a table of complete strangers. At that point, your stack will be decimated and your image will have disappeared.
In cash games, you also have the chance to track your opponents' mood shifts over time. At various points in a session, a player may get tired, frustrated or just go on tilt. If you're attuned to your opponents' moods, you'll find opportunities to profit from their weakened states. In a tournament, you rarely get a chance to take advantage of someone else's tilt. Usually, the hand that gets a player steaming also busts them from the tournament.
While tournaments can provide for some great action, playing them exclusively can limit your game. By branching out and playing cash games, you'll develop a completely different set of poker skills and be able to explore some of the more interesting psychological aspects of the game.