I asked a mate exactly what the heck it was and he linked me up to this...
Basic rules
There are three draw rounds in which you can discard as many cards as you wish. The goal is to get the lowest 4 cards of diffrent suits, without pairing your hand. The best hand that's possible is A234 rainbow, after that the best hand is A235r, A345r, A236r, et cetera. Note however that KQJT rainbow beats A234 if the A234 is not of diffrent suits. Pairs negate the diffrent suit.
Basic Strategy - 8max
The first thing that I'm going to discuss is the 8-handed play. The starting hands you want to be playing in general are 3 cards under 8 of diffrent suits, A2 or A3 of diffrent suits (in late position if people folded to you), and all badugi's (a badugi is 4 cards of diffrent suits that isn't paired). You will want to raise all of these hands. If someone raised before you and he is unknown, I would suggest to 3bet whenever you have 3 low cards of 6 and under, or a made badugi. I would flat with hands like A377 though, as they are most valuable as well. Very critical information: In a heads up pot, you should almost always bet if your opponent discarded more cards then you did, regardless of what you drew. Put pressure on him.
Basic Strategy - HU
Obviously, HU is a very villain-dependant game. I would open the button every time I have 2 cards under 7, or 3 cards under T, and obviously any badugi. The key thing is adapting to reads of your opponent. Does he ever stand pat as a bluff? Does he open hands in which he discards 2 cards? This should determine your calling and/or raising range when you're in the bb. I can't say much more about it as it's really all about adapting to your opponent.
Adapting to new information
The most crucial thing to use is information. If someone is standing pat, it generally means he has a made badugi. If you don't have a badugi, you can be quite certain that you're an underdog if you don't haveo ne. This is however where our hand selection comes into play. Say you have A23r3 and villain has 27TJr. We have 3 draws and 7 outs. Depending on the odds, you'll have to decide whether to draw or not. Please note that people are very bad at folding badugi's, even king high ones when their opponent is standing pat, so don't worry about them possibly folding when you hit your badugi and they're standing pat. They'll accomodate.
Folding Badugi's?
There are definitely situations in which you want to fold a badugi. Say you're playing a competent player. He raises UTG and you look down at KT78r and 3bet him. He calls and discards 1 card, you stand pat. He then proceeds to checkraise you after the first draw. This could definitely be a point in which you want to muck your hand since it's unlikely that he will bluff someone that's standing pat. I believe you can fold badugi's up to 9 high with the right read, so don't be shy to fold if you do think you're beat, even though you think you'll look silly for folding after standing pat. Make the right decision!
Common situation
You raise in MP with A255 and get 3bet from the BTN. You call and discard 1 card, BTN discards 1 card too. What should you do here? It depends on the villain. In general, I would opt to checkcall this street and checkraise him after the second draw, assuming you both discarded 1 card on the second draw and you didn't improve. This is because if you both don't improve, you are very likely to have the best hand with a 5-high 3card badugi. This means you're actually a big favorite. I'd also wait until after the second draw because the bets will double as big, so you get to build a pot twice as big. He will also often call a river bet if you discard a card on the third draw simply because he's clueless (most Badugi players still have no clue what they're doing). This depends on what level you're playing at though.
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