The Biggest Mistake In Poker, Bad Bankroll Management

So you’ve just decided to have a stab at poker for whatever reason including:

• Decreasing your commission percentage in Betfair by building up some points;
• You’ve seen it on TV/Internet and feel that it looks interesting and fun;
• You just crushed your weekly home game with mates or online play money game;
• Bored and got some cash;
• All or none of the above.

The reasons why people play real money poker are as many as the combinations of flops and frankly, the only thing that matters is that week in and week out the bankroll is still intact by exercising good bankroll management. Now that is a skill in itself and in this article I will try to make sure that you play for the long run and not just gamble it away like a degenerate.

Tired Of Going Broke

At the beginning of my poker journey, I started feeling quite confident about how I was playing. I had purchased all the latest poker books from Amazon, debated endlessly with friends about poker hands, purchased Pokertracker and read up on how to use it. I had made sure to get myself a good rakeback deal and calculated how much I expected to make after grinding out x number of tables for x number of hours. I made great notes on the “fishes” and avoided the regulars. Importantly, I have controlled the inner beast within me which is commonly known as “tilt” (only controlled but it knew it could lurk up unexpectedly without warning).

I played a lot of multiple shorthanded tables up to $5 / 10 (average $50 – $80 pot) and up to $10 / 20 fixed limit, (average $120 – $160 pots) if the conditions were right. I felt invincible!

Yeah, right…what I was doing was only prolonging the inevitable as my bankroll was in the region of only $2000 – $3000. Hmmmm, yeah but I played good, so I though. Tight / aggressive, position…steal 35.456% from cut off or button. It did not matter how well I was playing since I was risking too much for the limit I was playing.

Eventually I came close to busting and only rakeback saved me. This meant waiting for another few days/weeks to earn my rakeback and try to build my roll again.

This scenario must have occurred at least three times, all with the same inevitable conclusion. I felt completely demoralised and nearly gave up. How can I play so good and yet run so bad, I asked myself continuously.

I tried to blame everybody else but me – the bad beats, its “rigged”, the “colluders”, even the Greeks but I only had myself to blame and my poor discipline.

After the third time, I vowed never to have to repeat this painful process again and learned about proper bankroll management.

What is Bank Roll Management?

Bankroll management is simply the practice of ensuring that you have enough money to play poker for the long term. Poker is a game of high variance and although playing good poker will win you money in the long term, anything can happen in the short term and the short term is a lot longer than you might think!

Poker is a game of variance and even if you are playing near optimally, you will experience this variance, including nasty downswings. The severity of these downswings may be made worse by playing less than optimally and tilt. The good news is that sooner or later, if you’re a winning player than you should be able to ride through these rough patches and get back on track.

The bad news is that even if you’re Phil Ivey, if you run out of money during one of these nasty downswings, then you will never get a chance to reach the long term because you will be broke and out of the game! Lucky for Ivey, he’s got other income so maybe that’s a bad example. But not great news for Average Joe.

Of course, bankroll management is really only something that applies to winning players. A losing player can never have enough to cover his downswings because he has negative expectation. In the same way that a winning player plays for the long term, the long term is the enemy of the losing player.

The only strategy a losing player can undertake is to play for the short term and get lucky and quit (like that’s going to happen!) or play at such a low limit that his/her money lasts longer.

Main Advantages of Playing With a Bigger Bankroll

• Play for the long term
• Leaving your ego at the door
• Emphasise correct decisions over making money
• Desensitise yourself to money

This can make all the difference between starting your next session in a confident, relaxed mood and starting it in a fearful knowledge that another similar session will wipe you out completely.

I Heard a Story About This Guy Who Turned $50 Into $50,000…

Yeah, so have I but for every one of these whizz 18 year old online kids, there are thousands who were left in financial ruin (how come we never hear about them?) The truth is that unless the guy who made 50k from $50 started out grinding in micro limits or got lucky in satellite after satellite then won a big score is, he got lucky.

So How Much is Enough?

Well, how long is a piece of string? There is no exact answer to this question, just rules of thumb and it depends on what variation of poker you wish to play. Generally, the more the better but at the same time you do not want to play with SUCH a big bankroll that you don’t win much at the end of the month.

Here is a good starting point to a CONSERVATIVE online bankroll strategy that will not put you too far wrong:

Limit – At least 300 Big Bets. A big bet is the size of the bet after the turn. In other words if you are playing 1 / 2 limit, the big bet is $2 and a good starting bankroll for this limit would be $600 (300 times $2). If you plan on playing multiple tables (more than 3), it is highly recommended that you have at least 500 big bets which is $1000. The obvious reason for this is that variance is much greater with multiple tables.

No Limit – At least 20 buy ins (30 if multiple tables – more than 3 tables). A buy in is the max buy is 100 big bets. In other words if you are playing 25/50c, a buy in would be 100 times the 50c big blind which is $50. If you plan on playing 25/50c then it is recommend that you have at least $1000.

Tournaments – At least 75 buy –ins. A buy-in being the total cost of entering the tournament, including the house fee. Therefore if you plan on playing $10 multi table tournaments, it is recommend that you have at least $750 in your account.

Single table tournaments (Sit ‘N Gos) – Less stringent requirements than multi table tournaments as your chance of winning is greater, therefore 40 buy ins is recommended.

Moving Up Limits

I will start with the good news first. Let’s say Joe has been steadily grinding at $2/4 fixed limit with a starting bankroll of $1200 and has increased it to $2500 after two months. He is feeling good about his game feels that he needs a bigger challenge and the opportunity to make bigger money, let’s say he wants to buy a scooter for Christmas. Now if Joe came to me asking me what he should do, this is what I would tell him, hopefully without raining on his parade:

• The Peter Principle of Poker states that most players tend to start at the lower limits and if they have the skill, they will make money and advance to higher limits. Eventually they will reach a limit where they are no longer winning. It may be that Joe may reach $3/6 and not win because he is simply not good enough. At this stage he may move down to his usual limit of $2/4.

• He may experiment at $3/6 and see how he feels (taking a shot). If he feels out of his depth (which is perfectly normal when playing at a higher limit) then it may take getting used to but this feeling will pass. Better yet, he can rail the games and take notes on the opponents; therefore he will know them before they get a chance to know him.

• Another option would be to withdraw the $1300 and keep on grinding at $2/4. He may not be able to purchase that scooter but he can buy him and his girlfriend a nice all inclusive package holiday to the Med for two weeks. She’ll love him forever, not like the river card! That’s almost as good as a scooter, in my opinion.

Taking a Shot

If you play mainly 25/50c NL and you see a fish at 50c/1 NL and you’re playing well and your bankroll is not below 20 buy ins, by all means “take a shot”. There is no harm in doing this as long as you realise that if you lose your full buy in (considering you buy in full), it means you have lost two buy ins at the lower level. But let’s be positive shall we!

Dropping Limits

Moving down limits is far less exciting than moving up, but indefinitely more important. There may come a time that you for one reason or another you lose a significant part of your bankroll due to any number of reasons. The smart thing to do at this stage is to move down a limit or two. The last thing you should do is move up limits to chase. This is the quickest and stupidest way to the poorhouse and even if it’s such common sense advice, you would be surprised how many people do it without thinking twice.

Now let’s say that Joe has been running bad + tilted at $2/4 and his initial bankroll of $1200 has dwindled down to just $600. This means that he only has 150 big bets at 2/4. This would be a good time to move down to $1/2 to try to build up again.

This is when leaving your ego at the door is important. Naturally most players hate this as it represents a step back in their poker career, almost like a defeat or admission of failure. That’s exactly how I felt about losing most of my bankroll at $10/20 and playing $2/5. However, there was no need to be embarrassed…embarrassing are the stubborn players who populate the super micro limits or play money tables (and trust me my fish list at Betfair is full of them)!

Buffer Zones

A good rule of thumb of knowing when to drop down limits / move up is by creating a buffer zone. To illustrate this concept, if Joe loses 20% of his 300 big bet bankroll (left with 240 big bets) then he should consider dropping down limits. The same applies if he wins 20% of his bankroll (360 big bets). The same concept applies to NL and tournaments. A buffer zone should never be bigger than 30% of your bankroll.

Cashing Out

Now isn’t this the whole point of winning? I find it hard to believe that some players build massive bankrolls and choose to never cash out. Good for them, they must have some other sources of income but I feel that they are missing the point of poker. For the rest of us, it is nice to reward ourselves for all those hours we put in but how much is reasonable to cash out? This all comes down to one fundamental conflict.

On one hand, you would like to keep growing your bankroll so that you can play higher limits and win more but on another hand, you may suffer a downswing and lose all your profits or worse, everything.
There is no right or wrong answer to cashing out but here are some fundamental errors when cashing out:

• Cashing out more than you make every month on average. This means that your bankroll will most likely decrease over time;

• Cashing out so much as you are either playing so such a low limit or playing with such a tiny bankroll in the same limit before the cash out;

• Never cashing out as discussed above. Isn’t the whole point of poker to enjoy the fruits of your labour?

Personally, I have always opted to cash out a small amount each winning month. For example if I won $1000 one month and my bankroll was $3000, I would cash out $700 and be left with $3300 to build. Alternatively, I could cash out my rakeback for the month and be left with my initial stake. Therefore my rakeback would be my “paycheque”!

Conclusion

The important thing is to find a system that works for you. All I have done is provide you with general guidelines but everybody is different and have differing goals, needs and priorities. You need to work out what your poker goals are and what risks you are willing to take but I hope you are mindful of the general guidance I have offered.