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Bankroll Management

One of the most overlooked and important elements of poker is that of bankroll management. Even transcendent players like Stu Ungar seemed to have problems with this often unspoken of skill.Depending on what structure of poker game and your expectations for returns, there are different rules of thumb about how you should go about making sure you don’t go bust. The most common problem is what people call shot taking.

Shot Taking – Tournaments

This is when people take a significant percentage of their bankroll (sometimes even 100% or borrow beyond) to play at a specific tournament. For example, it would not be wise to have a total bankroll of $219 and spend $215 of it to enter the PokerStars Sunday Million tournament.

Shot taking seems great when people buy in for a couple of hundred dollars and end up taking down thousands, or even tens of thousands of dollars. The problem is that you need to have a strong sense that playing in any particular tournament with your particular skill set should yield a positive expected value return, or +EV return. The vast majority of people who spend (waste if you’re more cynical) their entire bankroll to enter a single tournament are setting themselves up for disappointment. Even if you’re the best player in a tournament by far, any outdraw or honest mistake on your behalf can end your tournament right then and there. In summary, there is often too much volatility and luck involved in expecting to cash in any given high roller tournament – even if you’re the best player in it.

A good rule of thumb for tournament entries should be around 2% of your total bankroll. So if you have a bankroll of $2,000, you should enter a tournament that has a $40 buy-in or less. This is assuming you feel you have a reasonable expectation of profit with your poker skills.

There is another form of shot taking – that is for cash games (or ring games.)

Shot Taking – Cash games

This is when people take a significant percentage of their bankroll (again sometimes even their life savings or borrowing to get into the game) and sit down at a table with blinds far greater than they can afford. For example, having a bankroll of $400 should not give you the feeling you belong at a $2-$4 blind cash game.

A good rule of thumb is to have either one thousand big blinds (i.e. a roll of $2,000 for a $1/$2 game), or more conservatively, to have 2000-2500 big blinds in your bankroll to play a particular tournament (i.e. a roll of $5,000 for a $1/$2 game). This is because of variance. Variance is basically considered the swings of playing poker. You can have an upward swing (a nice streak of getting great hands and payoffs), or a downswing (a terrible streak of cold hands or bad beats.) You have to have a bankroll sufficient to endure these swings consistently while slowly profiting from decent +EV play, or else you could lose your entire bankroll on a bad beat in a single hand!

Now we go onwards in discussing bankroll management when you are already playing at a cash table, rather than even before you sit down at a table. You need to have discipline and dedication to following and adhering to boundaries, or limits to the amount of money you can win or lose in any given session before calling it a complete day (meaning you don’t take a breather for 20 minutes after losing and continue playing further.)

Winning

Let the good times roll! Everyone loves to win, right? The chips are flying, your hands are connecting and people are shipping you lots of cash when you have the goods. Nobody ever wants to quit playing when they are on a big winning streak. This is probably one of the biggest problems with people in wondering where their money went after remembering how much they won a few nights ago.

You have to try and walk while you’re on top of your winnings for the session. Knowing exactly when that happens and to walk at that exact moment is virtually impossible, though. A good rule of thumb for walking away when you’re ahead is around 50% of what you brought to the table. For example, if you brought $100 to the table and have $165 or so sitting in front of you, that’s a pretty good return for your time of say 90 minutes of play. Feeling as though you won’t win much more, or that the game has tightened up, you walk away with your profits. You can always set your own percentage return before you walk away, though. If 30% return is good for you while being a conservative player, then do that! If you’re really aggressive, you may not want to leave until you’ve doubled the money in front of you. If multi-tabling, the percentages are the same, but on a per table basis.

Losing

The least fun part of poker is losing, and the most destructive part of poker is tilting. That’s what is involved here. When you lose, you can feel upset. You can feel angry at knowing that someone who probably was overplaying their mediocre hand or over-bet their draw got paid off on the river when your hand was the statistical favorite. It can get upsetting, especially when the stakes can be so high. You can feel as though you are getting punished for playing well, and that conversely, bad players (usually those who push their hands as statistical underdogs) are getting rewarded far too often.

There’s a wide range of ways you can handle losing while maintaining proper bankroll management, and they usually lie within how much you’re willing to accept as a loss for any given session before you quit. If you have the discipline to not only quit for the day after a losing session, but prevent yourself from tilting (getting emotionally enraged) and making overly aggressive bets due to your anger in an attempt to win back your losses, you already have an edge over most of the poker world without having risked any more money. The usual range for stop losses is about 30% of your buy in. If you multi-table, that would mean 30% on each table you are playing. Good luck in choosing your tournaments and cash tables wisely!

Regards,

L2Poker Staff

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This entry was posted on Saturday, August 1st, 2009 at 8:05 pm and is filed under Poker Guides. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.