Bankroll management can seem like a dry subject, or perhaps one that’s easily dismissed, but it’s an important part of the formula that can deliver you poker riches. Let’s look at what we mean by bankroll management and why it’s important.
In poker there is a luck factor – or mathematical variance if you prefer – which affects results. This is immutably true, no matter how good you are at the game. For example, even the best player in the world has a 20% chance of going broke when he gets his money in the middle with A-A vs J-J. If you have all of your poker bankroll on the line when this happens you’re playing Russian roulette with your money and are likely to go broke.
Using bankroll management you divide your ‘money for poker’ into smaller chunks to mitigate the risk of going broke – in simple language this means that you may get ‘unlucky’ when betting one of these chunks but it won’t have a material effect on your overall bankroll. The only downside of this approach is that you have to play more hands to realise your ‘edge’ in any game. It’s important to understand that your edge doesn’t change – you are just preventing the catastrophe of going broke to make sure your edge ‘plays out’ and is realised.
Managing your war chest
So how do you practice bankroll management? Well, the greater the luck factor in any game, the greater the number of chunks you should split your roll into. A good standard rule of thumb for no-limit hold’ em cash games is 20 buy-ins. So to play $0.50/$1 you should have at least $2,000 in your bankroll. However, as you go up the limits the games are more aggressive, you’ll be all-in more and so the luck factor (variance) is greater and you may want closer to 40 buy-ins.
As a recreational player you may not believe this thinking applies to you as if you go broke you’ll just reload from external monies. That’s fine, but you should understand that your risk of going broke is great and you may never know if you’re really better or worse than the game you’re playing in. A far more satisfying way to play is to have a separate bankroll for poker and see it build. You can take any approach to your poker money you like, of course, but recognise that the mathematical rules and the chances of going bust won’t change.
Turning pro
Bankroll management should be key for all poker players, but it’s particularly important if you decide to play the game for a living. Now that your bankroll is the means to generate your livelihood it’s the capital asset that generates your income for you to live off, so you’d better protect it!
Before you even contemplate going pro you should have established a win-rate or return on investment you can sustain in the games you’re playing and understand the income this is going to give you. This means you need to have played a LOT of hands (at least 150,000 in cash) and sustained this win-rate. You should also factor into your thinking that no matter how good you are, you will have downswings. It makes sense to be really ‘over-rolled’ – so perhaps look at 50-75 buy-ins for cash play. Not only do you want to feel completely comfortable with your bankroll, but if you are forced to move down in limits this will greatly reduce your income so avoiding that is highly desirable!
For many players a semi-pro route is the way forward. Just playing poker for a living can be a real challenge financially and emotionally and many players like to keep it as a hobby that also provides an income. In these circumstances you can be less conservative with your bankroll and maintain something like a 20-30 buy-in bankroll for your games.
Cashing out and clearing up
Cashing out from your poker account is a tricky subject without hard and fast rules. A lot of your decisions about taking money out will depend on your poker goals. If you’re playing for a living you should construct a proper business model as outlined above with your bankroll. You should know your average expectation each month and be able to take this out regularly. You should try to avoid taking out more when you win and less when you lose as monthly variations will be an aberration in the long-term.
If you’re aspiring to move up in level – whether you’re a serious or casual player – obviously it’s important you don’t take out everything you win or expect to win, as you need to build the capital base. If you’re a semi-pro or casual player, obviously you have more freedom to take out money whenever you feel like it, or if you have a big winning week or month! Your decisions about cashing out will come down to your goals with poker, but remember it’s better to be conservative as a big downswing can be around the corner and can happen to anyone.
A shot at glory
Taking shots is the time-honoured poker tradition of playing at a level above your current one for a short space of time. This can be done as a way of getting your feet wet and sampling the higher skill level before moving up, but it can also be done without the sustainable bankroll in a hope that you run well for a session or two and generate some serious profit.
There’s a fine line between trying a bigger game and just managing your roll badly. Remember, the primary reason for bankroll management is mitigating the risk of going broke. It’s important to realise if you only have a few buy-ins or tournament entries for the level you’re playing at that you could easily go broke, even if you’re a favourite in the game. It could be even worse – you could be a loser in the game if it’s a higher level than you’re used to; you could even be a favourite to go broke.
This doesn’t mean you should never take shots. It’s perfectly possible that you can beat a bigger game, and if that’s the case you should get into it as quickly as possible to start maximising your earnings. The key is to make sure you’re using money that you can afford to lose in terms of your bankroll. So, if you’re a professional player you need to make sure you’re using money that you can lose over and above your bankroll requirements and income needs.
As a semi-pro or casual player you can afford to be bolder, but remember, the maths still applies and if you want to maintain a bankroll you should always leave yourself the roll you need for your regular game.
Bringing your A-game
When taking a shot you should set out some rules before you play. You should have a completely strict and inflexible amount of buy-ins (cash or tourney entries) before you start. On no account should you dip into your funds beyond this amount as you’re cannibalising your bankroll in a situation where you may be an underdog.
It’s vital that you play at your best when taking a shot. The key to this is to play without fear either of the increased money or better players. A helpful thing to do for some is to consider the money gone in terms of your bankroll – after all it should be money you can afford to lose. If anything, playing in a bigger game should focus you and you may well play your best, so take the odd shot and enjoy the challenge.