The Keys To Effective Bankroll Management
Guide To Winning Poker (4)
- Proper bankroll management is very important to all players
- Even players not winning yet need to pay close attention to this
- It's also very important to move up stakes properly
There's A Lot To Consider In Managing Your Bankroll Properly
Most of the discussion surrounding proper poker bankroll management merely addresses risk of ruin. Now that's an important consideration but there are a couple of important elements missing here. The first thing is that win rates, or loss rates, aren't accounted for properly, if at all. How aggressive or conservative a player needs to be depends in large part on their win or loss expectations. For instance, if you can't beat your current stake in the long run, then there's no sense even speaking of what sort of level you need to be at to move up stakes, or your risk of ruin at that stake, which is pretty close to certain.
Secondly, there's also too much emphasis on moving up and not enough on moving down, and both need to be fully addressed in order for the advice to be effective. Thirdly, risk of ruin simply addresses the risks, while the effect of busting out can vary considerably. A player who is able to replenish his stack regularly is going to have a much higher tolerance than, say, a professional who will have to get a real job for low wages if he loses all his poker money.
Everyone Needs To Manage Their Bankroll Properly
So what I want to do is set out some guidelines for you that takes all these considerations into account, and will be applicable and relevant for both the brand new player with his or her first deposit ever, the professional who needs to both make a living and grow his or her bankroll at the same time, and everyone in between. What we're looking to do here is to take everything into account and seek to pursue the ideal path towards looking to move up stakes and grow our bankrolls with both an appropriate level of safety and certainty.
In doing this, we neither want to be too aggressive or too conservative. Generally, players tend to be way too bold starting out, and then gravitate towards being way too meek, and the true path lies in the middle of these extremes. However, it's not just a matter of backing off when you start and pushing things more at the proper time, as we need to look at what would be best and then formulate a plan to best achieve it.
This Is Especially Important For Players Not Profitable Yet
Let's start with the situation the majority of players find themselves in, which is not being profitable long term. Now there may be several reasons why this is the case, but I can tell you that from my years of teaching the game, it's seldom lack of talent. A player may not have had the experience or proper instruction yet though, or may simply be playing at the wrong poker rooms. In any case, we've got someone who is losing money on balance. So the task becomes to find the proper stake for the player to accommodate his or her current level of development. When I say stake I mean the relative level of bankroll required to play it effectively, and this can relate to the blind level, or the buy in level if it's tournaments.
So the ideal stake here for every player is first of all one where he or she has a sufficient bankroll to take variance out of the equation, meaning relative certainty of not busting out at it merely from general bad luck. We'll go into this in more detail soon, but that's not even a factor at all unless you achieve the second condition, which is being able to beat the game for a profit, however small. If you cannot, then regardless of anything else, you don't belong at that stake. This of course assumes that we are out to make money at playing. If we have money to blow and don't mind wasting it on the thrill of the action or whatever, then that's different, but in that case you don't need to be worried about managing your bankroll.
Minimizing Your Losses Is The Real Key Here
So in the case where you're not profitable yet, you need to play lower, to the point where you begin to start making money, however small the amount that may be. It's far better to make a few cents an hour at 1 and 2 cent blinds than it is to be losing money per hour playing higher. Once you get good enough to have at least a good shot at beating the next stake up, and have a bankroll large enough to handle the normal ups and downs, then and only then should you consider doing it. Otherwise you're just shooting yourself in the foot.
If there's no stake that you can beat right now, then you need to be playing the smallest available, and this may in fact be at a different poker room than you currently play at. At this point, it's not about managing your moving up, it's simply about managing your losses as you learn the game and improve enough to where you're even in a position to entertain thoughts of moving up stakes.
This sometimes is a hard pill for some players to swallow, as they may claim that the amount of money they stand to make isn't significant enough, but they miss the real point. Players like this need to ask themselves what they are really after, and if being entertained is that important to them and they don't mind paying the price, then that's fine. If you are serious about making your learning the game as inexpensive as possible though, you will heed this advice.
Looking To Move Up Stakes
So let's move on to the point where you are beating your current level and have at least a reasonable expectation of being able to move up. You need to not only look at your skill level here, you also need to consider the size of your bankroll, which includes additional deposits that you are prepared to make in the near future. So for instance if you're looking to set aside some of your current bankroll to take a shot at the next stake up, and you're planning on putting more money in, you can be freer to take the shot, or devote more to it, than if you can't put in any more in your account soon. In fact, all of your risk of ruin considerations need to take the ease of replenishment into account, or you will have yourself playing tighter than you need to, and have this limit your growth more than it needs to.
By the way, it's always best to take shots at the next stake rather than just move your whole bankroll there, as that would be putting too much of this at risk without having a good enough idea of how you will do there. Players err on both sides of this, for instance they will risk losing too much or even their whole bankroll at the higher stake before it is justified. Or, they may delay their move up way too long in wanting to be too certain of themselves, by presuming they need to risk more than they actually do trying out playing higher. There are some players who take this to extremes, which includes a great many so called regulars. They see moving up as a permanent thing and combine this with a fear of losing and the net result is that they stay at a stake far longer than is ideal.
It's Best To Try Out Higher Stakes First
So we want to see and approach this process in stages, with the first stage being beating your current level and expecting that you'll have a good chance to do the same one step higher, and being able to set aside part of your bankroll to take a shot at it. If you don't succeed, then you revert back to the previous level, and work on your game to the point where you can take another shot later. If you succeed, which means growing the amount that you've set aside over a period of time, then you're ready to move over more permanently. I say more permanently because we're still not completely committed to the higher stake, as we also always want to plan to move down stakes as needed.
Some players are stubborn when it comes to this though and either delay or refuse to move down when needed, and end up losing a lot more money than they need to, or even their whole bankroll, as a result. It's this kind of thinking that also keeps players from looking to move up when they should, by assuming that they are making much more of a commitment to the higher level than is necessary or ideal. So they end up screwing up on both counts, by slowing down their bankroll growth too much at the stake they are at, and also by risking losing way too much money at the new stake when they finally do get there.
I'm going to have more to say about all of this in a later session, and in particular, setting some more concrete guidelines, but I wanted to start out at this point by setting out some of the framework which we'll be using to decide this, and especially look to point newer and less experienced players in the right direction. Once again, we need to minimize our losses first, and it's only when we actually do have profit to work with that we can look to begin thinking about maximizing it.
In the next section I'm going to talk about balancing your education at the table with learning away from it, and let you know how you should be looking to spend your overall poker time.
Ken's Guide To Winning Poker - Index
Starting With A Solid Foundation
- What Are We Looking To Accomplish At The Poker Table?
- Ensuring That You're Setting Yourself Up For Success
- The Proper Way To Build Your Bankroll With Free Money
- The Keys To Effective Bankroll Management
- Managing Your Overall Poker Time Effectively
- Getting A Good Grasp On The Mental Side Of Poker
- The Importance Of Playing Your Opponents
- An Introduction To Using Poker Statistics
- Further Considerations To Finding The Right Path With Stats
- Using Poker Stats To Create Big Advantages At The Table
- Exploiting Players' Specific Weaknesses
- Exploiting People's Tendencies To Fold Too Often
- Exploiting People's Tendencies To Not Fold Enough
- Looking To Show Down Better Cards Than Our Opponents
- The True Nature and Importance of Aggression - Part 1
- The True Nature and Importance of Aggression - Part 2
- The True Nature and Importance of Aggression - Part 3
- The True Nature and Importance of Aggression - Part 4
- The Importance Of Position - Part 1
- The Importance Of Position - Part 2
- The Importance Of Position - Part 3
- The Misconceptions Of Playing Out Of Position
- Tactics For Playing Out Of Position
- Combating Aggression Out Of Position
Various Poker Strategies
- Considerations In Game Selection
- Balancing Your Playing And Learning At The Table
- Continuation Betting
- Introduction To Hand Planning
- Looking For Chinks In Your Opponents' Armor
- Seeking Our The Most Profitable Moves
- Using Position To Manipulate Players