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shutEMdown 11-28-2007 11:55 AM

Online bankroll management
how do you guys manage your bankroll online? Im curious to know because I am struggling at the moment. I was doing well before the FTOPS events on FullTilt, lol. Basically I adapted Chris Fergusons rules, altered them a bit, and went with it. What I did is play a cash game or tourney buy in that is no more than 5% of my bankroll. I found myself playing alot of $24+2 tourneys as well as $10+1 tourneys. It was going well until I decided to give a couple FTOPS events a shot. I got into two of them, didnt cash, and my bankroll went down a bit. So I played a couple $120 knockout tourneys, didnt cash, and I was back to square one. I maintained a good bankroll when I had my 5% rule but I found that my bankroll would pretty much stay even. Dont get me wrong, its a good thing that I didnt have to constantly redeposit every couple days but I just could never hit a big cash playing "lower" buy in events so my bankroll would never increase dramatically. I did this for about 2 months. Did i get too impatient? Should I have stuck with my 5% rule longer? I have no problem with my bankroll live as I have positive equity two years in a row but I find myself not as successful online regarding bankroll management. I'm curious how some of you manage your bankroll online and would love to try some kind of new bankroll management method. Thanks!

shutEMdown 11-28-2007 03:06 PM

Re: Online bankroll management
maybe this should of went in the "general gambling" section. mods excuse my newbieism!

pzhon 11-28-2007 04:15 PM

Re: Online bankroll management
how do you guys manage your bankroll online? ...Basically I adapted Chris Fergusons rules, altered them a bit, and went with it.

[/ QUOTE ]
His rules are bad. They are much more aggressive for tournaments than for cash games, and they lead people to buy in short-stacked, which is like filling your gas tank half-way to save gas. Playing in tournaments where he was clearly underbankrolled was a big mistake for Chris Ferguson in his remarkably slow and overhyped journey from $0 to $10k. Others have gone from $50 or lower to $10k in a few months.

See this post in the Beginners Questions forum for a much better approach to rational bankroll management.

The most important step to building a bankroll is learning to beat a game. You haven't given much evidence that you have done so. Money does not make money. Money + skill makes money.

shutEMdown 11-28-2007 04:41 PM

Re: Online bankroll management
Thanks. Like i said, I have no problem building a bankroll live. Its online where I have troubles so Im not exactly sure of a sound method. Ive checked out the link you provided so I will give that method a try. Thanks again!

HoldenFoldem 11-29-2007 03:35 PM

Re: Online bankroll management
I just read an interesting book on cash management called: Fortune's formula by William Poundstone. It discusses many things, but the relevant topic is the 'Kelly Criterion" .

Kelly devised an optimal betting system, and it is discussed for several pages . Essentially, you always bet a percentage of your stake. ie 10%.

If you start with $100 and bet 10% and double up, then you have now got $110. Your next bet would be for 10% of $110 or $11. As yoiu hit hot streaks, the size of your wages goes up, maximizing your return.

If you lose, the size of your next wager goes down, minimizing your cold streaks. At no time is your total stake at risk, because yoiu never bet more than 10% of it.

I've have given just the bare bones here.

They also compare results using a martingale system (double up every hand you lose until even again); the Kelly system, and a fixed wager system. They show a chart of the results, and the Kelly system is by far the winner.

Later they compare "overbetting" and " underbetting" and again the Kelly system far exceeds the others.

Its a complex topic, and the book gets complex as well. Kelly gives a formula of G (max subscript)=R
G= growth rate of gambler's money
max subscript means we are talking about the maximu possible rate of return
R = the optimal return

The Kelly forumla says that you should wager this fraction of your bankroll on a favorable bet:


edge is how much you expect to win on average assuming you could make this wager over and over with the same probabilities . It is a fraction because the profit is alwways in proportion to how much you wager.
odds means the public or tote board odds. It measures the profit if you win. ie 8:1 on a horse race

i'm reading this from the book and typing it into this post. It just gets really complicated from here. I have given you the guts of the thing though. I hope this helps.

good luck out there.

shutEMdown 11-29-2007 04:22 PM

Re: Online bankroll management
interesting. I find that waging, or I would say investing, 10% of my bankroll on a specific game is too high online. Does the author state what percentage of your bankroll is optimal at waging for a game or is the percentage dependent on the player?

radzik 11-29-2007 08:11 PM

Re: Online bankroll management
i could be wrong but wasnt that formula for blackjack or some other type of gambling not really for poker. It has been a while since i read this theory.

RustyBrooks 11-29-2007 10:09 PM

Re: Online bankroll management
Check out my post on the subject here

Essentially how much of a bankroll you need is based on your tolerance for risk (ROR or Risk of Ruin), the standard deviation per unit, and your win rate per unit.

I've laid the formula out in terms of BB/100 (that's what win rate and SD is based on) but it could easily be BI/tournament instead, it's unit neutral.

For MTTs this is not really so simple, I think, because the standard deviation for tournaments is wildly huge, and you'll need a pretty good sample size to even have a shot at estimating your win rate.

It's kind of amusing to play with this in excel and realize that even if you have a positive, good, win rate, you have a non-zero risk of going broke anyway. Obviously, the lower your bankroll, the more likely that is, with some small bankrolls that people use, going broke is practically a certainty, even if they're awesome.

pzhon 11-29-2007 10:45 PM

Re: Online bankroll management
I just read an interesting book on cash management called: Fortune's formula by William Poundstone. It discusses many things, but the relevant topic is the 'Kelly Criterion" .

[/ QUOTE ]
The simple guideline I gave in the linked post, bankroll = comfort * standard deviation^2 / win rate, is closely related to the Kelly criterion. Comfort is the inverse of the Kelly fraction.

Most people find the swings you will experience by using the Kelly criterion to be too large. Most people prefer using fractional Kelly system which gives you almost as much growth for substantially reduced swings. So, you can use the pure Kelly criterion if you want, but note that many people have cause for rejecting it.

Essentially, you always bet a percentage of your stake. ie 10%.

[/ QUOTE ]
No, not when you are presented with several wagers with different returns. You should not assume that your win rate is the same no matter what level you play.

What Kelly wrote, in the first paper on the subject, is far beyond the simplifications most people attribute to him. When people look for generalizations of the Kelly criterion, they often are working to rediscover what Kelly put in that first paper.

HoldenFoldem 11-30-2007 12:40 AM

Re: Online bankroll management
Thanks for your input on this. I interpreted it to mean you would buy in to a game of NL and put 10% of your stake on the table as your buy in. If you lost it, you would next put 10% of your remaining 90% on the table as your next buy in and so on.

The difficulty with the formula in my view is that you must estimate your "edge", as he defined it, to determine your optimum bets. I have no idea how you would do that at poker. Perhaps BBs per hundred hands. But lets say that you win 8 BB per hundred hands, now how would you use that information to determine your buy in amount, and your subsequent bet sizes while sitting at the table.

Perhaps, assuming AA dealt to you, and using Poker Stove to determine your chances of winning with 2 callers, and assuming poker stove says 45% chance of winning, you would want to put no more than 45% of your stack in the pot.

With 10,9 suited and a 8% chance of winning, no more than 8% of your buy in would go in to the pot.

I am only theorizing here, and would appreciate any input from those much more mathematically able.

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