Quote taken from
the MicroStakes LIMIT (not NL) Guidelines/FAQ v1.0:
[ QUOTE ]
What is an appropriate bankroll for the stake X/Y?
Poker is not a game of predictable expectations. A winning player will have their losing days, weeks, and sometimes months. Your bankroll must be sufficiently large to survive these wild rides. A bankroll of 300 Big Bets is the standard recommendation. If you are playing $1/$2, you should have $600 available in your bankroll. If this bankroll cannot be replenished, then you should often have more than 300 BB's available for your current stake. You can certainly take shots at a limit with less than 300 BB's, but be prepared to drop down if you hit a downswing. If you are playing 6-max tables, you will need an even larger bankroll to survive the higher variance.
[/ QUOTE ]
Almost every player who has ever played poker somewhat seriously has considered the bankroll question. "How much money do I need to play this game?" If you look around at some other recommendations, 300 BB is actually pretty bold. If you're interested in shorthanded play, then 500 BB is a more common number (especially now that games are much more aggressive), and players looking to "go pro" might want to be deeper than 1000 BB plus living expenses for about a year. But this post isn't directed at those players looking to go pro. I wouldn't have much to say about that because that's a jump that I've never taken. This isn't even for the semi-pro, who has a regular job and plays for a little bonus income on the side. Instead, this post is for the semi-casual player. The ones who take the game seriously enough to ask the bankroll question, but aren't really looking to have poker winnings represent any part of their regular income.
But before I start talking about bankroll, let me tell you a bit of my story. My first true step into poker was taken at Foxwoods back in 2001. I had just turned 21 earlier that year and had seen Rounders. I was a counselor for a math program in Boston and another counselor, who was already playing poker, got me interested in the strategic elements of the game. We disappeared for a couple days and took the bus from Boston out to Foxwoods. I think I took about $300 with me and lost $140 of it. Even though I lost what I considered to be quite a bit of money, I also recognized that this game was loads of fun and I believed that I could learn to play the game well enough to win. This started me down the poker road.
A few months later, I deposited $300 at Paradise Poker and started playing $.50/1 Limit Hold'em. Why $300? Because of the 300 BB rule, of course! If my memory is right, the smallest game at that time was the $.50/1 game, and I had made the decision that I would deposit once, and that would be the only deposit I would make. If I lost it all, I would be done with online poker. Needless to say, that didn't happen. According to my data, I lost about $142 that year (including the Foxwoods trip). And from there, things have been up and up:
2002: +$466
2003: +$459
2004: +$1000
2005: +$2112
2006: +$2741
The 2007 poker year isn't over yet, but the chances of me ending up ahead is quite small.
2007: -$3325
Some of that is because I took $1000 out of my bankroll to get an early start on making car payments (cutting the long term cost by paying off principal early and therefore reducing the amount of interest I pay), but the rest of that is due to running cold playing $15/30 at the Bellagio.
If you told me back when I deposited that first $300 that one day I would lose $3000 in a matter of a few hours of poker time, I would have thought you were a little bit nuts. Then when you told me that I would lose that $3000 and would still have another $3000 with which to play, I would have thought you were completely crazy.
Playing poker has a way of skewing your sense of the value of money. When I was still a poor graduate student, I would look at the price of something and think, "Hmmm... $30... that's a little expensive for me right now." But then later that night, I would sign on and play $2/4 with an $80 buy-in and willing to rebuy for another $40 or $80 if I was getting unlucky but the table conditions were favorable, and not think too much of it if I lost it all.
And that is the transition from my story to the topic at hand. What is a bankroll and what does it mean to semi-casual players like myself?
Bankroll Lesson #1: Know Thyself
Why play poker? There are lots of good reasons and a few bad ones. But a more pointed question is why do *you* play poker? If it's a get rich quick scheme,
read this. If your answer is something along the lines of "it's fun" or "it's interesting", then you're on the right track.
What do you plan to do with your winnings? This is worth asking before your bankroll gets too big. The reason why is that your reasons for playing can subtly change if you're not careful. For example, if you start pulling from your winnings to support a new habit or lifestyle (maybe going out more often), then your bankroll has suddenly become "income" and the way you handle your bankroll changes. Now a losing month becomes associated with not having enough money to do things you want to do. This usually doesn't mean that you *don't* do those things; usually what happens is that you start to justify the expenditures and blame it on variance. Now it's true that variance had a role, but it's not necessarily the role you think it played. (You could actually be a losing player and not know it for quite a while simply because you've been on the good side of variance.) But it's important to be aware of this when your bankroll is small (when you're pulling $10-20 at a time) so that when you're playing bigger in the future, you will be careful not to start pulling $100-200 at a time and driving your bankroll to busto, but still justifying your withdrawals in terms of variance.
My answer to the question of winnings is that my bankroll exists to support my ability to play poker. Except in one situation, I don't use any of the poker money to do anything else but play poker. The only exception in my life has been my car payments, and I am only using poker money to put in *ABOVE* what I planned to do in the absence of poker money. By treating my bankroll in this manner, I keep myself from getting tricked into thinking I have more money than I actually do. If I had not been "protecting" my bankroll from being spent, I would not have been able to afford the 100 BB downswing that I've experienced. I would have been busto and it would take me a while to put aside the $1500 I would need to take another shot at the 15/30 game.
Bankroll Lesson #2: Know Money
I'll be honest. If you bankroll is smaller than $50, you don't have a bankroll. You have a slush fund. If you're in a place in life where you cannot afford to reload $50 if you go busto, then you probably shouldn't be playing poker. Putting aside $50 is less than giving up one specialty coffee a week for two months. It's less than $1/day. It's not much money.
For those of us who are managing bankrolls starting from the mid-low hundreds and going up to several thousand, you actually have something to lose. But that's the whole purpose of a bankroll for the semi-casual player! It's there so that it can be lost. I'm not saying the goal is to busto your bankroll, but the reason it exists is to allow you to play poker without hurting yourself financially, which means that if you lose it, you'll still be financially okay. (This doesn't address the emotional battle, but I talk about that below.) This money is part of your entertainment budget, to be blown on the entertainment of poker.
Therefore, your goal is to make your bankroll last for as long as you want to play poker.
Bankroll Lesson #3: Know Variance
If you haven't played poker for at least a couple years, you probably don't know variance that well. You may think you do, but you don't. I can't help but laugh at the posters who do things like "OMG I lost 100 BB in my last 1000 hands. Here are my PT stats. What are my leaks?" I'm not saying that variance is any fun when you're on the unhappy end of it, and I'm not denying the cathartic value of complaining about it to others. But you must keep your perspective straight when the hard times (plural) come.
Unfortunately, experience is the teacher here. You can read all about other people's hard times, but until you're in the middle of it yourself, you don't really know what they're talking about. On the positive side, you can help keep your perspective straight if you know yourself and know your money. Why are you playing poker? Because it's fun? If it is no longer fun, don't feel obliged to keep playing. Take your money and walk away from the game. Because it's interesting? Then you should be focusing your energy on finding mistakes and not worrying about your bottom line so much. The game is interesting on its own merits, not on the outcome of the games you play. What does it mean if you lose a chunk of your bankroll? Not much. It doesn't hurt your real life at all since your bankroll exists because it can be lost. Keep these fundamentals in mind and you'll be much more likely to make it through to the other side.
Can variance be managed? Sort of... You cannot realistically prevent yourself from being on the bad side of variance (except by not playing). However, you have some control over the size of variance. As an extreme example, you can reduce variance essentially to zero by folding 100% of your hands. (But then you would also lose money because of the blinds.) Without going into the details of the math, every hand where you put money in the pot increases your variance compared to if you did not enter that pot. So you can keep your variance low by not entering in as many pots.
This will not stop your downswings, but it will decrease the expected size of the of the downswing. It is much more rare for a 16 VPIP, 1 BB/100 full ring player to hit a 300 BB downswing than a 22, 1 BB/100 VPIP player. So by stealing less, you can cut down variance a bit, but then you pass on some +EV experiences. Decreasing your preflop equity raises will also decrease your variance, but again it comes at the cost of some EV.
I believe that if you're playing in a way to reduce variance to protect your bankroll, you're probably playing too high and should move down. If you're worrying about your bankroll when you play, you probably aren't playing your best poker. You're much more inclined to play weak and scared postflop because you're not as focused on the poker as you should be. Consider your style of poker and move down as far as you need to in order to play the style that you want to play without having to think twice about your bankroll if you have a moderately bad run of cards.
Remember that your goal is to protect your bankroll from busto,
but the purpose of the bankroll is to allow you to play poker.
Bankroll Lesson #4: Moving Up
If you are a semi-casual player, you don't ever need to move up. Moving up is a matter of keeping the game "fun" or "interesting" and the size of your bankroll. If you are having a good time playing where you're at, that's great. Don't lose track of that for the lure of making more money. After all, the bankroll exists to continue existing. So if moving up increases your risk of busto and you don't have any reason to move up, don't do it.
But some of us do like to move up and take shots at the bigger games because that's part of the challenge. It's "fun" to play bigger games. There's a little extra adrenaline in taking that step up and to be a part of the next higher "class" of poker player. But whatever, it's still about the game. What rules should you take when moving up? Keep it simple: Know how much you can lose before you need to move back down (See Lesson #5). That's it. If you hit a bad run of cards, that's fine. Move back down, play the lower game for a while to hone your skills and rebuild your bankroll. There's tons to learn at all levels, so keep studying and get better.Y
ou want to know whether you're "ready" to move up? This question comes up over and over again. The truth is that there is no highly accurate measure of how ready you are that doesn't involve tons of hands. So looking for the ultimate green light to go up is a bit of a dream. But if pressed to come up with some numbers, I think a winrate of 2-3 BB/100 over at least 10k hands is a reasonable place to be if you're thinking of moving up. This will give you at least 100 BB at the next level (plus your pre-existing bankroll), so that you aren't likely to busto if you run bad and have to move back down. But you're never
forced to move up. If you don't feel comfortable moving up, then don't.
Bankroll Lesson #5: Moving Down
If you are a semi-casual player, you don't ever need to move up,
but you might need to move down. If your bankroll is in the low hundreds, you can play in such a way that it's basically impossible to busto. Just keep moving down until you're playing $.02/.04. As long as you move down early enough, you should never hit such a bad streak that you cannot recover (unless you're just a losing player). But even then, if your bankroll gets that small, you fall into the realm of "not a bankroll" and now you're just donking around with some loose change.
There is only one thing that prevents someone from moving down: EGO. Yeah, you were once a winner at $2/4 and now you're playing $.25/0.50. Embarassing, isn't it? Not really. The game is so boring because all the players suck. Yeah, maybe, but you can still be on the lookout for areas to improve, and the most likely candidate is working on developing your reads and making adjustments. There is more than enough variation between players that you should always be watching someone do something. There's an immediate benefit of helping you crush your current level, plus there's the future benefit of being better prepared if you try to move up again.
When should you move down? If you feel like you should move down, then move down. That's the easy one. The harder one is when you feel like you can beat the game, but you feel as if you're a victim of bad luck. How small should you let your bankroll shrink before you move down? 100 BB? 50 BB? 10 BB? I would recommend that you look at 100 BB at the level below (or about 50 BB at your current level) as your "Move down NOW" benchmark. I think it would be better to move down when you have about 150-200 BB at the level below (75-100 BB at your current level) to be safe. If you're playing below 100 BB at the level below, you're a couple bad beats from the ultimate busto. If you want to move down sooner, that's okay.
Bankroll Lesson #6: Cashing out
In Lesson #1, I warned about cashing out on a regular basis, especially if this cash starts to pay for regular expenses. But I think there are good times for a semi-casual player to cash out. Here are a couple examples:
<ul type="square">[*] You have an unexpected expense and your bankroll is the best source of money to pay the expense.[*] You have a planned expense that is better served to be paid off rather than continuing to play poker (paying off debt is a good example).[*] You have a lot of money in your bankroll (relative to the stakes you're playing), and you're taking out a relatively small about (no more than 20%) to cover a one time expense or to move it into savings.[/list]
In the first example, I think it would be pretty clear. If you're in a car accident, you need some cash to pay for the repairs, and you don't want to go into debt because of it. By the way, if your savings small relative to your bankroll, you should consider moving it into savings (but that's example #3).
The second example is something that I hope isn't overlooked by poker players, but could be. If you have $3000 in debt with a $1000 bankroll, you might consider taking $200-400 and paying down that debt, especially if you're playing small enough that your roll isn't threatened by the withdraw. Paying down your debt by a $300, especially if it's high interest credit card debt, will actually be worth $400-$500 because you reduce the amount of interest that you pay. This is what I did with $1000 of my $5000 bankroll. Again, this is a payment *above* your normal payment, not part of your regular payment. If you're relying on poker money as part of your regular payment, you're not a semi-casual player anymore.
In the third example, you're taking your bankroll like a Christmas bonus. This is money that you've stumbled across in the process of doing the things you were wanting to do anyway (ie, playing poker). I want to urge the younger players to seriously consider the size of your savings relative to your bankroll. If you have no savings but a $1000 bankroll, you should start saving. Your money is worth so much more than face value because you have time on your side. At the age of 25, $1 grows to over $20 by the time you're 70 (ie, retirement age) at a modest 7% return. Open a Roth IRA (US players only), find some no-load index funds, and start investing. Turning $200 into $40000 by simply taking a slice out of your bankroll makes sense to me because you're not likely to make $40000 playing poker in your lifetime. Even if I'm wrong and you do make $40000 playing poker, the $200 that you put aside at the beginning will be such a small expense to the amount of money you make that it's not going to matter anyway.
Moving on from here
Now that you've read my thoughts, I think it's a good idea to open up the floor for responses.
What is your bankroll experience? When did you start playing poker semi-casually? How much did you start with? Where are you now? What have you done with your winnings?
What is your bankroll philosophy? Do you agree with me? Disagree? How do you look at your poker money?
What are your struggles with your bankroll? How have you dealt with bad variance? Have you ever been close to busto? What did you do about it?