Please change the FAQ on bankroll requirements.

[pzhon]

Here is the SSNL FAQ entry on bankroll requirements:

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Q: What's the proper bankroll for each limit?

A: General consensus is that a player should keep at least 20 buyins for each limit he's playing. Excluding poor beginner play, bad bankroll management is the biggest reason that new players go bust. Do yourself a favor and only play in games you can afford.

Limit: $0.01/$0.02 | Needed: $40 ($100 on Stars)
Limit: $0.05/$0.10 | Needed: $200
Limit: $0.10/$0.25 | Needed: $500
Limit: $0.25/$0.50 | Needed: $1000
Limit: $0.50/$1.00 | Needed: $2000
Limit: $1.00/$2.00 | Needed: $4000
Limit: $2.00/$4.00 | Needed: $8000[/list]
This is bad.

[img]/images/graemlins/diamond.gif[/img] It should be emphasized that bankroll management is only for winning players. Losing players need a budget. Saying 'only play in games you can afford' confuses the two.

Mentioning beginners' poor play is not enough. Most experienced players lose, and many winners will lose if they move up too high, regardless of the amount of money they have in their bankroll.

[img]/images/graemlins/diamond.gif[/img] The mindless application of 20 buy-ins is wrong in both directions. The suggestion that you need $100 to play NL with a $0.02 big blind when the buy-in is 250 BB is particularly ridiculous, since the sustainable win rates are very high in these soft games, and it is much harder to lose a 250 BB buy-in than a 100 BB buy-in. The suggestion that you need a fixed number of buy-ins as you move into tougher games is dangerously wrong. The repetition of '20 buy-ins' should stop. It's like saying that it is 4:00 whenever someone asks what time it is. Sometimes it isn't far off, but that is only an accident. On 2+2, we should be able to do better.

20 buy-ins is far more conservative for a solid winning low stakes NL player than 300 BB is for a solid winning low stakes limit player. The correct analogue of the 300 BB guideline depends on your statistics, but it may be something like 10-12 buy-ins. See below.

Some people have objected that they don't feel comfortable unless they have a huge reserve. They want a security blanket, not a bankroll. Rational bankroll management is about making sure you can weather most storms, and have a low risk of ruin. For a solid winner in low stakes games, 20 buy-ins is overly conservative.

Just as the way you should play TPTK depends on many factors, the bankroll you need depends on several factors. Thankfully, it's not that complicated. The bankroll you need is c * standard deviation^2 / win rate, where c (what I call the comfort level) depends on your personal risk tolerance and ability/willingness to move down after a bad streak. Most people are happy with a value of c from 2 (aggressive) to 4(conservative). Note that this doesn't depend on the length of the sessions you play, or how many tables you play at the same time, or whether you play 6-max or full ring, or whether you buy in for 20 BB or 200 BB, except for the way that these affect your win rate and standard deviation.

If you stay at the same level without withdrawing, your risk of ruin is about e^(-2c) ~ 1/7^c.

Note the dependence on your win rate, which many people overlook in bankroll discussions. Win rates of experts are much lower in MSNL than they are in Micro NL. While 8 buy-ins may be enough to play NL $2 quite safely if you are half-decent, some winning NL $400 players (and some marginal winners at lower levels) need 40 buy-ins or more to have the same level of safety because their win rates are much lower. It is much more common to have a 10 buy-in downswing when your win rate is 4 PTBB/100 than when it is 20 PTBB/100.

For some 'typical' stats of winning SSNL players, see this thread. The survey methodology was not perfect, but the results are still quite useful.

Having overly aggressive bankroll guidelines has the obvious danger that people will expose themselves to a high risk of ruin, or to severe bankroll damage that will force them to spend a long time rebuilding. It may shake their confidence when they see downswings larger than they expected. Overly conservative bankroll guidelines are also harmful. They mean people waste more time in lower stakes games, and they provide an excuse for downswings that are strong indicators of poor play. More dangerous than either error, though, is giving a fixed answer when the answer depends on many factors.

I recommend replacing this FAQ entry with one which explains more of the rational bankroll considerations, and which uses a consensus estimate of a solid win rate at each level to determine the number of buy-ins needed for a solid winner to have a fixed risk of ruin.