Ferguson's Bankroll theory counterintuitive?

[MikeR]

I was listening to a podcast where Jesus was talking about how he turned a dollar into 20,000. He said he used a bankroll strategy where he would never bring more than 5% of his bankroll in play, and as soon as he had an amoubt equalling 10% of his bankroll, he would fold and immediately leave that table, bringing 5% to a new table.

This sounds counterintuitive to me, like a (what's the opposite of stop loss?). I always figured Jesus to be a pretty smart guy, so what are the merits of his bankroll strategy?

I've always been taught not to place artificial limits on when to stop play, and to only stop if I'm tired, the game's no longer good, and a few other reasons that don't have anything to do with how much money you currently have on the table.

[trumpman84]

The way it sounds to me is a pretty standard way of managing your bankroll. I think the 2+2 standard for a minimum NL bankroll is 20 buyins. Only buying in with 5% is the same as keeping 20 buyins. When he gets up to 10% of his bankroll in the game, he's no longer comfortable with losing it all on one hand, so he gets up and buys in for 5% at another table

[MikeR]

So it's mostly a comfort thing as far as running with the 10% more than anything else?

[AaronBrown]

The opposite of a stop-loss (which is technically called a stop-sell) is a stop-buy, meaning "buy if the price goes above X." It is counterintuitive, but a lot of professionals do it.

Jesus' scheme is actually like a limit-sell, "sell if you can get at least X." That's an easy to understand order, you lock in a profit. However, standard wisdom in poker and trading is to cut your losses and let your profits run. So quitting when you lose 5% of your bankroll, or selling when your stock goes down 5%, fits that rule; but leaving when you've doubled your money, or selling when your stock has gone up, does not.

But notice that Jesus did not say he stops playing, only that the reduces the amount he has on the table. It's true he walks away from a game in which he was winning, but from my read that's a necessary evil rather than the goal of the strategy. He just wants to take half his stack off the table, but he has to change tables to do it.

It's also possible that he feels having doubled his money he doesn't have much more to gain at that table. The idea that you keep playing as long as you have the best of it, assumes that your wins do not affect the other players. Perhaps he does better at a fresh table. It's not like he has to worry about running into people better than him.

[dogmeat]

Jesus is an expert on game theory. From your post I will make an assumption about three things:

1) This $1 into $20,000 involved a bet where his pocketbook and pride were at stake

2) He was playing no-limit hold'em

3) He looks at the risk as I do - when you are playing to a 5% piece of your bankroll, and that is what keeps you within your chosen element of ruin, you have to take down your table buy-in when it reaches 10% of your bankroll because you have reached a new plateau and as stated - you are now risking 10% of your bankroll and are exceeding your element of ruin percentages.

Dogmeat [img]/images/graemlins/spade.gif[/img]

[DrPhysic]

From your description, maybe he meant:
1. not wanting to put more than 5% of his bankroll on any given table, subject to risk of loss on a single hand,
2. Taking the $ off the table when he had MADE 10% of his bankroll. IE: if you have $1, you put $.05 on the table, you end that game when you have $.15, and buy back in for 5% of your now $1.10 br.

Thus his downside loss on any table is only 5%, but his upside is 10%. Which might in fact make some kind of sense.


Doc

[MTBlue]

It's not counterintuitive. It's limiting his standard deviation and I have a feeling that this method was developed sometime after he hit 10 dollars. I don't any NL game online that allows you to buy in for 5 cents.

[Hosayif]

he also said that dollar wasnt the first dollar, so in reality he turned 2 or 3 or 4 dollars into 20K.

[boc4life]

[ QUOTE ]
he also said that dollar wasnt the first dollar, so in reality he turned 2 or 3 or 4 dollars into 20K.

[/ QUOTE ]

Much less impressive

[mudbuddha]

yeah his system is pretty normal. alot of SSNL's keep +30 buyins which means they can afford 1.5x what he recommends. that way we can sit down even when we have doubled up or tripled up and continue to pound away at hte table.