Poker Bankroll Management

A Thorough Bankroll Management Strategy and Expert Tips

Bankroll Management in Online Poker
"If a good poker player plays 100 hours of $20-$40, he could win as much as $20,000. but once in a blue moon he might lose $10.000. A good poker player could only break even after 1400 hours of play. Given any time below that, he could possibly lose." Does this statement surprise you? A good understanding of the fluctuations that will occur playing poker should help you manage your emotions and bankroll; otherwise, this game can be extremely frustrating, and if you are not careful, you could lose your entire bankroll in a short period of time. I’ll be the first to admit that bankroll management is not the most exciting subject when talking about poker; however, I cannot emphasize enough the importance of having some basic understanding of bankroll management, earn rate, and the fluctuations that will occur in Hold’em. For the rest of us, your bankroll is your lifeline and needs to be protected. At the very least, this subject should help you understand better the significant fluctuations you will incur playing Hold’em.

 

Bankroll Earn Rate
Your earn rate is simply the amount of money you have earned or lost divided by the number of hours you have played. A very good poker player earns about one big bet an hour in a full ring game; therefore, if you are playing $5-$10, you should make about $10 an hour. At $20-$40, a good player should make about $40 an hour. In short-handed games and heads up, you could even earn more since you have more hands per hour to benefit from your good play. You should record your results by each game and limit that you play. For example, I record results for Texas Hold’em, Omaha Hi-Lo, and 7-card stud separately. I also distinguish between full ring games, short handed play, and heads up. since each requires different skills. Finally record your results for each limit such as $l-$2, $3- $6, $10-$20, $1-$2 pot limit, etcetera. For players who play more than one table at a time, it is important to keep statistics for each table. If I play two tables at the same time, I will record the time played for both tables. For example, if I play for one hour on two tables of $15-$30 and win $200, I will record two hours played with a win of $200 for the session.

This may not give you an actual hourly earn rate, but it allows you to evaluate your playing on an even scale. Your expected earn rate could differ from your historical actual earn rate. If you have only been playing for 500 hours, you could have very different results in the
future than what you have been earning so far. For example, if you have had relatively unlucky cards on average, your expected rate will be higher than you’re actual. You need to play a tremendous number of hours before you can feel confident that your historical actual rate is close to what you can expect to earn in the future.

For example, I have recorded over 3500 hours in my main game of $20-$40, but from a statistical perspective, I am still only 70% confident that my expected earn rate is within $10 of the actual. Statistically, I might expect in the future to earn either $10 more or $10 less an hour, depending on whether or not I was "lucky" over those previous 3500 hours. It takes a tremendous amount of hours before the cards start to break even. You can often run good or bad for hundreds of hours, which can significantly impact the earn rate you are achieving. For example, let’s look at the possible range of earnings for a good player who ought to earn $40 on average playing $20-$40: After 100 hours: -$ 11,000 to $19,000 After 300 hours: -$14,000 to $29,500 After 500 hours: -$12,500 to $52,500. After 1000 hours: -$ 6.800 to $87,000 After 1400 hours: 0 to $112,000

These ranges show why it lakes a long time before you can feel confident in expecting the same actual results to continue in the future. This is one of the reasons Hold’em is so popular. Losing players often have good runs, giving them the impression that they are good players. For example, a poor player who normally loses $40 an hour could actually earn up to $10,000 over a 100 hour period by getting lucky! Once they experience a lucky streak, they keep coming back thinking they can win again at the same rate. Unfortunately for them, the law of averages will eventually catch up and they will lose back their winnings and even more, as long as they keep playing poorly.

Poker Bankroll Managment Standard Deviation
Another important measure is your standard deviation. Without getting too technical, this measures the fluctuations you can expect in your play. Aggressive
players who play a lot of hands can expect greater variances than a tight player docs. The aggressive loose player will lose a lot most of the time and occasionally
experience a big win, while a tight conservative player will not have huge swings either way. The higher your standard deviation, the more bankroll you need to
handle the fluctuations in your results. Calculating your standard deviation is outside the scope of this article. If you use staffing to track your results, the software will calculate your standard deviation for you. For those who want more information on earn rate and standard deviation. Mason Malmuth provides all of the formulas in his book Gambling Theory.

The Bankroll
Using your earn rate and standard deviation, StatKing can calculate how much bankroll you would need to ensure never going broke and how many hours you
would need to play to at least break even. For a player who earns $40 an hour playing $20-$40 with a standard deviation of $500, you could play up to 1400 hours

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and only break even. You would need about $14,000 to ensure never going broke. If you play $10-$20 with an earn rate of $20 an hour, you would need $7,000 and still 1400 hours to ensure you break even. At $5-$10 you will need $3500, and so forth.  Many players often ask how much money they need to play at a given limit. A good player who earns one big bet an hour needs about 350 times the big bet to ensure never going broke; however, most players need more since their earn rate is less. If you are slightly more aggressive with your money, you can play at limits higher than your bankroll dictates; however, you just need to be sure to drop down a limit if things begin to turn bad. For example, let’s say you have $1600 to play with. If you don’t want to go broke, you should just play $2-$4. However, another strategy could be to play $3-$6, and if your bankroll drops to $1200, switch to $2-$4 and then if your bankroll drops to $800, switch to $l-$2. People are different when it comes to managing their bankroll. Some players may want to "gamble" a little with their money. If you don’t mind going broke, then you
can take more chances. But if you want to play poker for the years to come, you must ensure that you manage your bankroll effectively.

A Sample Bankroll Management Strategy
Let’s develop a bankroll strategy for the average player who wants to start playing Hold’em but can’t afford to lose a great deal of money. This player would eventually like to earn a second income playing poker on the Internet, but can’t risk any hardearned savings or their spouse will quickly put an end to their playing days, lol. For example purposes, let’s say this player has $500 to risk. We assume that since this player is just starting out, he is not at an expert level; however, he has read and studied poker and therefore has the potential to be a solid player, :). The first goal for this player is to demonstrate that he can win. $500
ought to be enough to win at $.50-$1 limits. If you lose $500 at these limits, then Hold’em is probably not for you. You should demonstrate that you can win at least 100 big bets before moving on to another limit; therefore, this player should build his bankroll to $600 to demonstrate to himself that he can win. For some people it may be difficult to play at these low limits.

You can only expect to earn about $1 an hour on average if you play well, and for many people this may seem insignificant. However, it is better to gain experience at the lower limits before you start risking your bankroll at the higher limits. You could lose $500 very quickly at $l-$2 if you have a bad run of cards and/or you are still learning the basic concepts of the game. Hold’em is a game of patience and if you want to succeed within the confines of your bankroll, you must demonstrate patience before reaping rewards. This is no different than if you were investing in the stock market or trying to grow a business.

It should take about 100 hours of play to build this player’s bankroll up to $600. He can now play $l-$2, and if his bankroll drops down to $500 again, he should drop back down to $.50-$1 and start all over again. Once he earns another 100 big bets an hour at $1-$2 or $200, he should have a bankroll around $ 1000. Add another $200 for deposit bonuses for a total of $1200. With $1200 he can move up to $2-$4 limits. If he drops down to $800, then again he should drop down a limit. Once he earns another 100 big bets at the new limit, he can move up another limit and so forth. You need about $2500 to begin playing $5-$10. You will probably experience a distinct increase in the level of competition at this limit, so I suggest playing a little more time at this level to demonstrate you can win against better players. Once you reach $5000. you will have demonstrated that you can beat the game at the lower limits. Keep following the same process until you reach a limit that you are comfortable with. The following chart shows recommended bankrolls needed for moving up and down limits:

Bankroll* Avg Hours of Play
$.50-$1 $500 100
$1-$2 $800 100
$2-$4 $1200 100
$3-$6 $1800 100
$5-$10 $2500 225
$10-$20 $5000 125
$15-$30 $7500 100
$20-$40 $10,000
*Includes deposit bonuses opportunities
Please note that this strategy is for someone who doesn’t want to risk losing his
entire bankroll, while also allowing you to move up limits rather quickly if you are
doing well. If things start to go bad, you need to be sure to drop down to the limit
indicated.

Each person has different levels of risk they are willing to assume. For example, some people could not handle losing $500 in a day. If this is the case, you should
never play above $2-$4. It is possible, although rare if you are a good player, to lose up to 100 times the big bet in any given session; therefore, be sure you are
comfortable with the limit you are playing. Once you reach a limit you are comfortable with and have a bankroll of about 350 times the big bet, you should be
able to play forever without going broke, assuming you are a player who earns one big bet an hour on average. Some players might also have higher bankrolls to start with. If this is the case, you can start where the table suggests, but realize that you still need to build some experience. If you begin losing, you should probably drop down a limit quicker than the chart indicates. Some people may be more willing to risk everything and say, "I only have $1000 to lose, but I can’t play for $25 pots; therefore, I am going to risk it and play $10-$20. If I lose it all, that is OK. with me." If you are that person, that is fine.

Just realize that if you hit a bad run of cards, you could lose your entire bankroll in one session and be finished. Like anything in life, to be successful you need to make a plan. What are your goals playing poker? How much would you like to earn per week? Once you know your bankroll and the hours you expect to play, you can estimate how long it will take to reach your goals. The sample plan above suggests that you will need to play 800 hours on average before you can begin to play $20-$40 when starting out with a $500 bankroll. If you have a $2500 bankroll, you could begin playing $20-$40 within 500 hours. Once you reach $20-$40, you could add over $1600 a month to your income playing as little as 10 hours a week. Each person will have different goals. Just be sure to make a plan that is realistic given your bankroll, the limits you are comfortable playing, and the time you are willing to invest.