In the previous lesson, we dealt with strategies for players who haven't become profitable yet, and in this lesson we're going to look with more depth into strategies for managing your bankroll among players already profitable to one degree or another. We've now got a positive expectation, meaning we will earn a profit over time once luck is factored out.
Managing your bankroll is a crucial element to your ultimate success. Proper bankroll management is a balancing of two elements: risk and profitability. On the one hand you want to make as much money as you can. This would make you prefer the biggest games and levels you could play at. Taking limit poker as an example, you'd be playing at the biggest table you could afford at the minimum buy-in. It is true that this strategy would give you the highest potential for profit, but also the highest degree of risk. You won't survive very long on even an ordinary run of bad cards. So seeking the most profitable solution here by itself won't do.
On the other hand, you could play 1 and 2 cent limit for the rest of your life and be pretty secure that the end of the world will come many times over before you ever go broke. 4 or 5 cents an hour is hardly worthwhile though if you've become good enough to beat higher games, so just looking for security alone is a bad idea as well.
What we need to do is seek to achieve the proper balance between these two elements, so that we can play with a high degree of safety while increasing our profitability.
The first thing we need to do is to establish the level of safety you're going to require. For instance, if you can easily replenish your bankroll every week, you're going to need a lot less safety than someone who earns their living playing poker and will actually have to go out and get a real job if they lose their roll. For those who can replenish their roll pretty easily, we don't exactly want to throw caution to the wind here either, as it would be much more preferable to be adding to your roll than to be starting over fresh.
We're going to use limit as an example here, although the concepts apply to all forms of poker. For instance, if it was no-limit, we'd be using a certain amount of buy-ins as our desired degree of safety, or if it was sit and go tournaments, a certain amount of entries. In the case of limit, we'll be dealing with a certain amount of big bets held in reserve. The principles of this lesson will apply to all forms of poker though, regardless of the type of game played.
Often, the benchmark that gets thrown around is a reserve of 300 big bets. A big bet is of course the bigger of the two numbers - for instance - in $5/$10 limit it would be $10. So 300 big bets at this level would be $3000. That's actually not a bad figure to work with, but since we want to account for the level of security required, we'll use a range instead - 100 to 500 depending on need. 100 will be the benchmark for those who don't really have a problem at all with replenishing your whole bankroll when needed - the least amount of safety needed. 500 will be for those who are pretty much screwed if they bust out. For the average player, 200-300 will be plenty. This of course assumes you are profitable, and if you're less sure about that, you will want to add an extra margin of safety.
Here's the rub though. If we just used a fixed system like this, we would move up, but move up pretty slowly. Let's say we're playing $1/$2, and we decide on 300 big bets as our level of safety. In order to move up to $2/$4, we're going to need 300 bets at that level, which is going to mean earning another 300 bets where we are in order to move up.
As I mentioned though, we don't necessarily want to move to the new level once and for all, and in fact, that's not going to be a very idea on any account. Let's say we're not quite ready for the new level, in other words, we're not quite good enough yet to be profitable with the slightly better competition we find there. We're going to probably lose all our money in that case, which isn't managing risk at all, to say the least.
By spreading the risk over several levels, not only do we allow ourselves to move up faster, we actually allow more safety dollar for dollar. Let's say in our example we don't shoot for 300 big bets at the level we're at, we instead shoot for 100 big bets at whatever level we're at. And when we reach 100 big bets at a new level, we play there. When we drop below the 100, we move down.
Let's look at this in practice. Say you have the same $600 that you were considering using at $1/$2. Instead now, we're playing at $3/6, and we're playing safely in fact. Here's why. We'll sit down at this level, and if things start going our way, we're in, and accumulating bets at the new level. Once we get to $1000, we can move up to $5/$10. Once we get to $2000, we can move up to $10/$20. And so on. If things don't start out our way, we'll drop down to $2/4, which is still twice the limit we were considering playing. We have a good cushion there, and should the unthinkable happen and we have to drop down again, we're still at the same $1/2. What we're doing is spreading the risk out among several levels, and we can drop down further if necessary. And each time we ascend a level, we're going to be adding to the level of security, as we have not only the level we started with but a whole extra level we can bust at before we even get to that. And when we add two levels and beyond, we continue to add to that security, eventually having far more than 300 big bets worth of room.
The real beauty of this system is it allows you to climb the ladder much faster than just relying on a fixed amount of bets at each level. For instance, from playing $3/$6 to $5/$10 involves just 67 bets. To move on to $10/$20 involves just 100 bets. Moving to $15/$30 is another 50 bets. And moving to $30/$60 is just another 100. So, in the first example we required earning 300 bets just to get to $2/4. With this system we can reach $30/$60 in as little as 317 bets!!! Even with some dropping down, we're going to be at $30/$60 long before you even get to $5/$10 using the fixed system.
This is easy to manage since all you need to do is play where you have 100 bets. If you have less, drop down. When you have 100 bets at a new level, move up. You'll find you'll be moving up a whole lot faster with this, all the while maintaining the level of safety you require, and even adding to it as you go along.
The same formula of course applies to other games. Let's say you decide to go with 10 buy-ins at no limit. When you have less than 10 buy-ins, you move down, and when you have 10 or more at a new level, you move up. If it's sit and go's you play, and you decide for instance to go with 30 entries worth, you move up or down depending on whether you have money for 30 at a given level.
With this system, combined with keen playing ability, a strong desire to improve, killer software at your side like Poker Edge and Hold'em Hawk, top notch instruction, and playing at the right sites, you'll be climbing the ladder of poker success and playing at the big games before you know it.