Poker Diversification: Bankroll Management

Poker shares one very important aspect to any kind of investment, and that is no matter how good you may be, you must prepare yourself for unlucky events. A good investment banker will not put his entire line of credit on one company or industry, and conversely a good poker player will not put his entire bankroll into a single game or on a single hand.

To illustrate this example I will bring up a wonderful movie, Rounders, arguably the first great movie about poker. The constant heads up battles between the main character and Teddy KGB shows us perfectly that if not managed well, your entire bankroll can disappear in a matter of seconds.

For those who did not see the movie, the movie's main character, Mike is shown in a heads up game with Teddy KGB an underground poker room owner. Mike has risked his entire bankroll on this game and a well played hand by Teddy KGB catches Mike completely off guard and he ends up losing his entire bankroll in a single hand. Later in the movie Mike is shown again in consecutive back to back heads up matches with KGB and ends up winning back his money and then some.

What must be learned from this is that no matter how good you may be at playing poker, you will lose on occasion to players worse than yourself. For example if I were to play a heads up match with Phil Hellmuth, I may still have a 30% chance of winning, even though I may be a worse player then him. Thus if we play 100 heads up matches I will probably win 25 to 35 games and he will win 75 to 65 matches. This means that he must have a sufficient bankroll size in relation to the amount of money he has risked in this match so that his risk of losing all his money is reduced to near nothing.

Rounders is a classic example of short term poker meets with long term poker. If you play with your entire bankroll every time you sit down at a poker table, then you will go broke eventually. Mike has played great poker from start to end, but his swings from good to poor bankroll strategy meant that he went from a nice sized bankroll, to being in debt, and back again to having a nice sized bankroll.

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So now that we know how important bankroll management is, how exactly should we manage our bankroll?

Well it takes discipline and often just a basic strategy, and I will lay it out plainly here. First I will present 3 levels of riskiness when determining your bankroll strategy and apply them to all forms of poker. The variations exist because some types of poker inherently have higher levels of variance (variance: the difference between winning sessions and losing sessions).

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3 different levels of riskiness:

Gambler: You play mainly for fun, but you have fun when you win, and losing your bankroll isn't going to be a huge deal as it's money well spent.

Conservative: You play for fun, but you are very determined to build a bankroll as high as possible without ever putting anymore money into poker.

Ultra-Conservative: You may play for a living, or you are a beginner poker player, thus variance will inherently be larger because you have not experienced enough decisions to always make the right decision.

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Basic terminology used when describing your bankroll strategy:

BB is referred to in fixed limit poker as the "Big Bet," not to be confused with the "Big Blind." For example if you look at a fixed limit table online, you will see 1$/2$ games, the small blind is 50c and the big blind is 1$, and the Big Bet is 2$.

Buy-In is used for Pot Limit and No Limit poker games. This is basically the amount of money you buy into a certain PL or NL game. I advise personally that you should buy in for the maximum at all times in a PL or NL game, some exceptions exist, but unless you are a very advanced poker player it usually pays to play with the maximum buy in.

*Note for No Limit and Pot Limit*
Most online poker rooms make the standard max buy in 100 times the big blind. So for a .5c/1$ No Limit Hold Em game, the max buy in is 100 dollars. This may change at your local casinos that are known for having strange buy in structures, and thus you may have to adjust your bankroll strategy slightly in relation to the structure.

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Texas Hold'Em Fixed Limit:

Ultra Conservative: 500xBB
(For example you should have a bankroll of 1000$ to play the 1/2$ fixed limit game)

Conservative: 300xBB
(This would translate into a 600$ bankroll at 1/2$)

Gambler: 150xBB
(300$ bankroll at 1/2$)

Texas Hold'Em No Limit and Pot Limit:

Ultra Conservative: 40 Buy-Ins
(At a .50c/1$ No Limit game with max 100$ buy-ins you should have a bankroll of 4000$)

Conservative: 25 Buy-Ins
(At a .50c/1$ No Limit game with max 100$ buy-ins you should have a bankroll of 2500$)

Gambler: 10 Buy-Ins
(At a .50c/1$ No Limit game with max 100$ buy-ins you should have a bankroll of 1000$)

*Note I will not continue to include these examples in further poker variations, as I'm sure you have an understanding of the math behind this strategy by now*

Omaha Fixed Limit

Ultra Conservative: 300xBB

Conservative: 200xBB

Gambler: 100xBB

Omaha Pot Limit and No Limit

Ultra Conservative: 30 Buy Ins

Conservative: 20 Buy Ins

Gambler: 10 Buy Ins

Omaha High/Low, 8 or Better Limit

Ultra Conservative: 200xBB

Conservative: 100xBB

Gambler: 50xBB

Omaha High/Low, 8 or Better Pot Limit and No Limit

Ultra Conservative: 25 Buy-Ins

Conservative: 20 Buy-Ins

Gambler: 10 Buy-Ins

7 Card Stud

Ultra Conservative: 1000xBB

Conservative: 500xBB

Gambler: 200xBB

7 Card Stud High/Low 8 or Better

Ultra Conservative: 300xBB

Conservative: 200xBB

Gambler: 100xBB

SNGs (Sit and Go Tournaments, or Single Table tournaments)

Ultra Conservative: 50 Buy Ins

Conservative: 25 Buy Ins

Gambler: 10 Buy Ins

MTTs (Multi Table Tournaments)

Ultra Conservative: 300 Buy Ins

Conservative: 200 Buy Ins

Gambler: 100 Buy Ins

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Bringing it all together.

Now that you have your strategy, you must implement it into a long term strategy of making your bankroll larger.

I will use myself as an example, I started with a 50 dollar bankroll, I play No Limit Hold Em and I would consider myself Conservative when managing my bankroll.

Now with a 50 dollar bankroll, you can only play .01/.02 cent No Limit Hold Em. At those limits you will be buying into games for 2 dollars. This is exactly 25 buyins for my bankroll, this is perfect for starting my bankroll.

As soon as my bankroll reaches 100 dollars, I can move up to the next limit, .02/.04 cent No Limit. The buy in is now at 4 dollars which is exactly 25 buy ins for your bankroll.

Again when my bankroll reaches 200 to 250 dollars, I will now move up to the next limit, .05/.1 cent where they buy in is 10 dollars.

You will continue this process all the way up the ranks. Along the way you will gain much needed experience and your skill will probably increase with the limits thus keeping your winning rate around the same, and increasing profits over time.

This includes moving down the ranks as well. If you currently have 1000$ and play the .25/.5 cent No Limit Hold Em games, and suddenly have a bad run and end up down to 750$, you should consider moving down to the .1/.25 cent game again until you have 1000$ again. This is suggested to reduce your variance, but if you happen to lose half your bankroll, you must move down in order to stay in compliance with this bankroll strategy.

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Quick note about multi tabling. Multi tabling will require you to have a larger bankroll than suggested above but not as much as you may think. If you single table at the conservative level, then you should consider moving to ultra conservative if you play 4 tables at the same time (this usually translates in moving down only one level in limits).

One thing to note about multi tabling is that you will increase your profits even though you are moving down the limit structure, and thus I highly suggest for anyone serious about online poker to learn to multi table effectively.

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This is all for bankroll strategy, I hope you all learn how to manage your poker money like a pro, please comment and come back again.

-Tireur