The Bankroll Bible
Bankroll management could have easily been the first chapter in each of my poker books, because it really is that important. If you regularly squander your bankroll either by playing in games you can’t beat or by losing/spending your money elsewhere, you will never progress beyond small stakes games. In order to play and progress without a substantial risk of going broke, you need to keep enough money set aside to handle the normal swings of the game.
This is the opposite of what almost all small stakes players do. They get together a few buy-ins, go to the casino, and then play until they are broke or it is time to go home. This results in them usually having, at most, 10 buy-ins to their name, which is nowhere near an adequate bankroll. If you do not keep an adequate bankroll, variance is almost certain to wipe you out, even if you have a substantial edge over your opponents.
To be clear, your bankroll is the money you have set aside exclusively for poker. It is not money that you spend on bills, food, shoes, or beanie babies. If you treat your bankroll like an ATM, it will always be running low.
Suppose there are two identical players who both play $1/$2 no-limit cash games and want to move to $2/$4. Both players currently have $10,000 and need to get to $20,000 before moving to $2/$4. They both play 40 hours each week at their local casino and win 7 big blinds per hour on average, regardless of the game or buy-in level. One of the players withdraws $600 each month to pay his mortgage and the other player withdraws $200 each month to pay for gas to and from the casino, plus some ramen noodles. How much of an impact does this $400 difference have on their abilities to move up?
It will take the player withdrawing $600 each month about a year to get to $2/$4 with a $20,000 bankroll. Doubling up and winning $10,000 in a year doesn’t sound too bad! However, the other player who withdraws $200 each month will have an incredible $46,800!
By not withdrawing that extra $400 each month, the second player is able to move to $2/$4 much faster, doubling his win rate, allowing him to make $28 per hour instead of $14 per hour for six additional months. This situation continues to compound over time, allowing the second player to continue moving up at a much faster rate than the first player. If you are willing to give up a little bit of spending power now, you will have significantly more money later. Mastering the concept of delayed gratification will make life much more pleasant for you in the long run.
There are a few factors that determine how many big blinds you should keep in your cash game bankroll (win rate, variance, and risk of ruin percentage), but I will make this simple by just listing the relevant requirements for you:
If you win at 3 big blinds per 100 hands, you need 10,000 big blinds ($20,000 at $1/$2).
If you win at 5 big blinds per 100 hands, you need 8,000 big blinds ($16,000 at $1/$2).
If you win at 7 big blinds per 100 hands, you need 6,000 big blinds ($12,000 at $1/$2).
If you win at 10 big blinds per 100 hands, you need 4,000 big blinds ($8,000 at $1/$2).
If you win at 13 big blinds per 100 hands, you need 3,500 big blinds ($7,000 at $1/$2).
If you win at 16 big blinds per 100 hands, you need 3,000 big blinds ($6,000 at $1/$2).
If you win at 20 big blinds per 100 hands, you need 2,500 big blinds ($5,000 at $1/$2).
If you win at 25 big blinds per 100 hands, you need 2,000 big blinds ($4,000 at $1/$2).
If you do not have a positive win rate, no amount or method of “bankroll management” can make you profitable. If you play with a negative expectation, you will lose in the long run.
Playing with these numbers will give you a 3% chance to go broke. If you are playing professionally, you will probably want that number to be lower, meaning you need to keep an even larger bankroll. If you are not a professional and you have a job, you can keep a smaller bankroll with the idea that if you lose it, you can always add to it with money from your paycheck.
These bankroll requirements may sound large to the uninitiated, but there is no way around it, they are what is required. You must understand that you do not have to play in a game just because it exists. If you are not bankrolled for $1/$2, play a smaller game. If there are no smaller games in your area, play online or get a job (and a paycheck). I hate to make it sound so cut and dried, but it really is. I tell you the brutal truth because I want you to succeed.
In order to know how many big blinds you need in your bankroll, you need to know how many big blinds you win per 100 hands. This means that you need to keep track of your win rate. Every time you play, keep track of how much you buy in for and how much you leave the table with. Also keep track of any other drains to your bankroll, such as the rake, dealer tips, drink tips (these three are easy because they come directly out of your chip stack), extra food costs, transportation costs, etc. If you had to buy a computer to play online, that is a significant cost. Any money you spend to play poker counts against your bankroll. There are numerous phone apps that can keep track of your results, which makes things easy. If you do not have a cell phone or computer, you can use a notebook and a pencil. Once you have kept track of your results for about 20,000 hands you will have at least some idea of your win rate. As you play more, you will get a more accurate picture of this number.
When you move up or if your game gets tougher for some reason (increased rake, the worst player in your area quits, your opponents get better, new parking fees, etc.), your win rate will decrease. This should lead you to reevaluate your required bankroll.
You should also take note of how much variance you experience. Assuming equal win rates, if you play a loose, aggressive strategy, you will have larger swings than someone who plays a tight strategy. This should lead you to keep a larger bankroll. The above numbers assume you play normally, not too tight and not too loose.
When you sit down to play, you should have some predetermined strategy in place outlining when you plan to leave the table. While there is no magical system that will ensure you win most of the time, you do not want to open yourself up to having gigantic losing sessions when things conspire against you. For this reason, I suggest most small stakes players cap the amount they can lose during any individual session to three buy-ins, or 300 big blinds. If you play in a short stacked 20 big blind game, perhaps you should be fine with losing 120 big blinds. This stop loss is suggested because many small stakes players go on tilt after losing a few significant pots and can no longer think clearly. To further help ensure you don’t go off the deep end, don’t take money with you to the casino that you are not comfortable losing.
It is not suggested that you stop when you are winning, assuming the game is good. A poor thought process is “I won three buy-ins today and I am happy with that, so I am going to leave and lock up a win.” If your opponents are giving away money, you should sit there and collect their money for as long as you are playing well, assuming your goal is to make as much money as possible.
It is important to understand that cash games are actually one long session. The last hand of today is the first hand of tomorrow. Once you understand this, the thought of locking up a daily win will seem asinine.
When I used to play $5/$10 on a regular basis, if I lost $4,500, I would quit for the day, whether or not I thought the game was good or bad. Whether I was winning or losing, if my opponents all played especially well, I would play for about an hour to see if some bad players joined the table. If the table remained difficult to beat, I would quit. My goal was to make money, not to sit at a table and play poker. You make money when your opponents play poorly, so when they play well, you are not making money.
I would start my sessions at noon and quit at midnight, ensuring I never played when overly fatigued. The time of the day that I played was actually quite poor, because the average players gamble the hardest late at night/early in the morning. By playing from noon until midnight, I missed the most profitable hours of the day. However, my main goal was not growing my bankroll as fast as possible, but to live an enjoyable life. I did not enjoy staying up until 6am. I liked living “normal” hours. I was willing to give up some amount of equity in exchange for being happier. If growing my bankroll was the only thing that mattered, I would play from 8pm until the game breaks (usually at about 6am).
In my experience, at the high and middle stakes, I win in about 55% of my sessions and lose in the other 45%. However, my wins are usually about twice the size of my losses. This is likely a function of game selection and session length. Most of my small stakes students win about 65% of the time and lose 35% of the time, with their wins and losses being roughly the same amount. Poker tracking apps will keep track of this information for you.
Here is what a solid winning player’s cash game graph looks like over the long term:
This graph has the player winning $58,422 over the course of 67,962 hands (23 days) at mostly $3/$6 and $5/$10 online. Playing this many hands live at a casino will take you about 2,000 hours, which is about one year of play if you play 40 hours each week.
Notice this player essentially broke even for about 40,000 hands, which is over half of the time depicted on the graph. Could you continue playing your best if you broke even at live poker for six months? Most players cannot. Winning players have a higher win rate live compared to online, but even then, it is quite possible to go on significant breakeven streaks. This player was quite fortunate that the biggest downswing was only 20 buy-ins. Most players are not so lucky. As you can see though, if you have a positive win rate, you will continuously grow your bankroll over time from cash games.
Many small stakes players drive themselves crazy trying to figure out how much to buy in for when they take a seat at the table. If you are better than your opponents, you want to buy in for enough to have the inferior players covered, which will usually be the table maximum. Some players buy in shorter, but that is usually in attempt to compensate for being bad at deep-stacked poker, or due to nor being properly bankrolled. If you want to succeed in the long run, you should strive to play all stack sizes well, not only a short or medium stack.