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Poker News | PokerWorks Op-Ed

Grinding Online - Bankroll Management

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As I mentioned in the first article in this series, Grinding Online, my first foray into online poker ended badly due to my lack of understanding of bankroll management. I was playing far above the limits that my money warranted, and despite some early success, a bad run of cards, coupled with the sloppy play that often follows such a run, saw my account plummet to zero.

It seems to me that there are two ways to approach poker. The first is strictly as a source of entertainment, where losing money is simply the equivalent of a night out at a ballgame or a nice dinner. As long as you can afford the money you are dropping at the tables, it really doesn’t matter to you if you win or lose. Many people approach Las Vegas in this way, thinking of their gambling losses as simply an entertainment tax.

The second way to look at poker is as a small business venture that you might like to keep small or build into a much larger business. One of the first pieces of advice people are given when they start a business is, “Don’t give up your day job.” Just as in any venture, the road to success is not a smooth, consistent climb. As a result, it is essential to make certain that your needs are being met from other sources of income, and that your poker bankroll is completely separate from your other assets. If you can pass the test of not needing poker winnings to pay the bills, your play will inevitably be more successful, since “scared” money rarely wins.

The next step is to give yourself some start-up capital for your business. Unlike other ventures, the great thing about online poker is that your only expenses are your computer, your Internet connection and the rake that is charged on the site. Every other penny can be invested at the tables. I believe it is essential that you set up a separate account for yourself, whether in a bank or elsewhere, which is only for your poker business. Keep this money isolated from your other accounts, so that it is easy to keep track of how you are doing. As with any business, you should also keep a spreadsheet to track your wins and losses. Many highly successful players write in a journal after every session that they play. They take notes on other players, and track the financial results of the session. I would suggest that you at least update your results weekly, and keep close control over any disturbing trends that might be occurring.

Once you have determined what your seed capital, or initial bankroll, will be, you can use that figure to determine the stakes at which you will play.

Let me give you an example: At one point, my bankroll sat at $1,200 (as I had started with just $50, this was a pretty good return on my investment). I proceeded to lose complete buy-ins in consecutive sessions of no limit holdem, when each time my opponent caught a two-outer on the river. If you have played poker for any length of time, you know that these things happen, and quite often happen more than once in a short period of time. This is called variance, and this aspect of poker gives it its inherent risk.

What you should be asking right about now is “How much were those complete buy-ins?” In online no limit holdem, a complete buy-in is 100 times the big blind at the table. If I had been playing $3-$6 blinds, those two full buy-ins would have been my entire stack, and I would have been broke. I’ve seen countless players play their bankrolls in just this way (remember, I did it also the first time I played online!) and walk away bemoaning their luck or cursing the site, forgetting all the two-outers that they won with, and avowing never to play again, saying that, “Online poker is rigged!”

The true problem with this outcome is that it is almost 100% inevitable if you are playing over the limits that your bankroll warrants. At some point, those bad beats WILL come and you WILL be broke. However, through proper management of your business capital, the monster that is variance can simply become an annoying mosquito that can bother you, but not do any real damage.

In the example I mentioned above, I was actually playing a blind level that my bankroll fully supports, .25-.50 no limit holdem, with a maximum buy-in of $50. Hence, those two “horrible” beats cost me $100, a little over 8% of my bankroll. I was certainly not happy about the bad beats, but it was much easier to laugh them off knowing how little of my stack was actually lost.

So what levels should you play in relation to your bankroll? In his books, Harrington on Cash Games, Dan Harrington suggests that, for no limit play, you divide your bankroll into 20 equal parts, and play at a limit that will allow you to make a complete buy-in with each of the parts. So, if you had $2,000, you would start off at the .50-$1 level, with each buy-in being $100. I would add that if you are playing limit games, you could also use the 1/20th figure for your buy-ins.

Harrington further instructs you only to go up in limits when your new bankroll will support 50% more buy-ins at the next limit, since the quality of play will go up and the game will be more difficult to beat. Therefore, in the current example, you would only move up to 1-2 play, with buy-ins of $200, when your bankroll reached $6,000, allowing you 30 buy-ins at that level. This will allow you to make any adjustments in your play before your stake becomes dangerously low.

On the other end of the spectrum, Harrington also advises you to drop down a level once you have lost 50% of your stake. His suggestions are actually less conservative than others I have come across, but I believe they make good sense.

As I’ve mentioned before, one of the nice things about online play is the opportunity to also play tournaments that don’t put any of your bankroll at risk, i.e. the freerolls. My suggestion is to be very aware of the amount of money you stand to win in relation to the time it will take to make it. Unless you are trying to duplicate Chris Ferguson’s $0-$10,000 feat, spending 4-5 hours to win $2 just doesn’t make a lot of sense, other than just for some free practice. On the other hand, using frequent player points to try and satellite into major events, such as the Poker Stars Sunday Million or the WCOOP, or taking advantage of a freeroll that could land you in the Main Event of the World Series of Poker seem to me to be well worth the time and energy.

In building your poker business, it is very important to understand what your company’s strengths are, i.e. which games are you best at. While you might want to eventually become proficient at a wide variety of games to take advantage of any potentially profitable situation, you should keep a close eye on which types of settings are the most profitable ones for you, and perhaps even more importantly, which ones are causing a drain on your account. For example, I’ve seen that the vast majority of my winnings have thus far come from no limit turbo tournaments of anywhere from a single table to 180 players. I seem to be just patient enough to outwait the maniacs, and just aggressive enough to bully the rocks.

On the other hand, I’ve learned from past experience that, at least right now, my Omaha ring game play leads to consistent losses. I’ve been working at improving that aspect of my game by playing HORSE, but I’m not spending a lot of time and resources in an area that is such an uphill battle.

Finally, it is important to decide when to reach into your growing bankroll and take out some money either to invest in other areas, or simply treat yourself or a loved one to something special. If you never use the money for anything, especially for something fun, I believe there is a part of you that will start to sabotage your play, and take your business in a downward spiral.

In my first, ill-fated run of online poker, I never let myself withdraw any of the money, and subsequently lost it all. Since those days, I have actually deliberately taken some of my winnings off the table when I was playing badly, forcing myself to go back to lower stakes and focus on what had been making me successful. I’ve done this, and each time made back the money I had withdrawn within a week!

I hear some of you out there grumbling, “Hey! I thought this was supposed to be gambling!”

In my mind, starting ANY business is gambling, especially when you consider that over 90% of all small businesses fail. But the ones that succeed have a plan, and the owners work that plan to maximize the potential for winning. Poker, in my mind, is no different. The more variables that you can and do control, the more likely it is that your poker business will grow for many years and eventually be a source of both pleasure and profit.

See you at the tables!

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