If your a winning player, why would you ever move down limits???????

[john kane]

this is something ive wondered about. thought i post it.

I hear of players moving down limits after a downsing.

Why would you ever do that?

say your playing 5-10 limit, ring game. Bankroll required 300BB = $3,000


so you deposit $3,000

if you went down to $2,200 after a few sessions, why would you then move down limits?


some say you should move down to 4-8 or 3-6, BR required $2,400 or $1,800. but why??????

i remember reading an article by caro (i think) showing the maths behind requiring 300BB. Surely having a BR of $3,000 initially should mean you should always play 5-10L, as you should be able to cover the worst downswings in the long run (unless you arent a good player).

just something ive been wondering about.

replies would be much appreciated.

[jba]

after every hand it starts over. the issue here is risk or ruin -- what are the chances of losing your entire bankroll? The lower your bankroll goes, the higher your risk of going broke.

it all comes down to this formula:

bankroll = -(sigma^2/2winrate)ln(risk of ruin)

if you're winning $20/hr with $300/hr std dev and you want to keep a 5% risk of ruin you are looking at:

-[(300)^2/(2*20)]*ln(.05) = $6700

If you decrease the bankroll in this equation while your win rate and std deviation remain constant, your risk of ruin will rise. This means you are more likely to go broke. You can't be a winning player if you're broke.

[jb9]

1. You move down so you don't confirm that you aren't as good as you think you are by going completely broke.

2. Many people will no longer play their best poker after some significant losses which have left them underbankrolled for their limit. Moving down removes some pressure and allows them to relax and play good poker.

3. Theoretically, the lower levels will have softer competion, and winning at 3/6 is better than losing at 5/10.

[Zetack]

[ QUOTE ]
this is something ive wondered about. thought i post it.

I hear of players moving down limits after a downsing.

Why would you ever do that?

say your playing 5-10 limit, ring game. Bankroll required 300BB = $3,000


so you deposit $3,000

if you went down to $2,200 after a few sessions, why would you then move down limits?


some say you should move down to 4-8 or 3-6, BR required $2,400 or $1,800. but why??????

i remember reading an article by caro (i think) showing the maths behind requiring 300BB. Surely having a BR of $3,000 initially should mean you should always play 5-10L, as you should be able to cover the worst downswings in the long run (unless you arent a good player).

just something ive been wondering about.

replies would be much appreciated.

[/ QUOTE ]

I personally wouldn't move down at that point, but I would move down at 1800 dollars.

It has to do with your risk of ruin. There are some mathematical forumla's that you can plug your winrate into and your standard deviation into and get your risk of going broke playing with a certain bankroll. As I recall with somewhat typical numbers and a 300 BB bankroll your risk of going broke is somewhere in the 5-10% range.

But when you go down to 2200 dollars your risk of ruin doesn't stay the same, it increases. You aren't magically due an upswing at that point, you would simply plug in your numbers with your reduced bankroll and get a new risk of ruin.

At some point your risk of ruin with your diminishing bankroll becomes to high to be acceptable and you have to drop down in limits so that your bankroll is proportionately higher.

Think of it this way, just as every hand is independent of the one before (you aren't more likely to flop an ace or king when holding A-K just because you've missed flopping an A or a K the last ten times in a row you held A-K) so the effect of your winrate and standard deviation on your bankroll right now, are completely independent of whatever your bankroll was at some other point.

In other words, there is no difference on your future results between depositing 2200 into your bankroll to play or having your bankroll decline from say 5000 dollars to 2200 dollars. Your risk of ruin is exactly the same.

If you are under bankrolled for a game if you start with 2200 dollars in your roll, you are underbankrolled for the game if your roll declines to that amount.

As an aside, 300 BB is probably the minimum roll you need. The conventionaly wisdom around here seems to be moving to a much higher roll.

All of that is less important at micro's, of course, where you can easily reach into your pocket for a few hundred dollars if need be to replenish your roll.

--Zetack

[Justin A]

Because I just went through a 350 big bet downswing.

[john kane]

Thank you for the replies so far.

My problem with the concept of risk of ruin is this;

You want to keep your risk of ruin at a certain percentage with which you are happy with e.g 5%

And so as the equation goes, if the bankroll decreases, and you are playing at the same limit (hence standard deviation and win rate are constant), so the risk of ruin must therefore increase as it is a function of ln.

Suppose in the perfect poker world you are not constrained by defined limits (5-10, 15-30 etc), but after every hand you can effectively moves tables to the exact limit you want in accordance with your new bankroll to keep your risk of ruin at 5% (which is what you are effectively doing, but just rather after every hand after x number of hands). either that or you agree with the table that in advance you will be setting the limits after every hand.
for example, your bankroll is 3,000 and you are playing 5-10. after the first hand your bankroll is 2,990. you now set the table limits at 4.999-9.9999. this is therefore marginally reducing the win rate and standard deviation, in proportion to the bankroll, hence keeping the risk of ruin at a constant. Basically a perfect world of different limits.

Now if this perfect poker setting limit world existed, then you would therefore never lose you bankroll, you would always be playing within your means, even you went as low as 50 cents, you could still set the table limits as 0.08-0.16 cents, so your risk of ruin would still be 5%.

so when does 'ruin' occur?

i remember reading the caro article about this (which included the equation the poster above noted), and im sure im missing something very much needed to understand this.

i just fail to see how you will ever be totally ruined if you are always lowering the limits you play at.

what is the definition of 'ruin'?

once again, replies will be much appreciated

[Guthrie]

I believe the definition of "ruin" is that you lose your bankroll. If you have the ability to deposit more money from other funds, then your bankroll is actually higher and your risk of ruin more indefinite. If you just make one deposit and never intend to make another, then that is your bankroll. If you lose it, you are ruined, and can no longer play. By moving down in limits, you extend the length of time you can play before ruin, and hopefully, start rebuilding your roll.

[john kane]

I suppose im looking at this from the totally wrong angle and after thought have realised my error (which was assuming the risk of ruin principle allows for changing the limit, i just assumed they cant be fools out there who dont move down limits, then i thought, wait a minute, this is online poker, there are plenty of fools to which the risk of ruin principle applies).

I have basically explained (rather well if i do say myself), the reasoning for moving down limits, is that you will never be 'ruined'.

my querying of this is mainly due to my current situation. I feel i am a good enough player to move up to 2-4NL short handed, but dont quite have the bankroll (due to having to spend most of my winnings throughout the past year).
I have a bankroll of now about $4,000 and want to move up (and have recently, but thinking it really isnt a good idea just yet), and so am going to move back down to 1-2NL. ive been in a nice profit at 2-4NL just that taking a bad beat for $270 today made me realise if i hit a back run it would hurt, so im going to go back to 1-2NL until my roll is up to $6,000 so i can feel more than comfortable playing at 2-4NL.

Thanks again

[TimM]

Online poker is about 90% of my income now. There is no way I would want a risk of ruin as high as 5%, so I play with 500BB, and move down if needed. Twice I have even moved up and then right back down due to a short break-even streak at the new limit. I have bills to pay and savings goals to meet, so my bankroll starts to shrink if I only break even for a while.

Ruin would threaten to occur if I ever lost so much that I had to move down to a level where I couldn't make enough to pay my bills in full each month. Then debt would start to build up.

Even for a part-time player, he can't move down forever, because at some point playing is no longer worth his time.

For a recreational losing player, ruin is not such a big deal, because he is replenishing his bankroll in other ways. He can play whatever limit wants, as long as he can afford to fund the bankroll enough to last him the amount of time he wants.