How do you manage your bankroll?

[BarronVangorToth]

Andy has a good point here.... Playing for a living and playing as a side venture are two entirely different things.

For example, I can sit down at the Foxwoods 20/40 anytime I want (read: when the game is insanely weak) -- even though I don't have $12,000 specifically set aside in my pocket to play poker.

Nor do I have a bank account somewhere labeled "poker" with $12,000 in it.

I have money and can play whatever game I want up to a certain level if the situation arises, especially since I know I've made X dollars this year so even if I take a stab at a higher game, even a $75/$150, it won't mean too much to my overall winnings for the year.

This is yet another terrific example where accurate record keeping comes in handy -- especially when my poker winnings invariably get spent on DVDs, groceries, sporting events, vacations, or giving my parents extra cash if they are short when I visit them.

The way I see it, there are at least three very different scenarios:

Person with finite funds that has limited poker budget. Let's say you're in college and scrounging for extra dollars like most of us were at University. Well, you got $200 set aside for poker. I would NOT recommend that this person plays $5/$10 ... however, going back to me, I've been out with friends and I've sat down at $10/$20 with $200 in my pocket because I know if something goes horribly wrong, the ATM is just 100 feet away. This isn't an option for some. For those that it isn't an option for ... I think 200-300 BB isn't unreasonable to have to play at X level, and gradually work your way up.

Situation 2 is my own ... talked about it enough. Many of us are in it, where we play poker for extra spending money and we have real work where we make our real money.

Situation 3 is the poker professional, playing for a majority of his income, where he needs to win X dollars just to pay his monthly expenses ... these guys need to manage their bankroll even more than most, because if I go a month and only win $100 -- Oh, well, I made $100 and it's my hobby, and as I believe good ol' Dr. Al has said, a lot of hobbies cost money, and if mine made me $100, good for me.

However, the poker pro who requires $3,000 per month just for his expenses ... him making $100 in the month is in essence losing $2900 ... which comes out of the bankroll.

All different scenarios; all require different mindsets.


Barron Vangor Toth
www.BarronVangorToth.com

[fnord_too]

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I would use a 300BB bankroll and move down at a minimum when your bankroll drops to 200BB.

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Maybe someone can clear something up for me. I thought the whole point of 300BB is so that you can absorb any swings *without* moving down in limits if you know you are a winning player. If you are disciplined enough to move down in limits after losing 100BB, shouldn't you be able to get by with less?

One problem I see is if you are new to a limit, you don't know your win rate. If you don't know your win rate, you can't really calculate what bankroll you need. You can't play at a new limit until you know you are properly bankrolled. Sort of a chicken/egg problem.

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I don't know if this will clear it up, but here is how I look at it. If you have a risk of ruin (RoR) of 1% with a 300BB BR and 10% with a 150BB BR, when you hit 150BB you have a 10% RoR regardless of where you started. (You can look at this and say "well duh" or you could show it using Bayes Theorem).

Now (I'm winging it here) lets calculate the risk of dropping 150BB given the above assumptions (1% RoR for 300BB, 10% for 150BB, the latter number pulled completely out of my nether regions).

Call the Probability of loosing 150BB P(H), call the probability of losing 300 BB P(F) (the H is for half, and F is for full).

So, given P(F) = .01, and P(F|H) = .10, what is P(H)?

By Bayes Theorem P(F|H) = [P(H|F)*P(F)]/P(H), P(H|F) = 1, since you have to lose half of your bankroll to lose all of it.

So, .10 = .01/P(H) ==> P(H) = .10, which makes sense.

So, you have a 10% probability of losing half your bankroll, and if you do lose half you bankroll you have a 10% probabiliyt of going bust if you stay at the same limit.

If you drop back at 150BB, and your win rate, SD is the same at the lower limit (half of the limit you are playing at), you now again have a 10% chance of losing half your BR and a 10% chance of going bust if you continue at that level.

So, say you are playing 4/8 with 300BB, and there are 2/4 and 1/2 games available to you, and you have the same bb/100 and sd in all of these. If your strategy is to play only 4/8 and you hit 150BB, you have a 10% chance of going bust (still 1% overall).

If instead your strategy is to drop back to 2/4 if you hit 150BB, then drop back again to 1/2 if you hit 150BB at the new level, you RoR is now .0001, or .01%.

This is because you only go bust if you bust out at the 1/2 level (.01), which you will only get to if you drop 150BB at the 2/4 level (.1), which you only get to if you drop 150BB at the 4/8 level (.1). So, we get a RoR of .1*.1*.01 = .0001.

If you have a RoR model, and win rate / standard deviation for each level, you can calculate your exact RoR given whatever strategy you employ.

Note, these are really worst case calculations, since in most cases you will never drop to 150BB if your RoR with 300BB is sufficiently low.

Also note that if dropping back is not a real option (i.e. you depend on the income you make from poker, and income from a lower limit will not suffice), you can also reduce risk by increasing bank roll.

Final note, I have never done RoR calculations, I just know (I think) how to play with the probabilities that come out of them.

Hope this helps.

[sammy_g]

Thanks. It looks like you've shown mathematically what is actually somewhat intuitive once you think about it.

- If you start with a large bankroll (300BB), your risk of ruin is small.

- If you are unlucky and lose half of your bankroll, your risk of ruin greatly increases. Still, if you keep playing you will usually be able to turn it around.

- If you're willing to drop down in limits each time you lose a certain amount, your risk of ruin is tiny -- almost nonexistent.

Of course, this assumes you are a winning player at the limits you play. One practical argument for dropping down is that if you lose 150BB there's only a 10% chance you were just unlucky and a 90% chance that you are not really a winning player at that limit.

By the way, I haven't bought Gambling Theory and Other Topics yet, although I plan to. What win rate and standard deviation was used to come up with the magic 300BB number?

[jason1990]

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What win rate and standard deviation was used to come up with the magic 300BB number?

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This is a good question which, hopefully, someone else will have the answer to. (I do not.) However, I do know this: a reasonable formula which relates RoR (p), winrate (u) in BB/100, SD (s) in BB/100, and starting bankroll (b) in BB is

-[s^2/(2u)]*log p = b.

(Here "log" is the natural logarithm.) So we see that there is an infinite number of ordered triples (s,u,p) which can produce the value b = 300. For example, if you want to have a RoR of 1% (p = .01) and a starting bankroll of b = 300, then your winrate and SD should satisfy

s^2/(2u) = -b/(log p) = 65.14.

If your winrate is u = 3, then your SD should not be larger than s = sqrt(6*65.14) = 19.8. But if your winrate is u = 2, then your SD should not be larger than s = sqrt(4*65.14) = 16.1. Or, if your SD is s = 18, then the you need a winrate of at least u = 18^2/(2*65.14) = 2.5. But with a SD of s = 15, you only need a winrate of u = 15^2/(2*65.14) = 1.7.

This is all just an approximation and probably only interesting on a theoretical level, but hopefully it will give you something to play with.

[LetsRock]

In theory, there should not be a problem with dropping half of your bankroll. That's why it's so big to begin with, to allow for brutal swings. The 300x factor haas been determined to be enough to handle the worst of possible swings.

This, of course, is assuming that you are making few mistakes and your losses are truly due to bad luck.

But, if you are uncomfortable that the size of your BR is not enough for the stake you're playing, then you should move down to a level that is comfortable for you. IF ouy're not comofrtable, you're likely to make more mistakes playing with your "scared" money.

[GuyOnTilt]

Hey guys,

Apparently I manage my bankroll different from everybody else. I like keeping a bigger bankroll than most, but I guess I've never really told anybody why. Soooooo, now I will: so I don't ever have to step down in limits. Personally, I'm not concerned AT ALL with losing my bankroll. I really think it's pretty much mathematically impossible for that to happen. But if I wanted to plug my numbers into a RoR forumla, here's how I'd do it:

Right now I'm playing 15/30 online and I have around 1000 big bets dedicated to my poker bankroll. If that number ever drops down to 400 (-600 BB's), I will step down to 10/20. That would give me 600 BB's for 10/20, where I would play until my br dropped to 300 BB's (-300 BB's). If that happened, I'd drop to 5/10 with 600 BB's and play till my br dropped to 300 BB's (-300 BB's). That would give me 500 BB's for 3/6. That process would go on, but I'll just stop there. I'd have to have a 1200 BB downswing to drop to 3/6, and I'd still have 500 BB's for that level if that ever did happen. So basically, me going broke ain't gonna happen. So I don't really care to figuring out my RoR or even worrying about it one bit.

What I do worry about though is having to drop down in limits. I just don't want that to happen. So like I said, I'd drop down if I ever only had 400 BB's for my current level. That would mean a 600 BB downswing (I maintain a 1000 BB br for poker). So since that's not an option for me, I plug that number into the RoR formula to see my risk of having to drop down in limits. If I went by the rule of thumb of 300 BB's, I'd have a pretty decent chance of having to drop down, but since I form my idea of a suitable bankroll around what will allow me to virtually never step down in limits, I don't. And if by some chance I did go through a 600 BB downswing (my wost to date is half of that), I have other money that I'd be able to supplement my br with so that I wouldn't have to anyway.

But yeah, so that's my view on the subject of bankroll management. I always encourage everybody I know to keep a larger bankroll than most do for those reasons, unless it's in their best interest to take a shot at a higher limit, and then I tell them never before 300 BB's. I consider a 300 BB bankroll to be taking a shot.

GoT

[daryn]

i've been doing this my 2nd time around too. i have $23,000 still playing 5/10. talk about conservative!

[Scotty O]

I do the same thing. I will play 5/10 and maybe 10/20 at foxwoods and dont have a specific bankroll for this. However, when it comes to online, I play within my Bankroll. I made 1 deposit and hope never to do it again.

I use the 300 BB for limit games and 30 buyin rule for the PL and NL games. I use 30 because it is a personal choice.

Good luck
Scotty O

[alittle]

With a rubber band.

[kiddo]

I not really understand how you can trust Party Poker with $30K? Why not put 1/2 of it on a bank account? With only 3% interest it will give you $900/year, and its easy to put it back if you should need it.