Bankroll Management refers to the way in which a player manages their poker money. In many ways, a professional poker player is like a small business owner. Though small businesses may be able to carve out a comfortable niche in their market, all of that will be useless if they do not know to properly save cash for when the going gets rough.
Similarly, poker players need to have a comfortable reserve of money to deal with the harsh swings that take place in the poker game. This is especially true for Texas Hold’em Poker Tournaments, where the difference between a losing and profitable month can come down to a few coin flips. Tournament players need to know how to manage their money so that rainy days do not damage their professional lives.
As such, poker bankroll management is one of the most valuable skills in the game. This article will discuss some of the basics of bankroll management for Texas Hold’em tournament players, showing you how to manage money in a way that will keep your poker career alive and profitable.
When you first start playing Texas hold’em poker tournaments, it can feel like the opportunities to make money are limitless. A new player might see his $100 buy-in turn into $1000+ in his first few sessions. After spending every night watching WSOP videos on YouTube, a new tournament player may believe that he has found his ticket to riches.
Yet as time goes on, he will soon become acquainted with the brutal swings of Texas Hold’em poker. Even the best players watch their money go through devastating highs and lows. After a big win, it can feel like you are sitting on top of the world. However, a series of rough beats can cause you to question every element of your game. Learning to deal with these swings is one of the most fundamental elements of poker. And one of the best tools in accomplishing this feat is proper poker bankroll management.
Bankroll Management: Variance
Winning tournament players in Texas Hold’em have two key qualities: A winning Poker Strategy and an understanding of variance. One cannot work without the other. You can have the best strategy in the world and still experience severe swings in your bankroll. Learning how to stay sane throughout these ups and downs requires you to intuitively comprehend the concept of variance.
Variance refers to the wide variety of results that can occur over a small sample size. The easiest way to understand this is through an example. Suppose you are dealt AA, and your opponent is dealt KK. Since these are the two best starting hands in poker, both of you go all-in for $100. The board runs out Kh 7s 2c Qs 5c, and your opponent’s three-of-a-kind takes the $200 pot.
Was it a mistake for you to go all-in in this spot? Of course not! Even though you lost all of your money, you can still expect your AA to win in this situation around 82 percent of the time. You just got unlucky. And this is exactly how variance works. In the short run, variance will cause you to lose money in situations where you are a heavy favorite. And it will also cause you to win money in situations where you are a significant underdog. But in the long run, your results will converge towards their true win rate. You simply need to have the bankroll required to deal with bad variance.
How Much Variance Do Tournament Players Experience?
Poker bankroll management is especially important for tournament players, as this format results in some of the most extreme forms of variance. Texas Hold’em poker tournaments often come down to a few big hands. For example, the difference between hitting the money and going home empty frequently boils down to whether your QQ holds against AK in the early rounds. Additionally, since professional tournament players make their living on big wins that come rarely, they will often have to play many events in a row before they realize a profit.
So how much variance does a tournament player experience? This can be answered by using an online variance calculator. For example, suppose you play 200 tournaments with 10 players for a $10 buy-in, and the top 3 players earn 30 percent of each prize pool. Let’s also assume you have a 10 percent return on investment (i.e., you win $1 for every $10 buy-in on average).
According to a variance calculator, your expected value for these 200 tournaments is $210. However, you will also LOSE money over this sample 19 percent of the time. In other words, there is around a 1 in 5 chance that a winning player will not see a profit after playing 200 tournaments!
This is why poker bankroll management is essential. Though winning players will make a profit more often than not, variance will inevitably hit. It is one of the harshest Poker Rules. You need to use proper bankroll management to avoid going broke when the poker gods are not acting in your favor.
Proper Poker Bankroll Management
If poker is your primary source of income, you will want to use a conservative poker bankroll management strategy. A conservative strategy means that you should keep between 500 to 1000 buy-ins at the stakes in which you play. For example, if you play $10 multi-table tournaments, then a conservative strategy means you should keep a bankroll between $5,000 to $10,000.
While a conservative poker bankroll management strategy will feel the best, most players can get away with something less extreme. Indeed, the majority of serious players in Texas hold’em poker tournaments keep a bankroll of around 100 buy-ins. That means if you play tournaments with a $10 buy-in, your bankroll should be around $1000.
If you are someone who simply likes to play poker for fun, then an aggressive bankroll management strategy might be your cup of tea. An aggressive strategy would be to keep around 20 buy-ins of your primary stake. This approach lets you run up your bankroll quickly, but it will also drag your bankroll down hard when bad variance hits.
A solid poker bankroll management strategy can allow you to move up the stakes without the risk of going broke. For example, if you choose to use an aggressive approach, you may begin playing $10 buy-in tournaments with a bankroll of $200. If the next stake available is $20 tournaments, then you can move up whenever your bankroll reaches $400. If your bankroll drops down to $100, then you can move down to $5 tournaments, and so on and so forth.
The most important thing is to pick a strategy and stick to it. By doing so, you can reduce the impact of variance on your results and ensure that you never go broke.
One of the biggest benefits of solid poker bankroll management is the impact that it has on your mental game.
Mental game refers to how well you handle your thoughts and emotions while playing. It is no secret that poker can be extremely frustrating. When your opponent stacks you after hitting his one out on the river, it can undo all of the confidence you built in the hours before. Learning how to handle the unavoidable bad beats that occur in poker is one of the most important skills for winning players. And proper bankroll management is the easiest way to develop it.
For example, suppose you get your stack in pre-flop with AA, and you lose to 22. If you only have two more buy-ins in your bankroll, that loss is going to feel devastating. You will be thinking about it all night. And you will probably play either too aggressively to win your money back or too conservatively to avoid losing again.
However, if you have 99 more buy-ins your bankroll, you will be more likely to laugh off the bad beat and keep playing your strategy. This is solid mental game.
Every poker player gets sucked out on the river, goes card dead for hours, or gets his bluffs called down all night. How well you can handle this variance is what separates the winners from the losers. And it is much easier to tolerate variance when losing a buy-in only reduces your bankroll by 1/100th as opposed to 1/5th.
While Texas hold’em poker tournaments can be a solid way to earn money, working your way up the ranks without proper bankroll management is impossible. When a few coin flips can be the difference between a profitable and losing month, making sure that you do not go broke is vital.
If tournament players want to have a long career, they need to choose an appropriate bankroll management strategy and stick to it. By doing so, players can ensure that bad beats do not cost them their ability to play, thus maximizing their chances of winning money and climbing the ranks.
Bankroll Management – FAQs
Q: How do you make a bankroll in poker?
A: You have to earn money outside of poker, then play in soft games in order to build your bankroll. If you win consistently, you can move up in stakes. If that doesn’t work, you can move back down and start over.
Q: How many buy-in do I need for poker tournaments?
A: It depends on the tournament. I limit my buy-ins by buying-in late. Remember, minimizing risks is a key to staying in the game.
Q: What is a good poker bankroll?
A: That depends on your goals, but as a general rule, you should never risk more than 5% of your bankroll on one game or poker tournament.
Q: Are cash games harder than tournaments?
A: Absolutely not. Cash games are generally easier than tournaments, but a lot depends on the cash game and the tournament.