Poker 101: What is Bankroll Management?

PokerWhether you’ve just started playing poker, online or live, or played for years understanding your bankroll and managing your bankroll is one of the most important things you can learn to do to ensure that you can play poker for years to come. It doesn’t matter if you’re playing professionally in a casino or at a private poker game – your bankroll is what determines whether or not you are able to play. Let’s start with what bankroll management is. Bankroll management is not only understanding exactly what your “poker” bankroll but know what it is at any given time. At any given time, if someone asked you what your poker bankroll is, you should be able to tell them to within a few dollars. Knowing exactly how much money you have to play with is important because it completely determines what stakes you can play.

If you don’t have a poker bankroll, do yourself a favor and make one. Even if you’re just a casual player who hits the occasional home game or charity casino night, delineating funds solely for gambling is a good idea. If you only play online, then it’s fairly easy. Your bankroll is the amount of money that you have online at any given time. You might have all of your money in one poker site, or you might have it spread across several sites, but you need to know what that total dollar amount is at any time.

Before we get into specifics around what your bankroll should be, let’s talk about whether you are okay with an aggressive Bankroll management style or if you would be better suited for a conservative bankroll management style. To determine which style is right for you, we need to first ask a few questions. Are you okay with having to “reload” and are you comfortable with “reloading” if you go broke? Are you playing for fun? Are you playing to make money? If you are okay with potentially going broke and having to re-invest more money to continue playing, then you might be okay with an aggressive bankroll management strategy. If you’re playing for fun, say at the annual casino night thrown by your work, and don’t really care what happens to your bankroll, you also might be okay with an aggressive bankroll management strategy. If you don’t want to have to “re-invest”, or you’re looking to slowly and steadily increasing your poker bankroll, you should lean towards a more conservative bankroll management strategy. I realize that based on the above, most people would wonder why anyone would want to use an aggressive bankroll management style. Well, you can play higher stakes with less money in your bankroll, and if you’re okay with the possibility of going broke, you can “potentially” make money faster using a more aggressive bankroll management strategy. You might have heard the notion of “Risk of Ruin”, and it’s an important part of your playing style and bankroll management alike. Risk of Ruin can actually be written as a formula:

Risk of Ruin = e-2 x WR x BR ÷ (SD x SD)

It’s not really all that important to completely understand the formula, but it is important to understand the concept. But, for those math junkies out there, in the above formula, e is a constant (2.718281828), WR stands for Win Rate (expressed in dollars per hour), BR is your current bankroll size, and SD stands for standard deviation (expressed in dollars per hour). What the heck is standard deviation? Well, there can be an entire article devoted to standard deviation, and there is a formula for determining standard deviation as well. I will save the Standard Deviation discussion for another day, but for this discussion let’s assume a 15%-20% standard deviation. There are several great articles on the internet about Risk of Ruin, and if you’d like to learn more, I’d highly recommend any of the articles devoted to it for further understanding of the formula. I don’t want to spend a whole lot of time on the formula, but I do want to spend some time talking about the notion of “Risk of Ruin”. The basic idea of Risk of Ruin is the possibility of going broke. In the above paragraph, I talked about whether or not having to “reinvest” was something you were opposed needing to do. The higher the value of RoR, the more likely you are to have to “reinvest”. RoR only really applies when you are locked into a “fixed” bankroll amount. So, RoR would apply to tournaments, SNG’s, and it could apply to cash games as well, if you are playing with a fixed Bankroll amount. This probably isn’t the case for the friendly cash game on Friday night’s because you can always reach into your pocket or go to the ATM machine to get more cash.

So, what does all of this mean, and why should you care? Well, the smaller the RoR value the less likely you are to go broke over time. So, if you want to maintain a BR and play within that BR it’s important to at least understand that the higher the RoR the more likely you are to go broke and have to “reinvest”.

Wow, okay, that was a lot of discussion around bankroll and bankroll management, and you’re probably beginning to ask when we’ll actually get to some numbers and limits to play within. Well, the good news is we’ve made it to that portion of the article. The below are some basic BR management guidelines. It’s also important to remember that just because you follow a BR management strategy, they aren’t perfect. I will give you an aggressive Bankroll management and conservative Bankroll management for each type of game.

Conservative BR Management:

9 man and 18 man SNGs: 40Buyins

27 man and 45 man SNGs: 80Buyins

MTTs: 200Buyins

Limit Cash: 500 Big Bets

No Limit Cash: 50Buyins

Aggressive BR Management:

9 man and 18 man SNGs: 20Buyins

27 man and 45 man SNGs: 40Buyins

MTTs: 100Buyins

Limit Cash: 250 Big Bets

No Limit Cash: 25Buyins

Now, let’s get into some real world examples. For the examples, I will use a conservative BR management approach. In our first example, let’s say that we’re playing primarily 9 man SNGs. I currently have a BR of $400. What buyin level should I be playing? Well, the above shows that I need to have 40 buyins to be able to play at a particular level with 9 man SNGs. $400(BR)/40(buyins) = $10 SNGs. Let’s try this same approach with 45 man SNGs. $400(BR)/80(buyins)=$5 SNGs.

I realize that this article could have been summarized in just a few words, and then I could have given you the answers you were looking for, but I felt that it was important to make sure you understand what the options meant and why they are important. You don’t want to play “scared” and you don’t want to become results oriented, and if your BR starts to get smaller, this is what will happen, and you won’t make optimum plays. Also, when looking at BR management, you need to remember, that it’s simply a guide. Am I saying you should never play out of your bankroll? No, I’m not saying you should never “take a shot”. What I am saying is that if you want to play poker for the long run, and you want to maintain a bankroll, and especially if you want to live off that bankroll, you need to completely understand BR management and adhere to it 99% of the time. The problem with “taking a shot” is that most people don’t just do it once in a blue moon. It starts to become a part of their daily game, and it’s a bankroll killer.

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