Managing Your Bankroll - A Lesson In Money Management
One of the most overlooked strategies in poker is money management. Unfortunately this leaves many players to figure it out for themselves which can often lead to disastrous results and can eventually consume your entire bankroll. From how much money you should have to adequately play at certain limits to knowing when to cash out are crucial factors that you must establish before spending a dime. While no two players are alike, financially and style of play, this article will show you the guidelines to follow in order to establish a money management system that's right for you.
What Stakes Should I Play?
A general rule of thumb says your bankroll should be 300 times the big blind. Therefore if you want to play in the $0.25/$0.50 NL tables your bankroll should be $150. Similarly if you want to play the $5/$10 NL your bankroll should be $3,000. Of course this is a very general rule, and the exact amount depends on several factors:
Tight vs. Aggressive
A tight player who only plays premium hands does not need to play with such a large bankroll and will be able to play comfortably with just 200 big blinds.
The more aggressive player who raises pre-flop with suited connectors or bets out on draws may need more than 300 big blinds to sustain the swings associated with this style of play.
Low Buy-In vs. High Buy-In
A $0.25/$0.50 buy-in game will naturally be much more aggressive than a $5/$10. Not only will you see more flops but you will also have more players calling to the flop which will invariably lead to larger swings and bad beats. Keep this in mind when determining the appropriate size of your bankroll.
Type of Game
The 300 times the big blind rule is commonly associated with NLH, but if you are playing Seven Card Stud which has 5 rounds of betting you will need more than 300 BB. If you're playing 5 card draw which only has 2 rounds of betting you will need a significantly lower bankroll.
If you buy-in for the minimum $80 in a $2/$4, the average chip stack is approximately $400 making your $80 stack a prime target for other players to pick away at slowly as you inevitably fold to any substantial raise. Playing with scared money restricts you to play premium hands only and eventually you are bound to come hit a bad beat and lose your entire stack on one hand.
Regardless of how good you may think you are, if you can't afford playing at the higher limit games you should focus on building your bankroll until you can comfortably afford to play at least 300 big blinds.
Don't Put All Your Chips In One Basket
If you have $1,000 in your online poker account you should only play a maximum of 20% at a time. You never know when you may get tangled up in a full house vs. quads situation and push all your chips in the middle. An all-in should never be for your entire bank roll. You may not win as much, but the lost winning percentage will always outweigh a potential loss of your entire bank roll.
Why Are You Playing Poker?
The poker player who plays as a hobby does not depend on poker winnings to live as he has another source of income and can therefore the standard guidelines outlined above will suit the average player just fine.
If you plan on playing poker for a living however you need to take into account your living expenses. This stresses the importance of never playing your entire bankroll in one game. Additionally you will need to make more frequent cash outs instead of riding out your poker winnings. Create a budget of your monthly expenses and cash out this amount as soon as you have it.
Outside The Poker Table
Because you will never be playing your entire bankroll at a time doesn't mean you should keep it in a sock drawer. Re-invest some of your money in low risk investments, or even in a high interest savings account. Just because you're not working at the table it doesn't mean your money shouldn't be working for you.
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