The most important skill in poker is not hand-reading, it’s not being able to calculate outs and pot-odds, and it’s not having nerves of steel when on a big bluff.
It’s bankroll management.
As a poker player, your bankroll is your lifeblood. Without the proper money management skills, the best players in the world would go broke. Despite this simple truth, many people don’t realize bankroll management is just as important a “skill” as anything else. You might be the second coming of Phil Ivey but all the poker skills in the world don’t mean anything if you’re playing at stakes that your bankroll cannot support.
Even if you’re a purely recreational player, bankroll management should have an important place in your game, unless you actually like having to constantly reload. And for a player who wants to move up in limits and maybe actually use his poker skills as a source of income, proper bankroll management is critical to your success.
What is bankroll management?
Bankroll Management is a series of guidelines designed to help safeguard a bankroll from tilt, variance, and bad play. In ring games, coin flips can occur where we have only a slight edge in a hand when all the money goes in. Occasionally we will lose these flips and need to have a large enough bankroll to support these losses so that we can continue to get our money in with small edges as well as big ones.
Why is bankroll management important?
The reason why you should choose your limits carefully in poker is due to the variance. Variance is a term used to describe the "ups and downs" of poker where you fluctuate from having bad runs of cards to good runs of cards, resulting in varying profits and losses.
If you play poker for long enough there are going to be periods of time where you will consistently lose money, not because you are playing badly, but because the cards are not falling your way. This means that if you do not have enough money in your bankroll to absorb these big downswings, it is likely that you will lose it all.
Every player, irrespective of ability, will experience variance in their game. Bankroll management is in place to deal with this variance and allow you to continue playing without going broke.
Therefore every time we sit down at the poker table, whether it is live or online, we want to give ourselves the best opportunity to win a maximum amount of profit while keeping the risk of going broke minimal. This is where the rules of bankroll management come into play.
There’s also a psychological benefit to having a properly sized bankroll. When you’re playing too high for your bankroll – for example, with only 3 or 4 buy-ins available – you will tend to play scared and not push small edges when the opportunity presents itself. Edges a good, aggressive player would not normally let slip by.
First, a poker bankroll should be money you can afford to lose. Obviously, you shouldn’t be playing poker with money you need to pay the rent, hospital bills or child support. If you are, going broke at the poker table will probably be the least of your worries.
Second, let your bankroll dictate what limit you’ll be playing. Basic guidelines suggest:
20 buy-ins for NL Hold'em.
300 big blinds for Limit Hold'em.
40 buyins for SnG Tournaments.
If you’re a limit multi-tabler, adjust so you have 300 BB for the average number of tables you play. NL multi-tablers should probably have at least 30 buy-ins.
If you drop under ½ of your bankroll you’ll be endangering one of two things: your ability to keep playing solid aggressive poker as you naturally become more protective of your money, or your ability to play poker at all if you continue to play an aggressive game and your bad run doesn’t end. It’s for this reason we suggest an even bigger cushion for most players – you want to make sure normal downswings won’t affect your ability to play your regular game.
Third, don’t be too proud to move down in limits if your bankroll’s in bad shape. If you’ve lost 1/3 of your bankroll you need to be absolutely certain that your next session is at a limit your bankroll can support. Otherwise you’re leaving your ability to play poker to chance. One of the benefits of poker, as compared to other forms of gambling, is that you can minimize the effects of chance over the long run through the application of skill – so why sacrifice that advantage voluntarily? Chances are you can beat the next level down relatively easily, so take the step down for a bit and rebuild your bankroll.
Last, watch out for leaks. Leaks are using your poker bankroll for anything else but poker: a nice dinner out, paying off a big credit card bill, and especially other gambling. We all know that really good poker player who always seems to be broke – why is that? Oh yeah, he’s always off in the pit playing blackjack or craps or betting the horses. Don’t be that guy. If you actually want to increase your bankroll and move up in stakes, you cannot be using your bankroll on anything but poker. There’s nothing wrong with taking money out for a small reward for yourself from time to time, and if you do, you should probably have a lot more than the suggested bankroll limits.
Managing your bankroll really boils down to discipline. There are many players who could play higher limits than they do if they were simply to place a few limits on themselves. If moving up is a goal of yours, you should take careful stock of how you treat your bankroll. Managing it wisely is the best insurance a poker player can have.
For more information, go to this great web tool for calculating the proper limits for the size of your bankroll.