Poker Bankroll Management

Even though online poker is a very profitable business and you easily make $30,000+ per year by playing in the low stakes $1/$2 games, you still have to be cautious of variance. At any time when you’re playing you can start to suffer huge downswings and get caught out by suck-outs on the river or turn for example. It’s happened to me tons of times before when you get shove all-in against some fish on the turn, make the call, and then it turns out that his 4-outer managed to win him a $100 pot.

The important thing to remember about poker is that luck plays a huge part in your game. Even by applying proven advanced poker strategy and methods to your game, you cannot expect everything to always go your way; you are guaranteed to hit a few bumps and bruises along the path. Tom Dwan for example is one of the most entertaining and exciting prospect of online poker in our generation. At 22 years old, he’s regularly playing the $500/$1,000 nosebleed PLO stakes and is a member of the Full Tilt Poker Pro team. However in September 2010, Dwan suffered a huge downswing worth $750,000, and this would have been even worse if it were not for his amazing $1.5 million win on the last Sunday of that month playing against Power Poker front man Ilari “Ziigmund” Saharies.

This isn’t the first time that Dwan has suffered such a bad beat, and most professional poker players will run into downswings worth up to 40% of their total online poker bankroll at some point in their life. That’s why it’s very important to apply poker bankroll management to your game.

Rules of Poker Bankroll Management

Poker bankroll management involves picking the right levels of games to play and limiting the amount of your bankroll that you risk at any one time. This helps protect you from variance and reduce the risks of “luck” eating away at your bankroll.

In cash games, you should not play with more than 5% of your total bankroll in any one game. This means that if you want to play $1/$2 no limit holdem ring games, with a standard 100xbb buy-in of $200, than you’ll need a total bankroll of at least $4,000 (200 x 20).

Because MTTs are a lot more difficult than cash games to get a pay out in, it’s recommend that you don’t play MTTs with a buy-in worth more than 1% of your bankroll. The reason that this figure is so low is because MTTs have a lot of variance. You will have to beat hundreds of entrants to get into the bubble spots (in the PokerStars Sunday Million there are 7,000 entrants on average) and you only have one stack to do this with. You’ll have to come out favourite on lots of coin flip moments during MTTs and even get a bit lucky in order to have any chance of breaching the final table. Hence, you need to be able to cover lots of MTT volume to make sure that going long stretched without a cashout won’t damage your bankroll too badly. Even Chris Moorman, the UK’s top online MTT player in 2008, went 20 MTTs in a row online without cashing out at one point.

For SNGS, because they contain smaller fields than MTTs, you can afford to play SNGs with a buy-in worth around 2% - 5% of your bankroll (i.e. you need a bankroll to cover at least 20 – 50 buy-ins). Remember that as the buy-in level increases beyond the low stakes $20 buy-ins, the games will become tougher and there will be slightly more variance.