Bankroll Management

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The money a poker player uses to fund his playing activities is known as his bankroll. If your goal is to improve as a player and move gradually from low-stakes play to higher-stakes play, your bankroll needs to be viewed as your working capital, and be kept as a separate account from your day-to-day expenses. When you win, your bankroll grows. When you lose, the losses come from your bankroll and don't affect your ordinary standard of living.

Growing and nurturing a bankroll is a key skill for a cash game player, perhaps as important as knowing when to raise and fold. Handle your bankroll well, and you need never go broke. Handle it badly, and you can be out of action pretty quick.

Who Needs a Bankroll?
If you're a casual player for whom the occasional poker game or tournament is just a form of entertainment, like going to a good restaurant, and the stakes are modest or even trivial compared to your income, then you don't need to worry about a bankroll. Just continue to play at stakes you're comfortable, and you'll be fine.

Another time you don't need to worry about your bankroll, when you are playing for more serious money, is if you're a losing player. If you don't have the skills to win, your bankroll won't last. This is true no matter what sort of "money management techniques", such as limiting your losses, quitting when you win a certain amount, or always playing an extra hour if you're losing, you may employ.

If, however, the game is your main hobby, and you have become a serious player, and you want to someday play for stakes that will not be trivial compared to your net worth, then bankroll management becomes important. Let's lay out a plan.

Start Small.
Your first step should be to fund your bankroll with an amount of money you can afford to lose without impacting your day-to-day life. That might be a relatively small amount, but it's perfectly alright.

Let's say your starting bankroll is $100. We recommend that you divide that bankroll into 20 equal pieces. Each of those pieces represents a full buy-in for a cash game session. With your $100 bankroll, you can afford to buy into a game for $5, which means you're going to begin by playing 2¢-5¢ cash games (where $5 is 100 times the big blind of 5¢).

"What!" you scream. "I wouldn't play in those games! I'm way better than those guys. I want to take a crack at 25¢-50¢ games. It only costs $50 to buy into those games, so I've got enough for two buy-ins."

Calm down. If you're really good enough to play several levels above where you are, then you'll be there soon enough. While you may feel that you're good enough to move up right now, you don't have the money yet to play without a significant risk of ruin. So learn patience. It's a great virtue for a poker player in any event.

The reason we recommend "20 equal parts" is that it is a figure, based on the experience, which happens to work. Assuming you play well relative to the other players at the particular stakes, and you want an acceptable risk of going broke, often referred to as "risk of ruin", yet still want an acceptable win rate, this division by 20 is a good way to go. But if you're willing to assume a higher risk in exchange for a larger expected win rate, which means dividing your bankroll into a smaller number of equal parts and playing at higher stakes, that's a personal decision which only you can make.

Moving up and moving down.
Once you're playing at a given level, at what point have you won enough to move up? And when should you drop down if your results have been negative? Well, here are some guidelines you may want to follow.

  1. Move up when your bankroll is 50 percent larger in terms of full buy-ins (than what you started with) at the next higher stake.
  2. Move down when your bankroll has shrunk by half at your current stake.

Now before we move on, there are two important points to make. The first has to do with why you need more buy-ins at the higher level. In most cases, the answer is very simple. As you move up in limit, the players on average are better, meaning the games are tougher. The consequence of this is that losing streaks are more likely to occur, and they are also more likely to be more severe. 

But there is also another side to this coin. Be willing to take a shot. If you see a very good game at a higher limit, and you don't, by these guidelines, have enough buy-ins to play, we see nothing wrong in playing anyway. Just be aware that if you are losing and start to put your remaining bankroll in jeopardy, you'll need to move back down. In fact, you may even need to move to a lower game than where you were before you entered the higher limit game.

Now let's return to our hypothetical player starting with a bankroll of $100 who has divided it into 20 equal pieces and is playing the 2¢-5¢ games on line. If he follows our advice, his rules look approximately like this:

  1. He can move up to the 5¢-10¢ games (the next highest games on most sites) when his bankroll grows to $300. A full buy-in (100 big blinds) at 5¢-10¢ is $10, so at that point he'll have 30 full buy-ins.
  2. He has to move down to the 1¢-2¢ games when he has only 10 buy-ins at the 2¢-5¢ level, which requires $50.

So he moves down when his bankroll shrinks to $50, and he moves up when his bankroll grows to $300. Of course, if a good opportunity comes along he might take a shot, and if he is willing to assume more risk he might move up with less than $300 and keep playing at his current level even if his bankroll is a little less than $50.

The purpose of these guidelines is to keep you in action, playing consistently at levels you can beat, and only allowing you to move up when you've demonstrated, through a combination of skill and persistence, that you can soundly beat the level where you're playing (in which case you'll probably do fine at the next level as well). There's not an enormous difference between any one playing level and the next level up. So a player who can beat the 2¢-5¢ game well enough to move from $100 to $300 (representing an accumulated profit of 4,000 big blinds) should continue to win, although at a slower rate in the 5¢-10¢ games.

Remember too that it's no disgrace to move down a level. If you begin with a bankroll of $2,000, hop into the 50¢-$1 games, and lose half your stake, then don't feel ashamed to move down to the 25¢-50¢ games with the $1,000 you've got left. Moving down doesn't mean you failed, it just means you started with more money than skill (or ran exceptionally badly). Skill can be learned with some time and persistence. Using this approach, you can eventually find the level where you belong for the moment, then build from there.