Limit Hold'em: Bankroll Management
Bankroll management is a very important part of a win-oriented player's repertoire in every kind of poker.
- The "bankroll" is the total amount of money you have available to play poker with, i.e. the amount you have in your account at PokerStars, for example. Obviously, irrespective of how large this amount may be, you are always on risk of going broke. In order to keep this risk as small as possible, you should manage your bankroll appropriately.
Inexperienced players, in particular, often have the urge to try and win as much money as possible as quickly as possible. They therefore play at tables with limits too high for their bankroll. This greatly increases the risk of losing all their money, of course. Regardless of how good a player is, poker is primarily a game of probabilities. Anyone can have a "bad run", i.e. a phase during which they lose a large part of their bankroll without actually making any mistakes.
In poker it is important to maintain a stable financial situation. This can only be achieved by sticking to a certain tactic and only playing limits your bankroll permits.
The 300 BB rule
Every player is subject to a certain variance, i.e. you may win a lot of money (upswing) or lose a lot of money (downswing) within a short period of time. This phenomenon is part of the game and can be explained using mathematics. Even if you play perfect poker, your opponents may simply have more luck during one or more sessions – they may permanently hit their draws (incomplete hands where one or several cards are missing in order to get a very strong five-card poker hand) and you lose several big bets to them. Due to this aspect of the game, the "300 BB rule" should be used when playing limit hold'em.
- The 300 BB rule says that you should always have at least 300 big bets for the next highest limit in order to play it. A big bet is the amount that can be bet on the turn and river. So in a $0.50/$1 game, the big bet is $1.
This rule is of course not obligatory, and it's really up to you which limit you play with your bankroll. However, we highly recommend you stick to this rule. There are too many examples of good players who have gone broke because of bad bankroll management. Thus, it makes sense to impose rules and to observe them.
A lot of professional players have a bankroll of 1,000 or more big bets, making it practically impossible for them to lose everything. If you make a living with poker it's important to minimize the risk of losing your entire bankroll. A professional player who is broke can't play and is therefore practically unemployed. But if you play poker for fun or to earn money on the side, you don't have to be that careful.
As a poker player you may have to deal with losses that financially force you to drop to a lower limit. It is not easy to cope with this drop from a psychological perspective, but it is often necessary in order to prevent you from losing your entire bankroll due to a downswing. This applies even if you are usually a "winning player".
As soon as your bankroll reaches 300 big bets of the limit precisely below your own limit, you should drop your limit and play at this lower limit until your bankroll has recovered to 300 big bets of the previous limit. So if you only have 300 big bets for the limit below, you should drop the limit. This is an essential part of the 300 BB rule!
Bankroll Management vs. Profit Maximization
As already mentioned, the rules for bankroll management can be adapted, for example, to your own personality, skills or expectations. This always raises the question of whether we should aim for maximum profit or maximum financial security at a certain period of time.
Priority objective should be keeping the probability of losing the bankroll as small as possible. Even after a downswing, your bankroll should be sufficient for the current limit.
Professionals who play poker for a living are as already mentioned forced to maintain their bankroll. If they lose it, they have no "working capital" and are sometimes even forced to quit their career as a poker player. A small piece of advice at this point: Please don't make the mistake of borrowing money. This increases the pressure on you to win, which generally makes it more difficult to play solid poker.
The probability of going broke depends on four factors:
- The number of big bets available for the desired limit
- Your willingness to drop the limit if things aren't going well
- The winning rate, i.e. average profit
- The standard deviation, i.e. whether you are constantly winning or whether your game is subject to large fluctuations.
In poker, maintaining your bankroll is opposed to maximising your profit. It is therefore possible to achieve the maximum profit at a lower limit, even if your bankroll allows you to play a higher limit.
In order to maximize profit, it can be a good strategy to increase limits quickly and play a limit with relatively few big bets. However, this also increases the probability of losing your bankroll considerably! It also violates the sustainability principle, which we will introduce beneath.
No one is forced to move up a limit immediately. We recommend that you stay at the limit with which you feel most comfortable. Success is not purely measured by the amount of money, but rather on the number of big blinds you win at the current limit. The most important thing is to have fun playing and to feel comfortable with the current limit!
In terms of a professional approach to poker it is extremely important that you are sure that you can beat your current limit for a long period of time before moving up to the next one. This means winning at least 300 BBs at the respective limit.