Bankroll management encompasses three principles. First, protecting the corpus from erosion. Second, protecting against reversals after an advance. And third, achieving unrestrained growth.
Think of the concept this way. Losing is bad. Losing back your winnings is bad. But winning, and hanging on to winnings is good. This is the essence (and goal) of bankroll management.
Sound like stock market investing? You are right. Except that professional investors use seriously more sophisticated bankroll protection strategies than we will be considering.
Lots of poker players discount the notions of bankroll and money management. They subscribe to the theory that poker is a never ending game (as if the stock market is not) subject only to statistical certainty. Thus, you are just as likely as not, to win the next hand. If your skill is such that you would normally win; then you should keep playing, even if you are going broke.
Logically, I suppose their theory holds a little water, and my illustration was a bit oversimplified. Nevertheless, whether the game was Blackjack, Poker or Sit n Go Tournaments, bankroll management has always been an integral part of my winning play.
Many poker players also take issue with the money management systems that seek to overcome the ‘house edge’. No argument there. So, let’s move on. Here are two points upon which we can all agree. First, even in poker there is at least one edge against us, the poker room rake. And second, sometimes we can be our own worst enemy (edge).
Take for example, Stu Ungar, three time WSOP World Champion. During his short life, Stu won over $30 million. Indeed, he is the greatest No Limit player ever. But, Stu died with only $900. He was just one more among many of the world’s worst gamblers. Stu was his on worst enemy.
These five tips are broad, but they will accomplish our goal of protecting ourselves (bankroll) from ourselves, and from our other adversaries.
1) Do not quit while you are winning. (Regardless of the game.) Solid winning streaks are so infrequent, you should never quit one. Ever. This tip speaks to our desire for unrestrained growth.
2) Play within your skill level. Let your skill (and bankroll size) prescribe the Sit n Go buy-in level. This tip is based upon common sense, not rocket science.
3) Play at a meaningful money level. This means that the buy-in amount should be comfortable, as well as challenging. Not so low that a loss is ignored. Nor so high that you are sweating the entire game.
OK, the advice so far is pretty basic and generally available. Now, for some specifics:
4) Quit a losing streak quickly. I define a losing streak very narrowly. For me, that means quitting if I lose three out of four Sit n Go tourneys. Or, lose two in a row following a win. Or, three in a row without a win. Simply, I am willing to cede that something is wrong with my play. And, that I am probably too fatigued or distracted at that point to make any needed corrections. In the world of investing, this tactic is similar to placing a ’stop-loss’ limit.
5) Move up or down as your bankroll prescribes. If you are losing, move down in buy-in level. If you are winning, move up. Use good judgment based on benchmarks and ratios; and, try to take the action quickly, up or down. If you wait too long, you lose. This tip could be applied over the course of a session, and on a day-by-day basis. You can accomplish this tip by adopting a bankroll-to-buy-in ratio.
So, what does all this mean? If you are a relatively skillful player, you could start with a $100 deposit. Begin playing at the $5 buy-in level (20-to-1 ratio). Suffer a learning curve setback. Perhaps move down, but never have to make another deposit.
If you are a newbie, you have many months of learning ahead. Start at the micro-levels with a 100-to-1 ratio deposit, and work your way up carefully.
R. Steve McCollum is a long time Holdem player. You may read many more tips on his poker blog at http://www.SitnGoHoldemPoker.com
