I got this question in e-mail and want to address it.
“I know you have a lot of fun playing poker online, but isn’t it terribly risky? I’m not doubting you’re a skilled player, but everyone gets dealt bad cards some of the time. Aren’t you worried you’ll lose big and wipe out all your winnings since you started playing? I’d hate to see you lose so much that you can’t afford to pay your rent, or worse, pay for the Fire Sale at the Saucer.”
Good question. The key to limiting risk at poker is what’s known as bankroll management.
Your bankroll is the amount of money currently sitting in your online account. It can be as small or large as you want, depending on how much you’re willing to invest in your hobby. As of this morning my bankroll on PokerStars sits at $507.83.
When deciding what games to play, I apply bankroll management rules that are slightly modified from what poker pro Chris Ferguson uses. My rules are as follows, and I’m going to round my bankroll down to $500 for these examples to keep the math easy:
- I can bring a maximum of 5% of my bankroll to the table for any cash ring game where the blinds are fixed. 5% of $500 is $25, so I can buy into cash ring games up to $25. That means I can buy in for 100 big blinds (the maximum usually allowed) on 10 cent small blind/25 cent big blind games. If I’m feeling froggy I can step up to the 25 cent/50 cent tables and buy in for 50 big blinds. Theoretically I could buy into 50 cent/$1 ring games for the minimum of 20 big blinds, but I never like to buy into tables for the minimum.
- If I start winning big at a cash ring game, if at any point my stack exceeds 10% of my total bankroll, I have to get up and leave before the blinds hit me in the next round. So, in my current situation, if I found myself at a table with a stack of $55, I’d have to leave because it would be approximately 10% of the $555 total I would then have.
- I can pay a maximum of 5% of my total bankroll to enter a single-table (up to 10 players) Sit’n’Go tournament. So again, $25 is the maximum I can pay to play a SnG.
- I can pay a maximum of 2% of my total bankroll to enter a multi-table (11 to tens of thousands of players) tournament. 2% of $500 is $10, so $10 is the max for me. There’s a lot more variance due to luck in the large tournaments, so you have to put less of your roll at risk.
- Exception 1: I can buy into any cash ring game for $1 or less regardless of my bankroll. So, no matter how bad I’m doing, I’m always allowed to bring 50 big blinds to a 1 cent small blind/2 cent big blind table.
- Exception 2: I can buy into any single-table Sit’n’Go tournament for up to $1 regardless of my bankroll.
- There is no lower-limit exception for multi-table tournaments. If I want to play one of those and the 2% rule doesn’t allow it, I have to enter freeroll tournaments.
Following these rules ensures that I never have too much of my bankroll at risk at any one time. Yeah it sucks to be playing 25 cent big blind tables when I’d rather be sitting next to Daniel Negreanu at the $25 big blind tables, but that’s where I am in the evolution of my poker skills and bankroll. Also, there’s an advantage to the lower-limit games – there are a lot more fish (bad players) there, from whom it’s easy to win money if you know basic hold’em strategies.
While we’re on the subject of poker, last night was frustrating. I was too tired to go out, so I stayed home and entered a 1000-person, $4 + 40 cent entry fee multi-table tournament. Top 104 finishes paid out, with first place getting $750. After three hours I got dealt pocket Jacks in the big blind and raised all-in after no one else put in a pre-flop raise, figuring it was a good opportunity to build my stack (which was rather small at the time) so I could legitimately challenge for that first place prize. Everyone folded around to the small blind, who called me with 7-9 (this is an example of the bad players you’ll find at low buy-in games). The flop came up 2-7-7. Just my luck. No help on the turn or river, and I finished in 106th place. TWO SPOTS away from the money. I shouldn’t have gone all-in with those Jacks at that stage of the tournament. Oh well. At least I only lost $4.40. There will be another tournament anytime I’m ready for one. That’s what’s great about online poker.