FROM CH. 8 OF “TREAT YOUR POKER LIKE A BUSINESS” — Managing Your Bankroll
Let’s talk about money as inventory.
If you owned a widget business, you’d want to have enough widgets in your warehouse that you could fulfill a big order. Money is the inventory that allows you to sit down at a table when a fish is there and the odds are in your favor. Without that inventory, all else is moot.
My family’s toy business is a good example of ineffective inventory management. My dad would only keep 400 cap guns on hand because he wanted to keep our inventory low for the purposes of overhead. But once a month, someone would call to buy 1,000 cap guns in one shot, and we’d either have to turn that person down or turn something around really quickly. Most often we missed out on the sale. Similarly, if you’re cashing out your bankroll all the time, you could potentially not have the inventory to play a poor player when he sits down at a table, especially in the case of a fish who has decided to move up in stakes. That’s a big sale on which you’ve missed out. It’s found money, basically, and you don’t want to miss out on the opportunity to pick it up.
Maybe your regular game is a $100 buy in, and you saw a mega-fish in the lobby for a $200 game. Now he’s got $400 down and the seat next to him is open. You could have position on him. But without the inventory, you’ve missed out on a big sale.
If you keep a constant-but-inadequate bankroll, you will go broke — of this I am 100 percent certain. Spending pieces of your accumulating bankroll because a long losing streak seems unlikely is a recipe for total disaster.
I’ve known many a winning poker player to go broke. They may start with $5,000, win $100,000 in three months, spend $80,000 and lose back $25,000. Now they’re broke despite having won $80,000.
I have a good friend who’s notorious for this. He’s been trying to be a pro for five years. But he has a few kids, and every time he wins $1,000, he says, “Wow, I could pay for my daughter’s music lessons or my son’s summer camp with this.” So he hits the “cash out” button, and he’s back to where he was at the beginning of the day.
True, he can pretend that day didn’t exist and start fresh tomorrow, and that theoretically works for the days he wins. But if you do that every time you win, and take your licks when you lose, you end up broke.
You need to ask yourself, “What’s my ultimate goal here?” Your goal is to make as much money as possible playing poker. You need the bankroll to play at the stakes for which you’re aiming. You need a six-figure bankroll to play at the high stakes, so if you only have $1,000 in your account, you have a long way to go. It’s a step-by-step progression.
You obviously don’t want to over-do it. You don’t want $50,000 in your poker account and $50 in your savings account. But you give yourself the best chance to succeed by having enough inventory to make the big sale when one comes along. Finding a balance that works for your situation is essential.
You want enough so your career can gradually progress up the stakes. If you have a comfortable balance in your poker account, you can more easily justify taking shots at higher-stakes games. If you cash out and are always on a short bankroll, it’s easy to fall into a scenario where you say, “There’s a great shot for me at the bigger games …,” and you deposit money from your savings online. Now you have your real-life money in there, and if feels like you’re losing a lot more than just the ups and downs you need to withstand as a poker pro.
When can you feel comfortable cashing out? There’s no perfect answer for everybody, because everyone’s financial picture is different. You might have extenuating circumstances where you really need the money, which is totally understandable.
Again, we get back to looking at this as a business. Statistics say that most businesses don’t make money for five years. We don’t want that, of course, so let’s reduce that figure to one year. We won’t expect our poker business to make money for one year, so for that period, you will not take money out of your poker account. This allows you to comfortably progress through the limits as your skills dictate.
As a conservative estimate, you want to have 100 buy-ins in your bankroll at all times. If you’re playing $100 buy-ins, you want to have $5,000 in your account. This is a minimum. A more aggressive coach might tell you 20 buy-ins is sufficient. But I’m conservative, because I like to have plenty of money in my account in case I see somebody I like at a higher-stakes table. It also gives me a peace of mind similar to someone who just paid off his home. Is it the best way to invest your money? Probably not, but peace of mind should be a huge factor in your decision because you can only really play your best when you are comfortable.
Now let’s say you’re winning handily at your present limit. If you’ve been winning consistently, it’s time to think about moving up. You can think about moving up once you have 200 buy ins, but I would definitely encourage you to begin taking shots at higher limits once you have reached 100 buy ins for your normal limits.
I suspect many poker professionals will disagree with my conservative bankroll suggestions. Make no mistake about it, this is some of the most conservative advice you will ever hear. But I tell you this as someone who’s never had a losing month, never gone broke, and is one of the all-time money winners in online poker: I have never taken a shot at a limit for which I didn’t have at least 100 buy-ins.