I am sure you heard that before. Poker should be played with chips, not money, even if money is in stake. The objective is to gain as many chips a possible. It is a psychological approach that all successful poker pros employ. If your opponent will sense that you are scared to lose your money, you already lost it …and there is no fun in that.
You may say you feel that the game is too big for you and you will never be as good in poker as your opponents are. Even if that’s true, you should not worry; there is one thing you can do. It’s called Bankroll Management. I am sure you’ve heard of it. The concept is very simple and if applied correctly, by itself, it will elevate your game by a lot.
The principal of it is simple. Do not buy into games you cannot afford. For example, if you have $100 to spare, do not buy into $50 game. You would risk 50% of your bankroll doing so. Let’s say you play very tight and you will still (somehow) get action with your pocket AA. You are all in against pocket K’s. Mathematically you will win 3 times out of 4 when that happens. One of those times your opponent will hit his K …and you’ll lose …half of your bank roll.
You must understand that losing 1 out of 4 seems not bad, but statistically 1 out of 4 does not mean that it will happen in a perfect sequence: you will win 3 after losing 1. It would be great, if that would be the case, wouldn’t it? Unfortunately we have no control over this sequence. We could lose 3 or more in a row to enjoy 9 straight wins after that, but guess what? If we have 2 buy ins, we will never get to those 9 straight wins, will we.
That’s where Bankroll Management comes in and that’s why it is so important. It simply says you should not buy in into games that exceed 5% of your total bankroll. In that case buying into $50 game would require you to have $1000. I am sure many of you have $1000 when you buy into $50 game ………… NOT! I have been (unknowingly) mismanaging my own bank roll for years myself …and I was losing money …for years.
One day I was tired of losing and I decided to educate myself a bit. I wanted to improve my game but not necessarily spend hours or days reading books or watching videos. After all I have a job, wife and kids that need me. When I discovered Bankroll Management I immediately understood the importance of it, and how following simple money management would improve my game. How?
I was not scared to call bluffs anymore. Over the years I was bluffed off a better hand so often it made me feel bad about my game. Simply my opponents sensed that I was scared to lose my money and they used it against me. I faced many all in shoves on the river that I was simply too scared to call, because more often than not wrong call could mean end of my bank roll.
Since I understood the importance of Bankroll Management, I am no longer buying into games I can’t afford …and, I am no longer afraid to call all in shoves on the river :). Now I play only stakes I can afford to play and even if I get unlucky few times in a row, I can keep playing and get to the stretch where I get lucky (if I need to). My today’s Bankroll Management makes me more immune to the variance than ever before.
To explain how, I will use an example of two players in a zero-sum game such as flipping a coin. Each player has an expected win/loss rate of exactly 0%. One player has a finite bankroll. The other has an infinite bankroll. Given infinite repetitions of the game, the player with the finite bank roll will eventually go broke, due to "swings" in variance.
The same principal can be applied to online poker, where it's you against everyone else. This means it's your finite bank roll against the infinite bank roll of the poker world. If poker was a zero-sum game, you'd eventually go broke. Generally, if you're a good player, you can expect a profit from your good game, as long as you have enough money in your bank roll to make the variance irrelevant. Your bankroll, although finite, needs to be large enough to seem infinite. 5% buy in rule should help you achieve that.
Many of very successful poker players are even stricter than 5%, some of which do not buy into games exceeding 2% of their bank roll. For years I did not understand and respect Bankroll Management. I’ve improved and got smarter. Since then I’ve had fewer swings in my bank roll and enjoyed steady profits.
…and that is, what I wish to all of you my friends!