Free Poker Training Goes On With Part 2
Start up your poker business – Part 2: variance and bankroll management
After deciding to learn online poker, hopefully you have read Part 1 and you know exactly what you can expect in this second part of the “Start up series”. In this part of the free poker training course we will discuss what the bankroll considerations, expectations are and the importance of variance.
Right in the beginning it is important to mention that all the monetary issues and requirements assume that you are playing at a no limit hold’em table with the maximum, 100BB buy-in. In a later part we will discuss how the requirements change if you wish to play some other kind of poker.
I tell you in the beginning of this free poker training session, the importance of variance is a key issue in poker. You have to be patient with yourself because after a couple of sessions it can easily happen that you are winning with a horrible strategy or you are losing while playing perfectly. In the short run (10 000 – 100 000 played hands) even a bad player can have revenue, in the extra short run (1 – 10 000 played hands) anyone, even the worst players can end up with a profit. Of course this is true the other way around as well. After a short period of time even the world class players can have a negative record. This variance is important because this edge gives weaker players a chance to take a shot and play. If they had absolutely no chance they would never play. So if you are winning in the beginning it can happen that it is only the positive effect of variance (and your strategy is not as good as you think). This basically means that if you play one night only, you might even beat Doyle Brunson. However a professional player understands the variance very well and knows how to handle it. This brings us to the very important issue of bankroll management.
Bankroll management is responsible for keeping under control at which level you play in relation to the amount of money you have in total for playing poker. Based on the bankroll management discussions on the 2+2 Forum, we can say that 4-6 buy-in variances in your winnings are absolutely normal. Many professional players who are long-term winners even had streaks of losing 16 buy-ins. Most poker players have encountered scenarios like this: within 1000 hands dealt you flop an underset, lose two coin flips, miss an open ended flush draw on the flop, and on top of this, your AA gets crushed by a KK in a preflop all-in. You look at your winnings, and feel terrible because after multitabling for 1-2 hours and making the right decisions, you end up with 5 buy-ins loss. As you climb the ladder to higher limits, the achievable win rate shrinks which increases the probability of such things happening. These negative streaks can happen any time, you have to be ready for them and act accordingly. If you lose some buy-ins take your loss and move back to a smaller stake table before you really hurt your whole bankroll.
Since we are talking about a business, you have to take three considerations very seriously:
- the more hands you play, the smaller the role of variance will be
- you have to have the right bankroll to minimize the chance of bankruptcy
- you have to have the right bankroll so that in case of negative variance it will not influence the way you play (being on tilt)
The first and second considerations have been discussed multiple times in various articles, strategy sites, forum posts, etc. It is common sense that in the long run variance will even out thanks to the Law of the large numbers, and that you need 20 buy-ins for a specific limit. For a casual player who needs minimal bankroll management, these are quite decent advices. Well, not for people who want to make a living out of poker. Let me use the 5 buy-in
downswing example I described above. Playing NL50 tables you have to have $1000 according to the 20 buy-in rule. With the above mentioned bad series you can lose straight away $250, 25% of your bankroll. Even if you try to remain calm and not tilt, your mind starts to have crazy thoughts about how to win this money back, and it can negatively affect the way you play. As your thinking shifts from “keep playing your A game” to “how to win this money back”, you will make tons of mistakes, which will eventually lead to losing even more money. That can easily bring you down 1-2 more buy-ins that you tilt away, and will make you quit playing for some time to recover. It has happened to many of us.
You cannot afford such situations; you are not a casual player. You do not only lose a couple of buy-ins this way, you lose way more important things. You start questioning yourself, you lose motivation and you lose your most valuable asset: time. And remember, even though this is a hypothetical scenario, it can easily happen any time. You have to be prepared. And you can be prepared with proper mindset, and proper bankroll management. Imagine that you have lost $250 from your $4000 bankroll. We can say the issue is not that dangerous at all, you lost only 6.25% of your money. Do you feel the difference?
The table below will shows some basic guidelines for safe bankroll management. At first glance such a strict bankroll management seems like overkill. Trust me, it is not. The confidence of having more adequate inventory for even the worst case downswings is priceless. Obviously, you are free to follow a less safe strategy, especially at the lower limits. Over NL100 however, stick to these guidelines.
If you would like to have an extra safe strategy to sit in the games follow the following bankroll sizes for the different levels.
NL2 (0.01/0.02$):      0 – 120$
NL5 (0.02/0.05$):      100 – 300$
NL10 (0.05/0.10$):    250 – 900$
NL25 (0.10/0.25$):    750 – 3 000$
NL50 (0.25/0.50$):    2 500 – 10 000$
NL100 (0.50/1$):       8 000 – 40 000$
…
Assuming you play NL5 with a $200 initial deposit, you should move to NL10 when you reach $300, but move back to NL5 if you fall below $250, and try again if you are over $300.
After NL100 you can always move to the next level when you have at least 100 times the maximum buy-in and when you fall to 80, move back one level. In micro levels there are more inexperienced players and you feel the variance factor less. The table is also very conservative and makes the chance of bankruptcy basically impossible.
In the next part of the free poker training articles we will discuss the initial investments you should make other than your inventory (bankroll) in order to gain competitive advantage.
In case you would like to play poker check out our rakeback section to make sure you get the best offers.. All winners use this great opportunity when they register at poker sites.
Related articles:
Start up your poker business – Part 1: The basics for online poker
Start up your poker business – Part 3: initial investments and useful poker software
Start up your poker business – Part 4: online poker site comparison
Start up your poker business – Part 5: your goals in poker, the right time to change levels and motivation
Earn extra money with poker
