Lesson 4: Building a Poker Bankroll

Building your BankrollMastering poker is a time-consuming process of excelling at many smaller skills. Bankroll management is is one such crucial skill and you overlook it at your peril. Many great poker players have fallen victim to not giving enough thought to building their bankrolls. As a result, they have ended up going broke by taking risks that were a bigger gamble than they realized. Building a poker bankroll, and balancing the desire to move up in stakes with the risk of ruin, is one of the most important tools to maximizing your poker profits.

When setting out to build your bankroll, taking a conservative approach has many positives:

  • Less chance of you losing your entire bankroll;
  • Decreased chance in having to take a stake (and potentially reducing your personal hourly rate);
  • Confidence in your ability to beat the games as you moves up in stakes;
  • A healthy bankroll that gives you enough security to avoid unnecessary feelings of pressure;
  • A more realistic view of variance;
  • The ability to identify shot-taking and the appropriate times to do so;
  • A more professional view of playing poker that could translate to making better in-game decisions.

While the conservative approach has many benefits, defining that approach is actually different for each individual player. Why? Because each poker player is in a different situation and has different needs.

Let's look at some aspects you should consider when defining your bankroll building plan:

  • Long-term goals for what stakes you would like to be playing;
  • Current win-rate at the stakes you are playing at;
  • An honest personal assessment of your poker skills and past history;
  • Your "life-roll" which will affect risk-aversion decisions;
  • How much money you need to win at poker to cover your living expenses.

Example

To see how this works in practice, let's look at a conservative bankroll building plan for two different types of players.

Player A

Player A is a successful business executive that has taken up poker as a hobby. He would like to be able to win when playing mid-stakes no limit hold ‘em cash games in his local casino. He is very new to the game and therefore feels he is most likely a losing player.

In this situation, where the player has a separate and generous salary, a good first step to achieving his long-term goal would be to allocate some of his bankroll towards education: buying (and reading) books, joining a training video site, and perhaps even hiring a poker coach. Studying poker is an important step for players of every caliber, and spending money on learning the nuances of the game is a crucial step for this player to achieve his goal of beating mid-stakes cash games. Meanwhile, gaining experience in low-stakes cash tables would also help keep his losses to a minimum, while still enabling him to become a better poker player.

Player B

Player B is a low-stakes, online, multi-table tournament grinder, who is beating the games with a 30% ROI (return on investment). He has played thousands of these tournaments, coaches a couple players, and is confident of his ability to beat the stakes he plays. Poker is 80% of his income, and he withdraws monthly for his living expenses. He has saved enough for three months of living expenses separate to his bankroll, and he keeps at least 250 times his average buy-in in his account. His goal is to play high-stakes online multi-table tournaments.

Given the fact that Player B derives such a high percentage of his income from poker, keeping a conservative bankroll of 250 buy-ins, as well as maintaining an extra-padding in living expenses, is a great first step. For this player, allocating some of his expenses towards a training site that offers videos from coaches beating the higher stakes multi-table tournaments would be a logical step in transitioning to games with bigger stakes.

As an online multi-table tournament player, moving up in stakes can be a much more gradual process than the options that player A is limited to. This is because player A, as a live cash game player, generally has bigger gaps between moving up in stakes. Let's say that player A studies, gets a coach, and feels confident that he is beating live $1/$2. Unless he lives close to many casinos, usually the next jump is $2/$5, which is 2.5 times his previous big blind. That's a big step to take, so it will take him longer to make it.

Player A could more gradually transition to $2/$5 by playing half of his sessions at $1/$2, and the other half at $2/$5. On the other hand, player B, as an online multi-tournament player, has many more options in terms of building a bankroll. Let's say that player B is currently playing up to $30 multi-table tournaments, and he wins the highest buyin that he plays for a big boost to his bankroll. At this point, he could decide to allow himself a slightly higher average buy-in (while maintaining a bankroll of 250 times his new average buy-in). He could accomplish this in many ways: by allowing himself a few shots weekly in the $55 multi-table tournaments; raising the cap of the highest buy-in he routinely plays at; perhaps eliminating the lowest stakes tournaments he currently plays at; or even by taking a higher-variance shot in a high buy-in tournament.

Of these options, the most conservative route would be to gradually progress in stakes, removing the lowest buy-ins he plays at and adding in those tournaments that are slightly higher than he was playing before. In doing this, it will be important for the player to keep in mind that his ROI will likely decrease as he moves up in stakes, though the goal should be to increase his hourly income generated from poker. A gradual transition towards his goal of playing high-stakes multi-table tournaments will help achieve many of the positive aspects we discussed earlier in this article.

Of course, if player B decides to take the higher variance route of playing the same schedule, but adding in one $215 tournament a week, it is possible that the player would win a large amount on his first shot and instantly gain the bankroll required to play only the high buyin tournaments. However, that route also carries the added risk that the low-stakes grinder might not be beating the higher-stakes tournaments yet. Additionally, the player may not be prepared for the larger monetary swings in the higher-stakes tournaments, even if he is a long-term winner in those games. Therefore, a more conservative bankroll building decision is advisable.

Bankroll Summary

Building a healthy poker bankroll involves a cautious assessment of your abilities, weighed with the evaluation of potential risks. Developing a personal plan of achieving one's goals in poker, while minimizing negative aspects and unnecessary risks, is one of the most important aspects for a player to consider away from the tables. Whereas most elements of poker involve gambling, the creation of a bankroll building plan can allow for a solid foundation for poker players of every level.

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