I’ve seen countless poor systems for bankroll management. Like any other poker decision, you would like to make right one. Being too tight will slow your opportunity for growth and advancement. Being too loose may have you moving up and down between limits super fast. I have a confession to make. I am a loose bankroller.
Everybody else I know plays with 40, 50, as well as 100 buy-ins within their be the cause of the game they’re playing. Not me. I played up to the $200s and $500s with no a lot more than 30 buy-ins. And you know what really matters? My decision was correct.
What is the function of a bankroll? It’s because you do not win every game. Of course, it’s possible to lose 100 games back to back, possibly at the end of your run like that, the sole person still solvent is the guy who had the 100 buy-in bankroll. This is unrealistic. Of the greater than 10,000 heads-up SNGs that I played, the worst downswing I ever proceeded was 20 buy-ins.
Even bankrolling as loose as I did, I was never at any real risk of going broke. So, the amount of buy-ins do you really need?
The proper bankrolling requirements are really easy to calculate. There’s an equation referred to as the Kelly Criterion that has been created by economists to respond to this exact question. We know our ROI, and that we know our bankroll. The Kelly Criterion says we are able to rationally risk any amount of greenbacks around our ROI. This means if our ROI is 5%, we can easily use a 20-buy in bankroll.
Now, nothing is wrong with like a bit more conservative than this. If you calculate your Kelly Criterion bankroll requirements by estimating your ROI at half exactly what it turns out to be, you need to be safe.
Remember, the harder aggressively that you bankroll yourself, the harder comfortable you must be with moving up and down in limits. You will shoot with the limits when you are hot, but when you find yourself cold, you’ll probably must drop down a set limit or two. This serves an extra purpose, though. You will play in bigger games as soon as your confidence are at its peak, and you’ll play in lower games when you find yourself prone to tilt.
Using the Kelly Criterion to rationally decide how much of your bankroll to risk is really a far better solution than selecting a number away from thin air, big event?