Bankroll management: Keeping score

The approach to building my bankroll that I described in my previous post is somewhat similar to the from-the-ground-up gameplan that top pro Chris Ferguson (pictured above) used in his epic bankroll experiment of 2006-07.
While I started with $5, Ferguson’s degree of difficulty was considerably higher. The World Series of Poker main event champion in 2000, Ferguson decided to see whether he could build a $10,000 bankroll from zero on Full Tilt Poker.
Ferguson began with freerolls – free-to-enter tournaments with massive fields that pay pocket change to the winners. It took him a month to win $2, and a further eight months to crack the $100 plateau. But after 16 months of working at the project for about 10 hours a week, he had his $10,000.
Impressive stuff, no doubt. But as much as Ferguson’s playing skill had plenty to do with succeeding in this feat, his bankroll management strategy was perhaps more crucial. I’ll sprinkle in Ferguson’s wisdom liberally as I move forward with this discussion.
KEEP THE POKER MONEY SEPARATE
I’ve mentioned it before, and I’ll say it again: I firmly believe the first step on the path to bankroll success for a recreational player is keeping the poker funds separate from the regular household income and expenses.
This boundary is beneficial in several ways. It allows your bankroll to serve as an accurate scoreboard, so to speak, of your poker successes/failures. It also prevents poker expenditures from becoming a point of contention with the family, because you’re not gambling with the grocery money. I can’t recommend this course of action strongly enough.
DON’T PLAY ABOVE YOUR MEANS
Ferguson’s rules of bankroll management are reflective of universal poker wisdom. He states that no more than five per cent of a player’s bankroll should be spent on a cash game buy-in or a sit-n-go; and that no more than two per cent should be spent on a tournament.
The principal is, a player must have enough of a bankroll to weather the inevitable downswings that accompany the variance of poker. Think of your bankroll as capital. Knowing you’ve got a comfortable reserve of funds prevents you from playing scared, and also helps to slow the onset of tilt during a losing streak.
I haven’t always been faithful to this strategy. In my previous post, I mentioned my massive spew-fest in the Mansion Poker cash game. That was a classic case of playing above my means. The max buy-in for the $2-$4 no-limit game was $400; when I began playing at that level, I had enough money on that site for just one of those buy-ins. Even after running up my account to $2,000, that only represented five buy-ins, and a few losing sessions quickly wiped me out.
Another classic mistake players tend to make is, when they’re on a losing streak, they play higher to recoup their losses. This is a somewhat natural reflex that I am prone to from time to time, but it’s counter-productive. After losing a string of sit-n-gos in the $20 to $50 range, I’ve sometimes succumbed to the lure of the $100 buy-in game. That’s exactly the wrong thing to do. Most of the time, it doesn’t stop the avalanche; it just speeds the descent.
To recap: If your bankroll is expanding, move up in stakes as you feel comfortable. If your bankroll is shrinking, swallow your pride and move down.
BE A STUDENT OF THE GAME
In an earlier post, I posed the question: “If I can’t have a regular expectation of winning, why on earth am I playing?”
You should be asking yourself the same thing. This next sentence probably isn’t in my best financial interest, but here it is: If you suck relentlessly at poker, you should either quit or get better. Read Dan Harrington’s books. Discuss hands with your friends. Figure it out, for goodness sakes.
That, to me, it the major goal of bankroll management – to figure out whether you’re good or whether you suck. If you don’t like the answer, do something about it. Take responsibility.
It’s probably easier for a recreational player like myself to manage a bankroll. Since the game is not my livelihood, I can take a break for a couple weeks when I go on tilt. I can move down to micro-stakes to satisfy my poker jones before moving back up when I’m feeling more confident. But even for me, it’s a pride-swallowing act to move down a buy-in level. It’s an area for growth.
I think that’s all I have to say on this subject. Bottom line: If poker is to be a presence in your life, make it a healthy presence. It can so easily be the opposite, and the right path begins with solid bankroll management.

Bankroll management: How I've been building mine

Sure, poker is gambling. But it’s a far cry from playing roulette or a slot machine. It’s a skill game. So my thing is, if I can’t have a regular expectation of winning, why on earth am I playing?
That notion led me to separate my poker bankroll from my personal finances waaaaay back when my game was in its formative stages in university. Even then, I wanted to make certain I was a winning player. The best way to do that, in my mind, was to keep all the poker winnings separate – squirreled away in a rubber band like Mike McD in Rounders. I worried that if I were to reach into my bank account to pay for every tournament I wished to enter, I would likely lose track of things, and my hobby could end up being a slow drain on my finances without proper oversight.
THE BEGINNING
My initial investment was a $5 bill, slapped down on a table at the University of Regina’s School of Journalism during a friendly sit-n-go tournament one evening. I won, as I recall, or at the very least I cashed for a nominal sum.
I built up the roll playing $5 and $10 home-game tourneys with my buddies. When I made the leap to online play in 2005, I had enough for a $50 buy-in.
In those early days, I registered to a series of poker sites via a third-party website, with the goal of clearing bonuses to earn prizes. The way it worked was, if you deposited $50 and played a certain number of raked hands, you’d win a prize from the third-party promoter. That’s how I got my poker chip sets, and bunch of poker books and DVDs, my poker table-top, and even a 32-gig iPod.
As I was collecting prizes by putting in the time on each poker site, I was also padding my bankroll - $50 here, $150 there. I had the most success back in the day on Absolute Poker. I generally played limit cash games to clear the bonuses, but then as now, single-table sit-n-go’s were my bread and butter. It seems to me that back in 2005, there were a lot more donkeys at the virtual tables. At any rate, I ran my $50 up to $800 on Absolute, and I used that money to cover about 20 per cent of the cost of my wife’s engagement ring. I love that I can point to that ring and tell her that poker helped pay for it.
THE DOWNSWING
I do have one uber-tilt story from this period. I built up a nice bankroll at Mansion Poker, back when it was a relatively small site. I think I was at around $400 on that site when I decided to take a crack at the $2-$4 no-limit cash game and went on a heater. I was up to $2,000 at one point, and was thinking this could be a real nice secondary income for me.
I still remember the pivotal hand. Towards the end of a winning session, a new player sat down at our table. We were playing short-handed, and I was planning to play a couple more free hands before the big blind reached me and then pack it in for the night. I ended up playing a three-way pot holding AhTc. The flop was a glorious KQJ – but with two hearts. The new player and I checked the flop, the player on the button fired a big bet, and the newbie stunned me by check-raising all-in with the remainder of his $400 stack. I obviously called with the nuts . . . he showed 9h7h . . . a heart hit the turn . . . I had a redraw to the nut flush . . . and missed it.
I re-bought at that point, thinking I had a great shot at getting my money back from this donkey. He took another $400 from me, nearly halving my bankroll. That exchange set me off on mega-monkey-tilt, and I lost my entire Mansion roll. The blow was softened somewhat because my initial investment had only been $50, but I was still quite devastated. Since then, I’ve largely stuck to tournaments, with only an occasional cash game backslide.
THE UPSWING
A happier story was that of my biggest score to date. In 2008, a friend in the local poker community hooked me up with a free seat in a $220 super-satellite prior to an annual tournament series. The event drew 596 players, and paid out 30 prize packages worth $4,000 (entries into a $3,000 and a $1,000 tourney later in the week). I managed to run just good enough and play just well enough to finish in the money. Since I wasn’t able to stick around for the weekend tourneys, the casino was nice enough to pay me out in cash. I used that money to pay off my car, which had a couple more years’ worth of payments, and to finance my honeymoon. It’s a great memory, and I’ll try to track down the column I wrote at the time and post it to this blog.
SETTLING IN
Online, after more or less exhausting the third-party thing, I settled at PokerStars. A big part of the reason was, it was easy to deposit funds. Canadian banks were (and I believe they still are) leery about allowing VISA deposits to poker sites – I remember spending hours trying to find a loophole to get some cash on Ultimate Bet, which I’d heard had the best tourney structures.
PokerStars offered an e-cheque direct deposit option, which worked for me. Plus, the player base was huge, and the sit-n-go structures were better than what Full Tilt and Party Poker had to offer.
I mainly played $5 and $10 single-table SNGs on Stars for a couple years with great success, before finally nutting up a year and a half ago and moving up in stakes. If you’re a regular reader of this blog, you know that my bankroll ballooned from $500 to $6,000 at that point.
This is the first time I’ve managed to build up my bankroll to a reasonable level without spending it. According to sharkscope.com, my total profit from tournaments on Stars is exactly $6,774 at the moment. Obviously I’ve spent a bit of it. But I’m focused on protecting it and investing it wisely.
I'm not raking in Ivey-like sums by any means, but all in all, poker is a fun and profitable hobby for me.

Bankroll management: Opening rant

As a relative minnow in the poker pond, it boggles my mind to hear tales/rumours about high-profile pros like Mike Matusow and T.J. Cloutier going broke.
Such stories are incredibly common – the phenomenon is the product of the challenging variance of poker, and an inability on the part of individuals to effectively manage their bankroll. Case in point: Jean-Robert Bellande (pictured above). The former Survivor contestant’s brutally honest tracking of his bankroll swings has earned him quite a following on Twitter. His handle is @BrokeLivingJRB, which offers a hint at his loosey-goosey financial philosophy.
On the face of it, winning at poker seems much tougher and more intellectually challenging than managing the spoils of victory. But it’s the opinion of many winning players that bankroll management is as important, if not moreso, than mastery of the actual game itself.
So . . . If poker is a skill game, and I believe it is, shouldn’t there be a corresponding way to skillfully manage a bankroll?
I say yes. My basic bankroll philosophy is hardly exclusive to poker. It’s essentially the same conservative style of money management that my parents drilled into me as a kid. Basically, it amounts to “Don’t spend money you don’t have.”
It sounds obvious, but our society’s relentless refusal to apply common sense and fiscal prudence is at the root of the current economic downturn. Folks in developed nations tend to have a sense of entitlement. If they can’t afford something, they simply put it on their credit card, expand their line of credit, or borrow against the equity in their house. We have a standard of living we envision and believe we deserve, and we’re determined to get there by any means necessary.
That last paragraph may have been a bit of a digression from the poker-bankroll theme of this post, but I tend to believe that society’s warped financial mentality can’t help but grease the skids for poker players on the way to the poorhouse.
I realize I’m rambling a little bit. So I’ll break this bankroll rant into three parts. Tomorrow I’ll tell the story of how I built my bankroll, and offer some general guidelines for poker players the following day.
One big qualifier: It’s probably true that it’s easier for a recreational player like myself to manage a bankroll. I’m not dealing in massive sums. But I feel like I’ve got some solid bankroll fundamentals, so take ‘em for what they’re worth.