If you are a beginning poker player, the first thing you need to learn is good bankroll management.
Why bankroll management is important
To be able to play your best poker game, you have to be able to play without fear of losing. You can’t be afraid too loose when you have to make a decision for all you’re money. For example, you have to be in a mindset that the money you paid to enter a tournament is gone and you don’t care if you win it back or lose it. What I mean by that is that you don’t care about this particular outcome of the game because you can easily miss one buy inn. It’s not going to hurt you financially if you lose this one buy inn.
At what level you can feel comfortable depends on the size of your bankroll, the amount of money you can set aside to play poker. Your bankroll should consist of money you don’t need for other things. It shouldn’t include money you need for rent or to pay for college. If you can only spare $50 a month, then that is you’re starting bankroll. Don’t put in your whole pay-check thinking you will have doubled it before you have to pay the next rent. You will be too afraid to lose and therefore you will lose. Just start at a lower level where you feel comfortable and work you’re way up from there.
Poker is a game of skill, and if you are a good player, you can make a steady income playing poker. What makes poker such a fun and exciting game is that it is also a game of change. In the long run you can be a winning poker player, but in the short run luck comes into play. No matter how good a player you are, there will be times when things don't go you're way. You don't get good hands, or when you do, you run into even bigger hands and when you get it all inn with the nuts as an 80% favourite, your opponent always seems to hit his two outer.
Times like these are called downswings. These downswings can hit a big dent into your bankroll and if you are playing for stakes that are too big for your bankroll, one downswing can ruin you. Therefore it is important to always play at a level that suits your bankroll. Most downswings will be less then 10 buy ins, but sometimes they can be as big as 30 buy inn’s. When that happens you have to react quickly and move down a level or it will ruin you even if you started out playing within you're bankroll.
Bankroll management for tournaments
I follow these guidelines. To start at a level you will need at least 30 buy inn’s in your bankroll. So if you want to start playing $7 tournaments you need at least $210. If you only have $50 you start at $1,50 tournaments. If things go bad and you fall below 20 buy inn’s, it's time to move down a level so you have at least 30 buy inn's again. If things go well, as soon as you have 30 buy inn’s you can go up a level. So if you're winning and get up to $450 you can start playing at the $15 level. But as soon as you drop below $300 you need to switch back to $7 again.
Bankroll management for cash games
In cash games the downswings are less then in tournaments. In cash games it is enough to have at least 20 buy ins in your bankroll. I like to buy in for the max amount, which is usually 150 big blinds. So if you want to start playing at $5 blind level you need at least 5x150x20=$15.000 to start. But as soon as you drop below 10 buy inns, $7.500, you should drop a blind level and start playing at the $2 limit.
$15.000 looks like a lot of money, why can't you start when you have $1.500, two buy inns? Because if you loose two times your buy inn, you have no more bankroll. Therefore you will be too afraid too loose your money and too afraid too take risks. If you want to play good poker you must be willing to take some risks. If you have a bankroll of $15.000 you will not be worried if you loose $750, therefore you can play poker without being scared.
Once you start making some money and your bankroll grows above 40 buy inns, you will have to make a decision. If you need the money as an income you could take 10% of your bankroll as an income each month as long as this does not put you below the 30 buy inns. If you don't need the money you can either build your bankroll above 40 buy inns to make it better protected against downswings or you can try to play at a higher level.
I recommend you only start to play at a higher level if you can split your bankroll into 20 buy inns for the higher level and 40 buy inns for the current level. So if you play at $2 level and want to move to $5 level, I recommend you have a minimum bankroll of $12.000 +$15.000=$27.000. That way if the new level is too hard for you, you still have a big enough bankroll to fall back to the lower level.
If you follow these guidelines and you are a good poker player, you will have to get really unlucky to loose your bankroll.
Please let me know in the comments below what you think of my bankroll management guidelines.
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