Rethinking BRM
Monday, 16 September 2013
PokerWinners' Mike Copley challenges received wisdom.
Bankroll management is like the Middle East conflict – everyone knows it’s important but very few of us understand what it's actually all about. In my opinion, however, it is the most important subject for anyone looking to make a living from poker.
At its basic level, good BRM should negate the chance of ever going broke through variance. As a byproduct, it also allows you to play with a better mindset, giving you a better chance to play your best and be a long-term profitable player.
Poker is a game of small edges and high variance. If two chess players face off, the better player will win just about every game. There's no luck involved, no outdraws, no “getting there”. In poker it’s not so simple. The best player can lose; he can lose a succession of coin flips or get his money in ahead only to get unlucky many times. Over the long run his edge will come to the fore, but in the short-term he can lose and so the variance is greater.
In poker, the difference between players is never that great – a good player can expect to beat a worse player maybe 60% of the time, which means we can go on losing runs through no fault of our own. Once we accept that, it's easier to be prepared to deal with those runs and make sure they are as short as possible.
There are plenty of traditional BRM rules floating about, giving general advice on how many buy-ins you need before moving up to the next level in cash games on your way to world domination, and what percentage of your bankroll it's advisable to commit when buying into any one MTT.
I've seen plenty of advice that states things like “Don't move up to a higher cash game until you have 100 buy-ins at the new level” or “Never buy in to an MTT for more than 2% of your total roll”, but these statements, which are given as fact, are far too simplistic, and ignore a number of important influencing factors.
You need to look at the games you play and what your average profit is per game. Obviously, if you're winning 100% long-term ROI in MTTs, your variance is going to be a lot lower than if you're only earning 5%, so it doesn't make any sense for both those players to have the same constraints; it has to be personalised.
Another factor to bear in mind is field size. Obviously this is most applicable to MTTs, though it does matter in cash games and SNGs if you are playing two, six, nine or 10-handed. The above “2% of bankroll in MTTs” is nonsense. For a start, we don't know if the person is playing an MTT with 10 runners, 100 runners or 10,000 runners.
Variance obviously increases hugely with the bigger fields and you are far less likely to see a return on your investment, although any return you do get could be huge if you make the final or win.
If we don't take any of that into consideration when designing BRM rules for a player, then it's not going to help. The starting point for your own personal BRM rules should be your historical results. Work out your winning percentages and how big and long your downswings have been, and start from there.
Some people have a higher risk-tolerance than others. For some, their poker bankroll is absolute; once it's gone, they're out of the game. For others, mainly recreational players, they may have a bankroll they're trying to grow, but if they lose it, they could redeposit and start trying to grow a new roll. Those in the first category obviously have to be more risk-averse than those in the second.
Other factors to take into account include how many tables you play at any one time. If a poker player plays one table, his focus is 100% on that table, and his edge is as big as it can possibly be. If you play two tables, your focus is split; you may miss something, so your win rate should decrease slightly. If you play 10, 15, 20 tables, your attention is split further, and we would expect your win-rate to drop a bit further. If your win rate is 10bb per table playing one table, it might only be 1bb per table when you play 15 tables.
You may ask “why play more then?” but if you work out the maths, your hourly rate is increasing with the number of games you play, so, in the above examples, I earn 10bb per hour playing one table, and 15bb per hour playing 15. At some point your win rate will drop so far that adding extra tables is futile; it's up to you to work out where that is.
As a caveat, I would note that for some, but by no means all, players, their minimum should be, say, four tables, as any less than that and their mind wanders to the TV, Facebook, etc. Again, it's personal. It's important to note that playing more tables reduces our edge and therefore increases variance. A lot of people justify playing lots of tables by saying it helps with variance, but what they don't realise is the swings among those games is even bigger than if they played the same amount of games over a longer time.
If that’s a difficult concept to grasp, think of it this way. If we play 10,000 hands in one day by 12-tabling for 10 hours straight, does that increase the variance in comparison with playing the 10,000 hands by two-tabling in sessions no longer than an hour at a time over a period of two weeks? Undoubtedly the answer is yes. Therefore, to play the first way you need a bigger roll.
One key factor which is often ignored in traditional BRM advice is the need to reduce your stakes during bad spells. If you go on a downswing, and you're not willing to drop down the stakes, then it has a much bigger impact on your overall bankroll. You should always be willing to drop down stakes.
If you start with £10k and are playing £100NL, you have 100 buy-ins. If your bankroll drops to £5k, and if you're willing to drop down to £50NL, you still have your 100 buy-ins and you're maximising your chance to continue in the game.
Players on losing streaks look at that and plead, “I'm just running bad, how am I going to win ‘my’ £5k back if I'm playing smaller?” but the reality is your £10k has gone, you are now playing from a £5k roll and you should have an appropriate BRM strategy. The good news is your skill edge should be bigger at the lower level and you should have a target for when you will promote yourself back to £100NL.
The only way to lose your bankroll entirely is if you're not skillful enough, because every time your bankroll drops, you drop in stakes, and you will always have 100 buy-ins, which should be a big enough cushion.
Going the other way, if we're having a good winning period and our bankroll has risen, we can afford to take one or two shots at bigger games. Remember, though, you need to lock in some of the profit and factor in that, as a full-time poker player, you need to pay yourself a wage.
A lot of poker players who have a big win will withdraw their £20k from first place in a tournament and go and splash the cash for a while. What I would always say is that, if your job is to play full-time, when you have those big wins, you've just guaranteed your income for the next however many months.
I tell poker players to decide how much they need to live off per month. Let's say it’s £1,000 per month. On the first of every month I'd pay myself £1,000. I'd also pay myself some commission – results-based pay – so if I've won £5,000 in that month, I'd pay myself 10% commission, an extra £500 bonus for my performance. I'm leaving all the rest of the money in the bankroll, hopefully to grow, but I've been rewarded.
If you go through a spell where your bankroll is falling, paying yourself becomes stressful as another negative on your bankroll, but if you've built up your roll in the winning months, you should have a nice enough cushion.
If our bankroll is £10k and we break even on the month at the tables, but we're paying ourselves £1k a month wages, our bankroll for the next month is still £9k (despite not losing anything playing poker) and we should implement whatever plan of action we have for a £9k roll.
If dropping down a level feels harsh when you haven't lost all month, remember: we don't play poker to break even. We may as well not risk a penny if that's our aim. We play to beat the game and if we're not beating it, it makes sense to drop to a level we are beating. Your main goal as a poker player should be to make a profit and earn enough money to stay in the game.
BRM is a long-term thing so many players come and go. They feel they're too good for smaller games and, driven by ego, they want to beat the bigger games. They don't last in the game.
At PokerWinners.com we have some fantastic strategy content from some of the best players in the world. The feedback we get is fantastic. Our members love reading how EPT, GUKPT and GPS winner Julian Thew approaches final tables, how WSOP champion Peter Eastgate coped with taking on durrrr on High Stakes Poker, and how double bracelet winner Praz Bansi advocates taking unusual lines and thinking outside the box.
Learning the secrets of great players is a privilege, but if we don't manage our bankrolls correctly, we'll end up on the poker scrapheap like so many before us – wastes of poker talent. We have a free bankroll management tool in development at PokerWinners.com which will allow members to input their bankroll, historical data, style of play, average field size, desired wage per month and much more. It will then tailor a personalised BRM plan for you which gives you the best chance possible of continuing to play poker at your optimum level.
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