Using Bankroll Management to Avoid Going Broke in Poker

What is BRM?

BRM stands for Bankroll Management. It's about managing the money a player wants to allocate to Poker. Having good bankroll management is crucial.

How Can BRM Help with the Mental Game in Poker?

Bankroll management can help you maintain a strong mental game during poker sessions by removing the financial pressure that can lead to playing mistakes.

What is a Limit in Poker?

A limit corresponds to the amount needed to sit at the table in Poker. For example, a player might only play $2 tournaments or sit at Cash Game tables with a maximum of $2 at the table. They're playing the $2 limit.

What is the Goal of Bankroll Management?

To play Poker (especially online), you need to define the amount you're willing to lose. If you lose this money, there are 2 possible choices: stop playing Poker or allocate new funds to Poker while risking losing them again. The purpose of BRM is to avoid facing this dilemma. To avoid going "broke", meaning running out of poker money, you need to define the appropriate limit to play. For example, with a $200 bankroll, you might be able to play $2 tournaments but not $5 tournaments because the risk of going broke would be too high due to variance and short-term luck.

You can calculate your cash game or tournament bankroll management with Poker Toolkit.

What Happens Without BRM?

A player with no bankroll management sees Poker as a hobby and doesn't expect to profit from it. They might deposit $30 before their session and play three $10 tournaments. Poker would be a hobby equivalent to going to the movies for other people.

In the long run, the player cannot generate profit. They can only dream of a "One Time," the Poker equivalent of winning the lottery, meaning winning a big tournament.

How to Determine Your BRM?

Several criteria come into play when determining proper bankroll management:

• Risk tolerance
• Personal financial situation
• Variance of the Poker format being played
• Poker skill level
• Desire to move up limits quickly

Risk Tolerance

If you're not afraid of risk, you can have a more aggressive bankroll management because losing money doesn't frighten you.

Personal Financial Situation

If your financial situation is very comfortable and the money you allocate to Poker is relatively small for you, you can afford to have a more aggressive bankroll management.
If the money you allocate to Poker is very significant for you, your bankroll management should be more conservative.

Variance Related to Your Poker Format

Variance is much higher in No Limit Hold'em than in Limit Hold'em. Similarly, variance is higher when playing 6-max (6 players at the table) and lower when playing full ring.
The higher the variance in your chosen Poker format, the more money you risk losing due to bad luck (or winning due to good luck). To avoid going broke, your bankroll management must account for the variance present in your chosen Poker format.

Poker Skill Level

If your skill level is well above other players at your limit, you can afford to have more aggressive bankroll management.
If your level is average or below, more conservative bankroll management will help prevent you from going broke.

Desire to Move Up Limits Quickly

With more aggressive bankroll management, you can move up limits faster, but the risk of going broke is higher.
With conservative bankroll management, it will take longer to move up limits, but you're less likely to go broke.

For example, you can discover a challenge to build your bankroll starting from $100.

How to Calculate the Necessary Bankroll for Playing at a Limit?

The bankroll can range from 50 buy-ins to 200 buy-ins (or more) for the most conservative players. In reality, there's no precise and exact value to follow. This is just a general range.

A very aggressive bankroll of 50 buy-ins corresponds to a $100 bankroll for playing $2 tournaments. By choosing this BRM, there's a high risk of losing everything, but you can quickly move up limits.

A conservative bankroll of 200 buy-ins corresponds to $400 for playing $2 tournaments and $1000 for playing $5 tournaments. By choosing this BRM, it takes much longer to move up limits, but it's unlikely you'll go broke.

Simulating Your Risk of Ruin in Poker

Find it strange that you need $300 to play $2 tournaments?
To verify this, let's simulate our risk of ruin using primedope.com.

We'll simulate 10 players playing Winamax [180 Max] Hold'em tournaments. This is a $2 tournament (including 20¢ rake) with 25 players paid.
Each player has a ROI (Return on Investment) of 10%, meaning that for each $2 tournament played, they make a net profit of 20¢.
We'll analyze the evolution of these players' wins and losses after 1000 tournaments played.

As we can see, with identical skills, results can be very different. By chance, the gap between the 2 extreme scenarios is more than 400 Buy-ins.
3 of the scenarios at some point lost more than $200, or 100 Buy-ins.

Primedope directly indicates the probability of going broke (risk of ruin) based on the starting bankroll.

Simulation Conclusion

With only $100 bankroll to play 1000 tournaments at $2 with 180 players and 10% ROI, the risk of losing your entire bankroll is over 50%.
With $288, the risk of ruin is only 5%.

Having a $300 bankroll to play $2 tournaments is therefore actually a good choice without being extreme!