Intro
You hear people talk about bankroll management all the time. There is so much random information out there. The reality is that no one bankroll management system will work for everyone. There is one key though, if you are a losing player no bankroll is big enough. If you are a losing player then you will eventually bust any roll. With that out of the way let’s examine the factors you need to consider when developing your bankroll management system.
General rules of thumb.
Okay so the general rule of thumb for a professional cash game player is 40 buyins for whatever game you’re playing. So let’s say you are playing 2/5. One buy in is $500, this means you need $20,000 in your poker bankroll. This is JUST YOUR POKER ROLL, meaning you are not using that money to live off. You need separate accounts. At the end of the month pay yourself out a percentage of the profit. You should not be paying bills out of your poker bankroll. Now there are factors which could mean you need less buyins or more buyins. Let’s go over those factors.
Your Risk Tolerance
If you are okay having a high risk of ruin RoR% (risk of ruin is the percentage chance that you bust your bankroll) you can play with fewer buyins. RoR% is expressed as:
RoR = [(1-T)/T]^C/X
Average win% = (average amount the bet wins) / initial capital
Average loss% = (average amount the bet loses) / initial capital
Z = (frequency of winning * average win%) — (frequency of losing * average loss%)
X = [ frequency of winning * (average win%)² + frequency of losing * (average loss%)²]undefined
T = ½ (1 + Z/X)
C = capital/bankroll
TLDR: If you are okay with having as high a possibility of busting your bankroll you can play bigger. The upside to this is if variance is on your side during that time you can win far more as you get to play bigger.
Your win rate
It’s pretty simple the higher your win rate the smaller your bankroll can be. This is because the higher your win rate the lower your variance is. With less variance you will have shorter downswings. Shorter downswings mean you need less money in your poker bankroll to sustain through downswings.
Outside income being put towards your bankroll
If you play poker as a side hustle and have outside income from a job or investments and if you go on a downswing you can just add money to your roll then you can have a very small roll. This should be self explanatory but it is because your roll is not actually your roll. Your roll is effectively unlimited.
A simple chart for this is as follows
