CardSharp

Ever since I wrote the last bankroll management article, I’ve been getting search hits for “craps bankroll management”. I feel sorry for these folks, because I doubt anything I said dissuaded them from their belief that somehow they could beat craps if only they played their money right. It’s important to understand why there are useful bankroll management principles that apply to poker, but there’s nothing to be done about craps. The difference is that poker, if played correctly, offers you a series of positive expectation wagers. Craps, in contrast, offers you only negative expectation wagers. So if you keep playing craps, in the long run, you will always lose. In contrast if you play poker skillfully you will always win in the long run. The problem, in poker, is to get to that long run without going broke in the process. That’s what the previous bankroll management article was all about – making sure you have enough money in you bankroll to weather the swings and get to that perpetually profitable long run.

There’s another aspect of poker management that’s worth discussing, and it’s probably a lot closer to what those craps players are thinking of when they think bankroll management: figuring out when to stop playing.

One of the most basic ways to do this is to employ a stop-win and stop-loss threshold.These terms are directly related to the concept of a stop-loss order in financial trading. In their simplest form, they mean that you stop playing when you’ve won or lost a specific amount of money. The first important fact to note is that, if you are playing a game with a constant expectation, a stop-win or stop-loss policy is never a good idea. If the game’s expectation is positive (even when considering opportunity costs) then you should play as much as outside constraints allow. If the game’s expectation is negative, you should not play at all. By the way, for all the craps players that will undoubtedly be directed to this article by Google, that’s the only good bankroll management advice anyone will ever give you – don’t play.

On the basis of the above fact, many poker authors have advocated playing fixed hours rather than stopping based on other criteria. Daniel Negreanu famously coined the phrase “play hours, not results”. However, I believe this conventional wisdom is dead wrong for one simple reason: your expectation when playing poker is far from constant. Instead I would suggest the following alternative policy “as long as you believe your expectation, including opportunity costs, is positive – keep playing”. As we’ll see, this policy effectivly includes a stop-loss, but also has other aspects.

Previously we’ve talked about finding the best possible game to play in. Assuming you’re following that advice, you should believe at the point when you sit down that you expectation is positive taking into account opportunity cost. And as long as nothing changes, that belief will persist. However, there are four things that can change that may make it correct to quit the game:

1. Your opinion of how good the game is changes
2. The game gets worse
3. Your play gets worse
4. The opportunity cost of continuing to play increases

I’ll cover each case separately.

Your opinion of the game changes

There’s no question that a lot of guesswork is involved in selecting the best possible game. And like any guess, you’re going to be wrong some portion of the time. When that happens, and the game is in fact not nearly as good as you thought, you may be well served by quitting and playing something else or if nothing good is available quitting. The key concept to remember here is opportunity cost – just because the game you’re in isn’t as profitable as it could be, that doesn’t mean you should automatically switch. You have to believe the new game you are moving to is better, and indeed enough better that it’s worth the playing time you’ll inevitably lose when you switch. Of course, if the current game is so bad your expectation is negative, you need to quit right away.

The game gets worse

Even if you do a good job of game selection and find yourself in an excellent game, it may not stay that way. If key fish leave, or become stuck and start playing more conservatively, the game may become far less profitable. Of course, this is not a reason to quit in and of itself, as these people will eventually be replaced by new players from the board. You should certainly stick around long enough to find out how well these new players play – the game may become very profitable again once the seats are re-filled. However, a situation can arise where all the seats in a game are filled by good players, and no one looks likely to go broke any time soon. These conditions are the most common when there are a lot of particularly conservative regulars/pros in a cardroom population, and especially if you’re at the main table of a game that has a must-move table. At that point, with no near-term prospects of new fish entering the game, it’s time to consider quitting or moving. Again it’s a matter of opportunity cost – whether or not you go elsewhere depends on how good you think the other game is.

Your play gets worse

Most people don’t like to admit it, but everyone’s play gets worse when they’re tired, hungry, drunk, or badly stuck. The problem of becoming “stuck” or having lost a large amount of money in a given session is very important. In an abstract mathematical world, being stuck wouldn’t affect your play or the way your opponents play against you. However, in reality it does. Everyone who’s played for meaningful stakes knows that sickening feeling you get after a big loss. And no one plays well in that state. Mike Caro coined an excellent term for the psychology of it – you pass the “threshold of misery” after which additional losses can’t make you feel any worse. This tends to serve as a motivation for bad play because the psychological value of a dollar won is now far greater than that of an additional dollar lost. People in this state tend to take unwise risks to win back some of their money because it seems rational in light of that skewed valuation of money. This is why many good players start playing like utter fools when they get too far stuck. This behavior is not universal however – some overly lose players actually play better when just a little stuck because they tighten up.

It’s imperative that you never play poker past Caro’s threshold. The results can be devastating. You can lose money far faster playing badly than you can win it playing well so it’s very possible to destroy months worth of careful bankroll building work in a couple of hours of play where you’ve lost touch with the value of your money. For this reason I think it’s key to know about where that sick feeling sets in for you, and then set a stop-loss threshold before that point. Simply refuse to get to the point where you would be seriously stuck. Quit first.

The other common reasons for bad play – exhaustion, hunger, and inebriation – demand similar policies. Playing while tired or drunk is simply a horrible plan. You’ll be far better off getting some sleep and tackling the game again when you’re rested and sober. It’s quite likely many of your opponents from the night before will still be there and will be playing bottom tier poker. Some players seem to like to engage in marathon 24hr. or longer sessions, but I’ve yet to see anyone playing even passable poker after more than about 18 hours. Simply by being well rested you can give yourself a big edge over people who under normal circumstances might be far better players. Similarly, if you’re hungry take a break and find something to eat.

The opportunity cost increases

There’s two basic ways the opportunity cost of playing your current game can go up. The first is that a better game becomes available. In that case, it makes sense to switch if the new game is enough better to cover the playing time you’ll lose switching. Far too many players become “glued” to the game they’re currently playing, and completely lose track of what’s going on in the rest of the poker room. This sort of laser-like focus may seem admirable, but in reality it can cause you to be tied to a marginal game when the best game in town is going on less than 50 feet away. I recommend getting up from the table every so often when there’s a big hand and you’re not in it, and take a quick peek at the other games in the rooms. Look for signs of a good game like the presence of notorious fish or lots of drunks. You’ll often be glad you kept your eyes open, and if you don’t find anything your seat will always be there waiting for you.

The other kind of opportunity cost increase is when there’s something outside of poker you’d like to be doing. While it’s difficult to put a dollar value on time spent with your family or a night out with friends, most players tend to undervalue these things. This makes a lot of gamblers hard to live with. It’s worth noting however that if there’s something you’d rather be doing instead of playing, you’re probably not playing you best. This often makes for an excellent time to quit.

Final Words

As you can see, I advocate that you stop playing for a number of reasons, and none of them are time based. If you’re not tired, the game is good, and there’s nothing you’d rather be doing then why stop? On the other hand, if you’re starting to get stuck and the game’s lousy and you’re tired and your girlfriend wants you to come up to the room and have sex, it’s idiotic to keep playing just because you planned on playing 5 hours.

While stop losses might be wrong in a theoretical world, I think they make a lot of practical sense in the real world. In addition to the benefits already mentioned, they may cause you to stop if you’re being cheated or if the game is actually much harder than you think, so they’re protection against several other kinds of bad judgment. While the point where you should set the stop-loss is somewhat player specific, I think between 1 and 2 standard buyins is a good starting point for most players.

On the other hand, I can’t see any benefit to a stop-win for most players. There may be some people with the unusual psychological makeup that they play worse when up, but I’d imagine that’s rare. In any case, I’ve never employed a stop-win and it just seems obvious to me that if you’re winning and the conditions are otherwise good you should definitely keep playing

One effect of having all these triggers that stop you from playing is that you probably won’t put as many hours in as you would if you just played fixed hours. You should be more than compensated for this however by removing all those hours of tired & stuck play from your results. However, if you find you’re having trouble making ends meet, it may mean that your current stakes aren’t really livable, or that you’re really not enjoying being a poker player that much. In those cases, it’s probably time to either work out a plan to move up or use your backup plan (from the previous bankroll management article) so you can start doing something you enjoy more. Pushing the number of hours you play can sometimes be a short term solution to make ends meet, but it’s rarely a good idea in the long run as burnout will eventually set in.