How to avoid losing all your money: 7 rules of bankroll management

In the long run, poker results depend on the player's skill. However, many beginners fail to play enough hands or tournaments. The culprit is poor bankroll management. To avoid losing all your money, you must follow the rules. We will discuss them in this article.

What is Bankroll Management?

Bankroll Management is a set of rules for managing poker capital. It minimises the risk of bankruptcy and allows careful advancement up the stakes. 

Much in poker depends on variance. Variance — the deviation of a result from the mathematical norm. Two players can make the same decisions, but one will lose while the other — wins

Bankroll Management wasn’t invented in poker: stop-loss and other concepts were borrowed from stockbrokers. Capital management strategies are also used in sports betting. Bankroll management can be considered a subset of financial literacy. In real life, people with a monthly salary of $1,000 are not advised to spend $1,500 on a new iPhone. Similarly, registering for a $2,650 tournament with a $3,000 bankroll is not considered wise in poker. 

Specific bankroll management models depend on several factors: the discipline being played, the qualification of opponents, the skills and psychological resilience of the player. For example, in multi-table tournaments, the 100 buy-ins rule applies. To play $5 tournaments, you need to accumulate $500. At the lower cash stakes, requirements are softer: NL2-NL5-NL10 can be tackled with a bankroll of 40-50 stacks. As you move up limits, it is wise to increase your buffer. We explored bankroll poker in a separate article.

To successfully navigate the “turbulent waters” of online poker, adhere to a few capital management rules. Here are the main ones:

1. reliability is more valuable than a quick start;

2. take shots in suitable situations;

3. be flexible when the bankroll decreases;

4. don’t move up the limits to recover losses;

5. set a stop-loss and follow it;

6. don’t spend your bankroll on everyday needs;

7. study the psychology and mathematics of poker.

We will discuss each rule in more detail.

Rule #1: reliability is more valuable than a quick start

Many beginners come to poker for quick and big money. The thought: “I’ll deposit $100 — register in the Sunday Million — win it — take home $100,000” crosses many minds. Fairy-tale stories do occur in poker. For instance, in 2003, Chris Moneymaker won the Main Event of the World Series of Poker. Before this pivotal success, he was playing low-stake tournaments on PokerStars. In 2015, a player nicknamed Tornado111 won in Spin&Go for $5 with the maximum multiplier and took home $1,000,000. Before the million-dollar spin, he had only played 20 tournaments.

Moneymaker's victory sparked a “poker boom”. If 839 players participated in ME WSOP-2003, the following year 2,576 people played the main tournament

In most cases, a beginner’s career follows a different path. They deposit money, jump into an expensive tournament with all their funds, quickly exit, and forget about poker. Over the long term, success comes to patient players. With a starting bankroll of $100, it's sensible to participate in freerolls and $1 tournaments. This cautious approach allows you to gain experience fighting live opponents and hone your gameplay skills. After 50-100 tournaments, not only does skill grow, but so do the first wins. Without bankroll management, a player just won’t “survive” to see their successes.

We recommend beginners pay attention to the “FunFarm Start” programme. If a novice completes the theoretical part of the course, they receive a starting capital of $50. This free money will provide the opportunity to alternate between freerolls and tournaments with buy-ins of $0.5-$1.

Rule #2: take shots in suitable situations

In poker, a “shot” refers to a trial attempt at the next limit. It allows a player to:

• gradually move to more expensive tournaments or cash tables;

• gather information about opponents and their playing habits;

• reduce psychological pressure.

In cash games, a player might mix their regular limit tables with one higher-stakes table. For example, a player with 3 NL10 tables might add one table of NL25. In tournaments, a shot can be realized differently. Suppose a player participates in $5 events and has accumulated $800. Systematically playing $10 buy-in tournaments isn’t bankroll-wise, but adding one more expensive event to a session is feasible. They end up playing 10 tournaments for $5 and 1 for $10. With some luck, the player might save money for the transition more quickly.

No one forbids trying more complex shot-taking schemes. Consider cheap satellites into expensive tournaments. Convert $5 into a $100 ticket. For example, at the time of writing, PokerOK runs satellites to the Mini Main Event for $5. The ticket offers a chance to compete for $1,000,000. Any in-the-money finish will significantly boost a player's bankroll. A victory can multiply capital hundreds of times. 

Rule #3: be flexible when the bankroll decreases

The path to success in poker resembles a winding road with many bumps, cracks, and dead ends. Downswings and failures accompany a player throughout their career. Bankroll management helps overcome tough moments with minimal loss. Many players take moving down limits to heart. An experienced professional isn’t intimidated by the prospect of a cheaper game. Moving down allows for: reviewing mistakes, maintaining self-confidence, and losing less.

Dropping to a lower limit can be disappointing. However, enduring a downgrade is easier than grieving over a lost bankroll

Set flexible transition rules. For instance, if you lose 25% of your poker capital, drop to a lower limit. Here's an illustrative scenario involving two players — Daniel and Phil. Both are playing $5 tournaments with a bankroll of $500. Both hit a losing streak. When Daniel’s capital fell to $400, he switched to cheaper events. Phil decided to stick to his plan and lost 80% of his capital. Later, Daniel quickly returned to his previous limit. Phil, however, took a long time to rebuild his bankroll. Taking a timely step back simplifies future recovery.

Rule #4: don’t move up the limits to recover losses

Losses are a natural part of poker. The game inherently includes bad streaks and major defeats. During a downswing, a poker player's main task is to minimize losses. However, many players move up limits to recover lost money. Fighting stronger opponents leads to inevitable losses. Disciplined players adhere to bankroll management and humbly finish sessions with a loss.

Moving up limits to regain losses is the shortest path to bankruptcy

Over time, distance smooths out the negative effects of variance, but not the consequences of tilt and loss of control. Regularly revisit basic capital management rules and ignore the urges to move up limits. Bankrupt players won’t recover with poker. 

Rule #5: set a stop-loss and follow it

The stop-loss or Stop-loss came into poker from trading. It involves selling a security when its value falls. For example, a Disney stock is worth $100. If the owner sets a Stop-Loss at 5%, when the price drops to $95, the broker sells it, locking in the loss. In poker, this rule protects a player from tilting. If, after a series of losses, a player starts making poor decisions, it’s wiser to end the session early. 

Stop-loss is easier for cash players: lose 10 stacks — close the tables and take a break. In tournaments, fixing losses is more complex. Players simultaneously compete in several events. They often start at different times. It’s easier to track the number of tournaments and the overall “load”. Suppose a player has expended $60 in buy-ins across various tournaments; they halt further registrations.

Stop-Loss will benefit fans of the Re-entries format. After exiting a tournament, a player might buy back in for another entry. The format is risky for tilt-prone players. If you enjoy Re-entries, limit the number of re-entries. An example rule: “if I bust out of a tournament, I take one re-entry but no more.” 

Rule #6: don’t spend your bankroll on everyday needs

After initial success, players begin withdrawing money. Some reward themselves for their efforts, while others show family that poker can provide a living. However, cashouts slow down progression up the limits. It’s especially risky to withdraw bankroll funds for tournament players, given the variance. One might continue delivering solid poker, yet still lack wins for months. If too much is withdrawn, it risks the bankroll or dropping to a lower limit before the next win. 

Your bankroll is your working tool. Don’t impede progress for momentary whims

Extra money is better invested in yourself. Purchase useful poker software or hire a coach. Both decisions will elevate your skill level. Continue with this approach and eventually, you’ll start winning tens of thousands of dollars a month. At that stage, you are free to withdraw money and treat yourself as you please.  

Rule #7: study the psychology and mathematics of poker

Bankroll management protects players from bankruptcy. Psychological resilience helps reduce losses during challenging times, enables timely downshifts in limits, and shields from tilt-driven attempts to recover losses. Mathematics enlightens players on variance. The sooner a player grasps poker’s complexity, the quicker progress will come. Understanding variance won’t recover 30-40 lost buy-ins, but it will help view losses more calmly. The most rational beginners start working on their game with renewed vigour, aiming to reduce luck’s influence on results.