Learn Holdem Money Management
What is Acceptable Risk?
The answer to that is going to be different for each individual and will vary from game to game. If you want to remove the "gamble" from your game and treat it like a business, you will have to limit your risk to a level that minimizes your risk of ruin, keep good records, and make adjustments as needed.
The first step, when starting out is to see if you even have an edge, a positive win rate. At this stage, you can play for free or as cheap as you can until you gather a sufficient quantity of data. Pick a data target large enough to give you meaningful feedback such as 100-200 hours of NL Cash Ring or 100-200 games of 9 man SNG's. Narrow your focus to a few variables, for example: 9 player, Turbo, SNG, 1 game at a time, all at the same buy in level.
Next, establish your average hourly win rate and determine what amount you want to invest into your bankroll. Each game type, number of players, and strength of opponents at a given level of play, all affect your Variance (potential for a draw down). In order to avoid ever having to replace you bankroll with another one, you need to keep your Risk of Ruin below 5%. Let's take a $10,000 bankroll as an example. I'm going to make suggestions for you to consider. These suggestions also assume that you have a proven advantage for each game type and level:
Game Type Level Buy In %BR Risk
Limit, Cash, 9 players $10-20 20BB Buy = $400 4%
Limit, Cash, 2 players $5-10 20BB Buy = $200 2%
NL, Cash, 9 Players $1-2 50BB Buy = $100 1%
NL, Cash, 2 Players $.5-1 50BB Buy = $50 .5%
SNG, 9 Players Buy = $100 1%
Multi Table Tournaments Buy = $50 5%
Each one of these risk limits takes into consideration the Variance of the situation. This is why you need to keep good records. If your win rate lowers, your variance will increase and you will need to drop a level. Always drop down a level when your risk limits exceed the level you have set for your bankroll.
Analize your records. Which games give you the highest win rates and the lowest variance? Investing more time into them will increase your monthly ROI. Monthly ROI(return on investment) is simply your Total Profits /Beginning Bankroll * 100. When you want to increase your Monthly ROI, you have four options: improve your game, put in more playing time, play multiple games, or move up a level. Moving up a level should happen only when your Bankroll justifies it. Monitor your win rate when you first start playing against tougher opponents. Make sure your new level increases your Monthly ROI.
If you are using tracking software, look for relationships between your Performance Stats, your Win Rates, and your ROI.
