Diversify your Bankroll

We always hear people talk about the importance of bankroll management in poker. It is one of the cardinal rules that one must follow in order to be successful in this fickle game.

For newbies out there who are somewhat confused as to what it is, bankroll management is basically playing within what your money allows. You only play at certain limits and you make sure you have a buffer such that a sudden bad run of cards will not eat up all of your bankroll. As sure as the sun rises, there will be times when you lose money not because you are playing like a donkey, but just because of variance (cards not falling your way even though you get your money ahead). You have to make sure that you have enough money to absorb these downswings and live to fight another day.

Even the best players in the world would go bankrupt in an instance if they did not follow good BR management. So its importance has to be emphasized again and again.

There are many rules out there being touted by different pros as to what is the correct level. From 20x your buy in to 100x your buy in. Another advise that we usually hear is to make sure that only 5% of your total bankroll is in play at any one time. If you ask my opinion as to what the correct level is, I would also not be able to give you a definite answer. I think it depends pretty much on your comfort level. I am a somewhat conservative player who only plays SNGs and MTTs. So my current bankroll is usually falling somewhere between 50x to 80x my playing limit. I am not saying it is the correct level. Some would probably say its too conservative, but I have been moderately successful following this personal guideline, so I stick with it.

But enough of bankroll management for the meantime. That is not actually what I wanted to write about. There are many great articles in the net which discusses this topic better, so just browse around and I’m sure you’ll find something that would suit your style.

What I wanted to talk about is DIVERSIFICATION. In finance, diversification is basically a risk management technique where you mix a wide variety of investments within a portfolio. You want to make sure that the fluctuations of any one investment has minimal impact on the overall performance of your finances. So if you have let’s say $1000 to invest. You wouldn’t want to put everything in the stock market even if it offers the highest return . The ideal move is to put some in the stock market, some in bonds and keep a small portion in liquid cash. So if the stock market suddenly crashes overnight, you are still protected.

In simple terms, it’s basically saying “Don’t put all your eggs in one basket”.

So what the heck does this have to do with poker ? Well, in much the same way, it is highly risky to have all your bankroll in one poker site. Yes, that poker site has been good to you. Yes, that poker site offers the best rakeback deal. And yes, that poker site gives reload bonuses every 2 weeks.

But you have to also know that there is very limited regulation governing the operation of online poker in general. Poker Site offices are usually located in remote places like Kahnawake which is actually an Indian reserve located somewhere south of Canada. There's a good reason why they're located in such remote places and I don't think they have customer service centers where you can go and personally complain if you suddenly find your account short of one thousand dollars. Also, don’t fool yourself into thinking that there is some almighty Gaming Commision that has regulatory and control powers over these sites. The poker site could just decide to close for any arbitrary reason and your bankroll is pretty much fucked. Just read the horror stories in the different forums. If these guys decide to fuck you over, you pretty much can’t do anything but bend over and take it.

Let’s take the case of the Ultimate Bet Scandal where Superuser accounts have been proven to exist for more than 4 years to cheat players of millions of dollars. You know what the Kahnawake gaming commission decided? It asked Ultimate Bet to refund these monies back into the player accounts that have been affected. But the commission really doesn’t have any idea of the actual amount scammed nor who were the players affected. You were probably born in Mars if you think that Ultimate Bet will reveal the true extent of the cheating.

Then they fine UB $1.5 Million for the violation which UB would probably gleefully withdraw from their secret account where all the cheating money went in the first place. As my daughter would say after acing her tests, CHICKEN!! If the commission was actually regulating, common sense dictates that they should have caught on to the scam years ago.

Just think about it, why would you cut the hand that feeds you? In much the same way that the wall street CEOs got away with murder in the ongoing US financial crisis. UB is basically getting just a slap in the hand. In fact, I have just received an email from UB yesterday with another great reload bonus in celebration of their highly successful asshumping of the ordinary poker player. =)

Another great example is Moneybookers. Did we have any recourse when they suddenly decided to shut us Asians down? Heck, we can whine all we want in our forums but at the end of the day. They said FUCK YOU to us and we said THANK YOU. If you had all your bankroll in a site where they only accept Moneybookers, then its highly irritating to have to figure out a way how to get your own hard earned money back in your grubby hands.

So how do you protect yourself? Well, you can’t really do anything except cry to your mommah if a poker site decides to cheat you or suddenly freezes your bankroll or worse, closes shop. But you can reduce the risk by keeping your bankroll spread in 3 or 4 different sites. This way, even if something happens to one, its basically just 20% to 25% of your total bankroll.

If you’re a beginner, don’t worry too much about diversifying. You probably don’t have enough online money to do this anyway. But I hope you get the point that I’m trying to say. Bankroll management (having enough buy-ins) is key and should be every player’s primary concern. But there is nothing to lose if you also diversify your bankroll. You actually gain many advantages other than reducing your risk. You can avail of continuous bonuses by switching from one site to the other and personally I find it’s a good way to avoid tilt. Going from one site where you are on a losing streak to another site usually makes a big difference on my outlook. Also, you are kept aware of all the promotions and tourneys being offered by the different sites such that you can choose the fishiest tables or the juiciest MTTs to play anytime of the day.