After reading countless books, studying videos, and talking poker for more hours than I care to admit I have noticed that most topics have been well covered in some way. In a recent World Series of Poker episode Daniel Negreanu said "In the long run the most successful poker players are great money managers." You’ve heard the commentators on the WSOP mention that the average pro values each tournaments at X number of buy-ins, but I found myself wondering, how do I get to X and what the heck does it mean?Almost everyone will express the importance of bankroll management; however it seems to me that finding a proper explanation of how to value your tournaments can be difficult. So for my first article on PocketFives I decided to take a crack at offering a detailed explanation of this important part of bankroll management.
There's a lot of math, but hey we’re poker players so no problem right? In my first attempt to write this I ended up with something that looked like an advanced game theory text book. I decided it was best to scrap that and just tell you where to find the numbers and give a basic explanation of where they come from and what they mean.
I know if you’re a regular reader on this site you have heard countless times that you should be maintaining a spreadsheet. Well guess what, if you’ve been doing that this whole process will be a breeze. If you’re like me and the spreadsheet is missing a few days worth of info there’s no other way to do this than to actually count your results. To use as an example I decided to take my $2.20 180 man turbo results.
I chose these in particular because I spent plenty of time playing them trying to build my bankroll, so I have a pretty decent sample size. This brings me to another point. When dealing with statistics and odds bigger is better; when we’re talking sample size that is, the more events you have considered the more reliable your information will be.
Ok on to the math, hang with me through this and then we will get into what it means and how to use it. In order to find out how much you can expect to make over the long run playing tournaments we need to find your average cash and multiply it by the odds of cashing. To find our average cash we add up all cashes for that buy-in\field size then divide by the number of tournaments that you cashed in. My numbers looked like this…
AC = total $’s cashed/ total tournaments cashed in
AC = $1857/84
AC = $22.10
Ok, now that we know our AC we need to know how often we can expect to cash, or your In the Money percentage (ITM). Now we also know from sleeping through math class we can find our ITM by taking the total times you cashed and dividing it by the total tournaments of this kind that you played. Again my numbers looked like this…
ITM = total cashed/total played
ITM = 84/596
ITM = .14 or 14%
In other words I could expect to cash for about $22.10 once out of every six tournaments that I played. With those two numbers we can figure out what your profit per tournament is (for simplicity let’s call this X). To find X we need to first multiply our buy-in (BI) and rake (R) by 6. Remember that my ITM ratio was 14% or about 1 of every 6, so we will be basing this on a six game span. Once we have that number we will subtract it from our AC then divide by 6. It looks something like…
X= AC - 6(BI+R)/6
X= 22.10 – 6(2.00+.20)/6
X= 22.10 – 13.20/6
X= 8.90/6
X= $1.48
Now that we have X, what does it mean and why should you care? Well the obvious answer to that is it means that I can expect to profit $1.48 for every tournament I play at that level, assuming that my skill or the average player’s skill doesn’t increase or decrease. At this level it might not be so important, but when if you are considering taking the plunge to the pro life having this formula can tell you just how much you would make over a given number of tournaments.
So for instance let’s say that I was playing $220 tournaments and was able to maintain the same results (not likely but let’s go with it for this example). If I wanted to know how much I could expect to make over the course of a year I would multiply X by the number of tournaments I could fit in. Let’s say I could fit in 20 a week with X= 148.00 I would expect to make about $154K… much better than my current salary, but of course I would need a solid sample size before I felt comfortable telling my boss where to put his job.
Yeah yeah, I hear you… what does this mean for the average player? The micro guy just playing to build his bankroll could use this to estimate how long it will be before he can make his next jump in levels. Say you’ve already moved up a level or two and can afford to pull out a few dollars here and there; but you know you really want to buy that TV you saw in big box electronics the other day, well if you know your X then you would know just how long it will take.
I hope you enjoyed my musings and that this has been in some way helpful. Remember Rome wasn’t built in a day, so be patient and use good bankroll management. Good luck at the tables!
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