ARTICLES
by
Mark Blade

Note about this article: Many visitors of the popular poker website, TwoPlusTwo.com, have read my article titled, "Why Money Management May Work For You In Some Cases" in the August issue of their Two Plus Two Internet Magazine. If you haven't, you can get to the August issue by clicking here. In that article, I make reference to a previous article of mine that appeared in Two Plus Two's May issue. Because Two Plus Two is very writer friendly, they do not keep their internet magazine writers' articles posted on their site for more than three months. Some Two Plus Two visitors have e-mailed me wondering if there is any way that they can still get a chance to read my article from the May issue. So, by popular demand, here it is:

Smack Some Sense Into You About Money Management
by Mark Blade

Before we get started, you must understand an important term distinction. “Money Management” refers to the strategy of controlling your wins and losses by quitting your current playing session once you are up or down a certain amount of money. It is ripe with flawed reasoning. “Bankroll Management,” on the other hand, refers to having an adequate amount of money to insure that you don’t go broke at the level of stakes you are playing. It is a very valid and useful concept.

Smack Some Sense Into You About Money Management - Attempt #1

You’ve probably entertained the notion of money management because of something like this. On June 11, you walked into a casino and played poker. After 3 hours and 45 minutes, you were up $500. If you had just walked away at precisely that moment, you’d still have that money. But instead, you kept playing and ended up down $1245. So you thought to yourself, “Eureka! From now on, I’m always going to quit when I’m ahead by $500.” Sounds good. I’m following you so far. But let’s see how this really plays out.

Assume that you normally would play 8 hours a day, 5 days a week, except that you will now cut your days short whenever you reach that magic $500 mark. You will have three types of results.

Result Category #1

Some days your plan actually works. Some days you were destined to lose that day. Or you were going to break even or just make between $1 and $499. But instead, you hit that $500 mark and quit. That worked out great! You really saved some money on those days. Congratulations! Maybe you’re smarter than I realized.

Result Category #2

Uh-oh. Wait a second. Other days your plan doesn’t work out so well. You stopped playing at $500, but little did you know that you were destined to make more than $500 that day. You were going to make $501 or $753 or maybe even $2215. Those days it didn’t work out so well, did it? It actually cost you a lot of money. Hmmmm?

Result Category #3

These are the days when you were going to lose, break even, or make between $1 and $499. But on these days, at no point during the day would you ever hit the magic $500 number. So these days are irrelevant. You would play the full 8 hours whether you had your money management system or not.

Money Management Put To The Test

So we’re only really debating Category #1 and #2. Let’s look at these days, and let’s zoom in on the precise time that you hit your $500 mark. Remember, you came up with your “Eureka Plan” on June 11. Now it’s June 12 and you’re putting it into effect for the first time.

Sure enough, 4 hours and 22 minutes into your playing on June 12, you accumulate your desired $500. Freeze time and let’s think about this. Is today a Category #1 day? Will you save yourself money by walking away right now? Or maybe it’s a Category #2 day? If it is, and you got up now, you would be missing out on a lot of money. So how do you know what kind of day it’s going to be?

You don’t. And therein lies the rub for money management. You have no idea if you are destined to win or lose from that $500 point on.

Wait a second. I just lied. You do have an idea. Assuming you are a winning caliber player, you know that you play better than your competition. Let's say you average one big bet per hour. If you stay and play on, you can expect to make your one big bet per hour on average for every additional hour that you sit there at the table. Sure, it won’t be guaranteed for any particular hour or short stretch of hours, but in the long run, that is what you will earn.

So money management strategies really just cost you money because they prevent you from putting more hours in at the table which would put more dollars into your pocket.

What About Stop-Loss Strategies?

They work exactly the same way as the “stop-win” strategy that I just debunked. Think about it and you will see that you will have the exact same three result categories except they will be flip-flopped. And when you get to that decision making moment when you’re down $500, you still won’t know if you are more likely cutting off future losses or future gains. Whoops – I lied again. If you are a winning caliber player, you do know what’s more likely from that point on – Gains.

Moral Of The Story

Keep playing whenever you have an advantage over your competition.

Smack Some Sense Into You About Money Management - Attempt #2

If you still don’t quite grasp this concept, read on.

Here’s another way to look at money management strategies. What it all boils down to is that you are picking a specific time to stop playing. You are picking this time because during one particular session, which you define as a day at the casino, you hit some predetermined winning or losing amount number and hit the eject button on your poker seat. Let’s say that this happens when you lose $500 at 8:17pm on April 6.

Then what happens? You walk out of the casino and go home. You put your wallet on your bedside table, put on your pajamas, and climb into bed and go to sleep. You wake up, take a shower, have breakfast, grab your wallet and hop back in your car.

You go to the casino, plop yourself down at a table and start playing again.

This is your new session on the glorious new day of April 7. You are going to start your counting from zero again and wait until you win or lose your predetermined $500. But wait a second. What if on April 6 at 8:17pm you had walked out of the casino, walked over to your car, kissed the hood ornament for good luck, and then walked right back into the casino? What if you called that your “new session?” Hey, that could save you on some gas money too! You could just start from zero then and decide to leave when you won or lost $500 from that point on.

Don’t you see that that is what money management techniques are really all about. Once you’re really evolved, you wouldn’t even have to get up out of your seat and go to kiss your car hood ornament. You could just do what I do. Every time I win or lose $500, I just stand up, kiss the nearest waitress on the lips, plop myself back down, and start my new count again from zero.

C’mon. You’re a smart, experienced poker player. Leave the money management nonsense to the novices.

Additional note about this article: If you are interested in purchasing PROFESSIONAL POKER: The Essential Guide To Playing For A Living, it is available at Amazon.com (usually at a very nice discount) by clicking here. If you are interested in reading the follow-up article to this one, you can read it on the Two Plus Two Internet Magaine by clicking here.