As Barry Greenstein described in his book, Ace on the River, for a poker player, it just isn't enough to know your cards and your opponents, you also have to know how to take on money and even more important, how to let your money work for you. The key to success is having a good plan and a thought-out Bankroll Management.

First rule of Bankroll Management is about holding onto your money - Maintaining Your Capitol. You can't play poker if you don't have any money. For a poker player, having money is like a plumber having tools. If a cook wants to go on vacation, he isn't going to sell his pots and pans to go on vacation. I always hear from poker players, "When I have won $1000, then I'll cash out $800 and I'll buy this or that." Big mistake! What people should be saying is "When I have won $1000, I will go up a limit."

Sustaining and maintaining a bankroll is a very important and a topic that you should not take lightly as a poker player. In the game, there are many dangers from bad beat, tilts and just simply bad luck, which can all make a pretty big dent on your capitol. Downswings can last only a few hours, days but can also go on for weeks and even months. If you don't have a strategy for capitol conservation, you'll probably be bankrupt pretty fast. No one is safe from having a downswing, not even the pros. AA and KK will be beaten by worse hands, the draws don't materialize, the flush on the turn is beaten by the pair on the board that gives your opponent the full house and it goes on and on.

Capitol Maintainance is the first rule of Bankroll Management and this is what is the most important factor as well to use to determine in which Limit you should be playing. Should you go up or even go down a limit? Don't decide this based on short term wins or loses, but rather on the size of your bankroll, even if this is hard to do.

By having a strict Bankroll Management you are ensuring, that you will be able to win consistently at a Limit before you leave it and therefore you are also playing in "safe waters" even when you go up a limit. Going down a limit, does not mean you will win every hand and it isn't dishonorable, it just means that at the moment, you don't have enough money for a higher limit. At the same time, you are showing that you are flexible enough and clever enough, to recognize the best solution for the present bankroll size and situation and adapt to it. Later almost every player who has gone down a limit will tell you that it was the right decision, even when it is a very hard decision to make.

Of course, what also belongs to a successful Bankroll Management is discipline. The temptation to go up a limit after a couple of good sessions is strong, especially after you have won so much on the Y tables and at a higher limit (the X tables) you could be winning twice as much. However, most find that it unfortunately isn't that easy and that one session X cost as much as the whole winning from the Y sessions plus a whole lot more. Then of course, you have to try and get back what you've lost - again in the higher limit, well because it will go much faster than at the lower Y sessions. Then before you know it, you are on the fast track to being broke.

Here we will be presenting values, that were taken as being conservative in order to give a beginner a solid footing. We have also decided to focus the values needed more for an online poker game than for a live game, although these are similar.

Bankroll Management for the Fixed Limit Player
In Fixed Limit you have the 300-200 Big Bet Rule. This rule corresponds to the bet on the turn and the river and is usually two big blinds (on some poker sites and on many homepages one big bet = one big blind). In other words, this rule tells us that you can go up a limit, when you have 300 big bets for the that limit and you should go down a limit when you only have 200 big bets for the lower level limit.

Bankroll Management for the No Limit and Tournament Player
In No Limit you have the 25-20 BuyIn Rule. This tells us what the maximum amount is, that you can bring to a table. Typically this is 100 big blinds. The rule says that you can go up a limit, when you have 25 BuyIns for the higher limit and you should go down a limit, if you only have 20 BuyIns for the limit left.
Of course, having a rational Bankroll Management System also means having a rational bookkeeping system. You can do this is a notebook, by using an excel sheet or with a program or website. Next to your account status, you should also be keeping track of played limit, how long the session lasted, place, winnings/loses and the strength of your opponents as well as any notes you have made on his playing style.

Bankroll Calculations
There is a formula, which you can use to determine the size of your bankroll against the chances of going broke known as the Risk Of Ruin. The formula is:
Bankroll = -(SD^2/2*Hourly rate)Ln(ROR). SD stands for Standard Deviation, a program such as Pokertracker or Pokeroffice will give you this value.

I will try and use an example to clarify:
Let's say that you are playing Fixed Limit $10/$20, which is probably the lowest limit you can play to be able to totally finance the cost of living with poker. Your winnings are 1 big bet/hour which equals about $20/hour and you have a SD of 200. Then we'll assume that you have accepted having a 5% chance of going bankrupt.
If you plug these values into the formula we get:
(-200^2/2^20)Ln(.05) or -40,000/40*Ln(0.5)= $2996.
What we read from this, is that you need a $2996 bankroll in order to play $10/$20 with a 5% chance or 1 in 20 of losing it all. 1 in 20 is actually pretty risky, if you are trying to support yourself and your family by playing poker.

How about we try with only a 1% chance of being ruined? We then get -40,000/40*Ln(,01) = $4605. If you are a "winning player" with a standard deviation of 10x your winning rate and $4605 in your pocket, you can play $10/$20 Fixed Limit forever and will have a 99% security of not going broke.
If you are winning player, your bankroll will grow and by having just a bit more, your chance of staying in the black will also increase to 99.9%. This corresponds to having a bankroll of $6908.
I would also like to point out, by increasing your bankroll by just 50%, increases your chance of not losing it all by 100%. By the way, $6908 corresponds to 345 big bets.

If someone asks you about the magical 300 Big Bet Rule, you can grab a pencil and paper and go for it, probably no one will ask you anything ever again....