How Much Do I Buy in For?

 People who are losing tend to continue to lose while people who are winning tend to continue to win.

STUCK: In poker to be stuck is to have lost money over the course of a session.

One piece of advice my father gave me about the stock market was to "cut your losses short and let your profits run." This advice has been echoed by many people when it comes to poker - that if you are winning you should stay at the table for as long as you continue to keep winning, but if you are losing you should leave. This seems fairly straight forward but it is actually counter to what most people believe - that one should quit when one is ahead. "Quit while you're ahead" thinking means you leave profitable tables with small gains when you should be leaving them with  large gains. It also makes people stay at tables where they have been losing money because they are trying to get "unstuck," which often leads to greater losses.

One way to cut your losses short is to buy in for smaller amounts than the maximum. At the $1/$2 level I play, the minimum buy in is $50 and the maximum is $300. I used to always buy in for between $200 to $300 - thinking I could maximize my profit should I get all-in with the nuts against another big stack. However a string of losing sessions had so depleted my bankroll that it seemed prudent to take smaller amounts. Taking only $100 has the effect of "cutting my losses short" but, should the table turn in my favor, I can still make a decent profit.

Friday I made a decent profit. Taking only $100 forced me to play very disciplined - you can not afford  crazy bluffs or calling with mediocre holdings when you are short stacked - and after five hours of poker I left with exactly $500. Now, would I have made more with a larger buy in? Possibly. But it is erroneous to think that because I left up $400, I would therefore have made $1,200 if I had bought in for $300. It doesn't work that way in the real world.

Yesterday I returned to the poker room with $100, but this time things did not go well and after only two hours I left with the $20 I had remaining. When I got to $20 I realized that the chances of me getting unstuck were so slim that I might as well save the $20 and go home. If I had started with $300 and had lost $80, I almost certainly would have played on in the hopes of getting unstuck. And maybe I would have. But it is more likely I would have continued to lose. This is because people who are losing tend to continue to lose while people who are winning tend to continue to win. Or as my stockbroker father would say, "The trend is your friend."

So here we have the tale of two poker sessions, one winning session where I let my profits run and a losing session where I cut my loses short (although I should have cut them much shorter!). I am up $320 for the two sessions.

Many people think that being a great poker player means turning a profit in the majority of sessions you play, but you can be a winning player even if only half, or even less than half, of your sessions are positive - as long as your positive sessions are very positive and your negative sessions are only mildly negative. Again this is counter to what most people, even a lot of experienced poker players, believe. They eke out a lot of small gains and a few terrible losses, but since they have more winning sessions than losing sessions and they believe they are better than average players when they have been losing money over time.