27/05/2011

Decide to Play Great Poker: Excerpt 3

Annie Duke

Decide to Play Great Poker
Decide to Play Great Poker

While Decide to Play Great Poker mostly covers decision making regarding playing strategy, the last 70 pages or so focuses on decisions regarding bankroll management and emotional control. The fact is that you can be the best poker play on the planet when you are playing your A game but if you can’t manage your bankroll properly or if you are always playing on tilt, you will be broke. Period. I can’t emphasize enough how important these issues are in being a successful player, recreational or professional. You can know how to play top pair perfectly but if you don’t have money to bet it doesn’t matter. You can know how to ply a set just right but if you are on tilt you won’t actually execute properly.

Enjoy the excerpt. Decide to Play Great Poker is available for pre-order now and will be out June 7th. It will also be available on Kindle.


Fooled by Randomness

Say you’re running particularly good one month, like normally you’re earning $8 an hour in your $1/$2 game, but this month you’ve been winning at the rate of $24 an hour. You think, Well, I’m just that good, and now you start to estimate that you’re so skillful, you should win at that unexpectedly high rate (which, by the way, would be pretty impossible at $1/$2 no-limit unless the game played super-huge). Know what? No one’s win rate is that far above the norm. A really fantastic poker player might have a 5% edge on the game and that’s huge, because of the churn. If he sits in that $1/$2 game with $200, his expectation isn’t to win $10 for the night. His expectation is to earn 5% on the total churn, the total money he runs through the game, betting and winning pots and betting that same money again. If he churns $1,000 through the game, he should expect to earn $50 on the night. If he plays for six hours, that’s an hourly rate of around $8. He might win $250 one night. He might lose $125 another night. But his expected earn will always be $8 an hour, no matter what his daily results are.

So we have to draw a distinction between running good and playing well. Sometimes they overlap—your good play nets good results—but often it’s just a case of a player being the beneficiary of a not-very-extraordinary string of outcomes. Nassim Nicholas Taleb describes this phenomenon in elegant detail in his book Fooled by Randomness and I commend it to your attention. It explains why a huge-field poker tournament always features at least one unknown and, let’s face it, not very skilled player going deep into the money with a massive chip lead.

Say 6,000 players are in the main event of the World Series of Poker and half of them have the strategy of just going all-in on every coin flip they can find. Thousands of players will wind up on the rail, wondering where this strategy went wrong, but quite a few guys will wind up on the right side of a few coin flips in a row—not a statistically startling occurrence, by the way—and now they have a mountain of chips. It’s like putting an infinite number of monkeys in front of an infinite number of typewriters. Eventually one of them will write this very book. (Go monkeys!)

Putting 6,000 players in a poker tournament with this coin-flip strategy is like parking monkeys in front of typewriters: Someone’s gonna get lucky; someone has to win. Someone will inevitably be on the right side of a string of coin flips, whether he’s playing well or not. If it happens to be you and now you suddenly think you’re the second coming of Jesus (Ferguson), you’ve just been fooled by randomness, that’s all. You happened to be the one who caught lucky.

If you keep running great, tournament after tournament, that’s great, maybe you do have some skill. Because then you can say that the good result in the main event was predictive of how you’d do in future tournaments. But you can’t link good results to good play on just one iteration until you use those good results to predict the future; otherwise you might have just gotten lucky.

And here’s where players get confused. Based on a string of good outcomes, they falsely conclude that they’re much better players than they are and can therefore afford to play higher, or spend money as if they’ll keep winning at that rate—two great ways to go broke. The logic of this is seductive. If I’m earning 5¢ on every $1 we bet, why wouldn’t I want to earn 50¢ on every $10, or $5 on every $100, which I tell myself I can do just by committing a much larger percentage of my bankroll to my play?

Here’s why that won’t work: Even if I’m every bit as good as my short-term results would have me believe (which I’m not, by the way), if I play with too large a chunk of my bankroll, eventually variance will catch up to me. I’ll go broke, maybe not even from bad play, but just from bad luck. And then I’ll have no money to back my over-inflated sense of self.

We can see, then, that in order to be a winner in this game, you need to be not just a good poker player, but a good money manager, because without your bankroll, you can’t do business. And one way of being a good money manager is to keep your eye on randomness. There are predictable pitfalls to avoid. We’ve all heard, for instance, about talented poker players who blow their bankrolls on negative-expectation wagers like craps. It’s not just that they’re action junkies (a lot of them are). It’s also that when they’re running hot, they fool themselves into thinking that they’ll always run hot. They think that the money they’re making at poker at this moment will continue to come in at that rate, so they can afford to take bad gambles, just for fun or for the buzz.

They’re not certain to continue winning at that rate.

In fact, they’re certain not to.

And then they’ll go broke and they’ll cry.

So here we see two types of mismanagement at work. First, there’s the money mismanagement—squandering the bankroll. Second, there’s the ego mismanagement—the sense that you’re better than you are. Let these two beasts loose and you’re really in the soup. Just ask any talented railbird who’s ever hit you up for a loan.

I’m not telling you never to play craps or baccarat or slots or whatever. I’m just saying that that money had damn well better be recreational and not have a negative impact on your poker bankroll. If it does, you’re like a carpenter who starts hocking his tools, or melting them down to make tin whistles. It just doesn’t make any sense. You’re the one who’s supposed to have the edge, right? Not the house.

So some players go broke when they let their bankrolls leak. But even players sensible enough not to play keno (!) still go broke by putting too high a percentage of their bankroll on the table at once. This is particularly common online, where you can accumulate money very quickly. You get a lot of hours in. You get in a lot of churn. And if you hit a lucky streak with a lot of churn, you’ll accumulate a lot of money very fast.

And think you can continue to win at that rate.

And put too much on the table at once.

And go broke in a day.

The story is famously told of a blue-collar guy who liked his poker and played a sensible responsible game. He had no bankroll to speak of, so he just played satellites. Satellite after satellite, enjoying his poker and doing a good job of ego and life management. Then one day he caught lucky, won a satellite into a big tournament, and cashed out of the event for $250,000.

Can you guess where this story is going?

Now he’s got a quarter of a million dollars and suddenly thinks he’s too good to play satellites. So he just starts buying into every tournament that comes his way. It takes five months, but he manages to burn through all $250,000. Maybe he wasn’t even that bad a player. Maybe he just got really lucky once, then not unusually unlucky for a not-unusual length of time. Anyway, that’s a quarter-mil he let go of.

It’s hard to get hold of a quarter of a million dollars. Ask anyone.

So if you’re to play poker successfully, you’ll need some bankroll rules. And I know I said that the first rule is there are no rules, but this is the exception that proves that one.