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It is commonly recommended that a poker player move up to higher
stakes based on basic bankroll requirements. It works something like this:
You start out playing $1-$2 No Limit Hold’em with a bankroll of $4000. This would represent 20 buy-ins of $200. Once you win 20 more buy-ins and have a total bankroll of $8000, you move up to the next level. In this case you would begin playing $2-$4 NL.
While it’s extremely important to have a strategy for progression, there are several problems with this method. The primary issue is that moving up based solely on bankroll requirements ensures that you will eventually become a breakeven or losing player. This is best explained by the Peter Principle.
The Peter Principle is a theory coined by Laurence J. Peter in his 1969 book of the same name. It simply states that, “…in a hierarchy, every employee tends to rise to his level of incompetence.” Allow me to illustrate the concept:
Peter begins a job as a high school teacher. He is terrific, boosting standardized test scores and beloved by students. Recognizing this, the principal asks Peter to become a trainer for the school. The new position involves giving instructional seminars and helping teachers improve their classroom techniques. Peter is phenomenal, improving the quality of education throughout the school. Blown away by his success, school district officials ask Peter to become vice principal. In his new role, Peter struggles significantly. The problem is that he no longer has the skills necessary for his position. Peter has risen to a level where he is now incompetent.
In our case, poker is the hierarchy and the employees are the players. As poker players progress upwards through the stakes, they naturally encounter more difficult competition. Eventually, they reach a point where they are no longer capable of winning.
If you move up solely because your bankroll reaches a certain point, it’s nearly meaningless in terms of being an accurate measure of your overall skill. This is because even a losing or breakeven player can win many buy-ins simply due to the normal swings associated with No Limit Hold’em. As a result, it’s very difficult to gauge your skill level.
The rate at which a player wins money is also very significant. Did the player win $100 an hour for 40 hours? Or did he win $10.00 an hour for 400 hours? Obviously these two things are very different. However, according to traditional bankroll requirements, both players should move up to higher stakes.
In general, as players move up in stakes, they face greater competition. The reason for this is that winning players move up to higher stakes seeking to maximize profits. Therefore, as you move up, there are more players who were at least as successful as you were at the previous level. This means many of your opponents are likely to be at least as good as you. This will ultimately have a profound effect on your ability to win.
If you were a slight winner who accumulated enough to warrant moving up, you may become a breakeven or losing player by increasing stakes.
If you were a breakeven or losing player who hit an upswing and ran exceptionally well, then by moving up you are certain to become a loser eventually.
The amazing thing is that most players have absolutely no idea what skill level they possess. The reason for this is that typically they do not keep records. Even when players do accurately document their results, many of them are unlikely to know how to use the information correctly.
Without hard data, players tend to overestimate their ability. All players want to believe that they are winning, or at least breakeven, players. Therefore, they accept any and all positive evidence as proof and brush off the negative as bad luck. This mindset further encourages a player to move up stakes as soon as possible.
The solution is to move up based upon your win-rate rather than your total bankroll. The key to this is ensuring that not only are you winning at a high enough rate, but you’ve also played enough hands so that it’s likely to be accurate.
Knowing your win-rate is also valuable because it can reveal what stakes are ideal for you. Even if you were a big winner at the previous level, your hourly rate may actually decrease by moving up, even if you are still winning.
There are two standard ways to calculate a player’s win-rate. Live players tend to use Dollars Won per Hour and online players frequently use Big Bets Won per 100 Hands (BB/100). A “big bet” is a term originating from limit poker and is defined as double the big blind. For example, a big bet at $1-$2 NL would be $4.00. The benefit to using BB/100 is that it’s a consistent measure even when playing multiple tables.
For an online player, a minimum win-rate of 3 BB/100 is suggested before a player considers moving up. A win-rate of 5 BB/100 or more would be considered very good.
Live games typically play at least twice as big as online games. The reason for this is that online play tends to be closer to “by the book” strategy. For example, in a $1-$2 NL game online, players will often open for a raise of $6.00 or $7.00. Live, this is very rarely the case, as a standard raise might be $10.00 to $15.00. This means that a win-rate of double or more than that of online play is sustainable live. In addition, the stack sizes live are usually larger than on the internet. There are two reasons for this:
The first reason is that the maximum buy-in allowed live is almost always higher than online. This is the result of live games not being capped at 100 big blinds ($200 at $1-$2 NL) as has become standard on the internet. The maximum buy-in live is regularly 150 big blinds or more, sometimes having no cap at all.
The second reason is that players stay at the same table much longer when playing live. This ultimately leads to even deeper stacks as players rebuy and the chips remain in the game, as opposed to online, where players come and go from the table frequently.
In order to honestly gauge a player’s skill at a given level, a large number of hands are necessary. Although this may come as a shock to many players, the truth is that a minimum of 20,000 hands is needed before a win-rate begins to be meaningful. Players’ win-rates will become increasing accurate the more hands they play. Logging 50,000 or more hands at the same stakes would be considered ideal.
It is much easier to keep records online than it is live. Software such as Poker Tracker and Poker Office make it simple to record the number of hands you’ve played, as well as automatically calculating your win-rate.
Online players seeking to increase their hourly earnings by adding multiple tables would benefit greatly by closely monitoring their winrate. It’s vital to know how each additional simultaneous table affects your play. This will allow you to ensure that there isn’t a significant drop-off in your win-rate.
Tracking your win-rate, rather than solely following traditional bankroll requirements, is essential to knowing whether you are beating the game enough to warrant moving up stakes. In order to avoid becoming a product of the Peter Principle, it’s critical to determine the level at which you’re most profitable.
Nick Brancato is a top Internet poker pro and cash game specialist. He is an instructor for WPT Boot Camp and a private poker coach. To learn more visit www.wptbootcamp.com.
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