In order to define bankroll management, it's important to first define what we mean when we refer to a player's bankroll. Contrary to what some people may believe, your bankroll is not simply all the money you have at your disposal, but rather a portion of your money that has been expressly set aside for the purpose of gambling.
From the moment it enters your online betting account, you should cease thinking of this money as part of your net worth – it is now simply a profit-generating tool that you will need to use sensibly and effectively when winning and closely protect when losing.
For this very reason, the money you use in your bankroll should only be money that you can afford to lose. It should be the spare cash that you have lying around for entertainment purposes and you should not be overly emotional about what happens to it.
If you do not mentally separate yourself from its value, you will fear losing it – whether you're playing roulette, craps, blackjack, or poker. When your actions are bound by fear, it's impossible to consistently make decisions that have a positive overall expectation. Now that we know what a bankroll is, let's take a closer look at how adhering to a strict set of rules and guidelines will help you maximise its value and effectiveness.
Managing your bankroll is critical whether you are a casual player or a high roller. It applies equally to games of pure chance like slot machines and games of skill like poker. Let's say you've had a look at your finances and decided that £2,000 is an acceptable amount of money to load into an online account. Emotionally, you've already treated this money as if it were gone and even if you don't see a single penny of it back, your day-to-day life will be entirely unaffected. That's great, you're now ready to play your chosen game, but it will be a very short-lived experience if you decide to risk the whole lot on only a handful of £200 wagers.
Indeed, instead of thinking of your stake as a number that you rigidly adhere to, chose to risk a percentage of your bankroll on any given bet – this way, the size of your wager will increase or decrease proportionally as your bankroll grows or shrinks. Most sensible players will usually risk no more than 1% of their bankroll at any given time, so using the £2,000 example mentioned above, your typical wager would be £20.
Now, it doesn't take a genius to figure out that betting £20 from £2,000 is considerably less risky than betting £20 from £200 and this is precisely why the size of your wager changes, but the percentage of your bankroll in play remains the same. Using this method protects your bankroll when losing and also increases your potential for profit when winning.
In our example above, a £2,000 bankroll will give you the opportunity to place a minimum of one hundred £20 bets. That obviously doesn't factor in all the wins you can potentially have along the way. Even though casino online games do favour the house, the house edge can be a couple of percentage points or less. More importantly, the house edge only manifests itself over time. Over the short term there is statistical variance, which means anything can potentially happen. You probably know that there are an equal number of red and black numbers on the roulette wheel, yet we've all seen red come up five, six, or even ten times in a row rather than slightly less than half the time that the odds dictate. That's statistical variance in action.
Variance is what makes games of chance exciting, yet it also affects how you manage your bankroll. Imagine that you are playing a slot machine with a big jackpot. By exercising sound casino online bankroll management, you'll be able to stay in the game longer, which means more opportunities to win the big prize.
In addition to deciding what percentage of your bankroll you will risk on any given wager, another key component of sound bankroll management is deciding when to stop – both when winning and when losing. While this is a simple enough concept on paper, many players struggle to put it into practice while playing because they let emotions cloud their better judgement.
This is precisely why we advised you to start playing with an amount of money you could detach yourself from earlier. Nevertheless, you're not a robot and a prolonged run of bad results can often have a negative impact on your decision making. This is why it's highly advisable to set yourself a daily loss limit where you stop playing once a certain portion of your bankroll has been depleted.
This exact percentage will naturally vary from player to player, but generally speaking if you lose 5% of your bankroll in one sitting you're more liable to make bad decisions and should probably only continue if you can honestly say to yourself that the money you've lost already won't affect your play going forward.
Conversely, just because it's wise to detach yourself from your bankroll's monetary value when you start playing, it doesn't mean you should forget that it's real money altogether. When you start out, set yourself a target representing a significant amount of money that would benefit your life in some way and withdraw that portion of your bankroll when you hit it.
For example, if you make £4,000 from your £2,000 stake and that amount of money is significant to you, don't leave it at risk in your bankroll – simply withdraw the £2,000 profit and start over again with your initial £2,000 deposit.
Remember that gambling is first and foremost entertainment. You should never risk more than you can afford to lose. You need to prepare yourself for the worst case scenario, which means you need to ask yourself what will happen if you lose your entire bankroll. Will you be able to pay your bills? Will you have cancel your upcoming holiday for financial reasons if you have a bad run at the tables? You should ask yourselves questions like these when deciding how much money to bring to the table. Exercising a little fiscal prudence can go a long way and will eliminate many of the gambling pitfalls.
If you ignore the principles of sound bankroll management and burn through your cash too quickly, you may be tempted to reach back into your wallet. That's always a bad idea and one that you can avoid simply by playing smart in the first place. Don't forget that online casino sites let you enjoy hundreds of great games for free. Playing for fun will not only help you avoid many of the hazards of gambling, but it's a great way to learn about bankroll management. Why not experience a dwindling and growing bankroll first-hand with zero risk? It's the easiest way to develop a winning strategy and have fun in the process.