Bankroll Management: Understanding Caro's Threshold of Misery

Explanation. Mike Caro has come up with a number of interesting theories in his years as a poker aficionado. One of the more controversial ones has been his threshold of misery theory, which states, “Any losses a player may take after passing the threshold of misery will have no higher meaning to the player than what they’ve already lost.” Basically, if your threshold is $1,000, and you lose that much, you’ll feel just as awful with a $1,000 loss as you will with a $1,700 loss, and so on. This threshold varies from player to player, but understanding where this threshold is and how to avoid passing it can be key in stopping yourself from absorbing massive dents to your bankroll.

Finding your personal threshold. Every player has a general idea of where that threshold may be. Think back to the biggest loss you’ve ever endured. Was there a point during that terrible run that you just felt yourself give in to the sadness, the run bad, all of the negativity? That point is very likely your personal threshold. Some people have a higher threshold if their bankroll is built primarily on poker bonus offers, as opposed to their own money. Keep a note of where you begin to feel yourself giving in, and make that your “stop loss” point to quit a session on. For some players, that may be a single buy-in; tilt may be something they struggle with, and breaking a buy-in wrecks them for the rest of the night. Others may have a few buy-ins that they can work with before their game is wrecked. Try to find a comfortable level of buy-ins that you can lose and still feel good about your play before you go crazy and drop 3 buy-ins over your threshold.

Deviating from stop loss. The problem with stop loss, however, is that, you may lose that money from two bad beats, or simply blinding off, not from bad play. Then you might find yourself searching for new poker deposit options to get more cash online, even though you're already past the point where you said you'd quit. That’s why, after finding the monetary comfort zone you have as a “stop loss” point, you may want to switch that out for a psychological stop loss point. A game may be too good to get up from with your abilities, even if you’re running bad. If you’ve dropped a number of buy-ins that represents your monetary threshold, you may not want to leave the game if you still feel psychologically coherent and able to play a sound game against your opponents. Take a deep breath and analyze your previous play and your current mental state, then determine if the game is still right for you, given your remaining funds and your mental state. You may be able to bear a few more buy-ins before you truly do cross the psychological threshold, but losing 3 buy-ins in a soft game due to bad beats should be something you deal with casually, and be prepared to bounce back and fight against, in the long run.