Our relationship with money is an important aspect of how we play poker. Much has been written about money management; however, the psychology of money has mostly been ignored in the poker world. Money is not just money, it has meaning. We’ve all heard the saying, “Don’t play with scared money.” The implications are obvious.
How you make money decisions when it’s attached to risk is an important aspect of understanding your game. I recently worked with two avid recreational players: one a consistently winning $2-$5 no-limit player and the other a decent $2-$2 NL and tournament player.
The $2-$2 player moved to the $2-$5 game and was having trouble, mostly with bet-sizing and maximizing profits. The regular $2-$5 player showed him a number of leaks in his bet decision-making. The $2-$2 player was too conservative. He was winning, but his win ratio was not sufficient to make up for the variance in his losses. He cared too much about protecting his stack. In tournaments, he was willing to make the correct bets.
I concluded it had more to do with the nature of money, the relationship between money and personality, than it did traditional poker skill. Each player’s emotional relationship to money guided his thinking. Each player was playing well within limits they could afford.
In tournaments, the $2-$2 player did well; he was not concerned about busting when he went all-in at the right time. He said, “Once I buy in, my money is already invested; my job is to maximize my return.” Not so in the $2-$5 cash game: those chips had real meaning. It was almost as if he were playing with scared money. However, the regular $2-$5 player viewed his chips as tools and not as money and did much better.
Prospect theory, an economic theory developed by Daniel Kahneman and Amos Tversky, would suggest the best gambling plan is to have a stop-loss number. This is the number at which you stop playing when you’re losing. It also suggests a stop-win number; the number you’ll stop playing when you’re ahead. This plan allows you to leave the table a winner or reduce your losses. The theory looked at casino gambling and found people go in with such a plan, but quickly abandon it. You may ask, “How can I stop? The deck is hitting me; I’m in the zone; I can’t make mistakes.”
Prospect theory advises you stop when you reach your winning goal. You can cash out or take a break and buy in to another table, but that’s another session. Poker skill should be measured over the course of your poker life; it’s punctuated by sessions. Of course, this is a conservative money management strategy and doesn’t take into account “getting hit by the deck” or “juicy tables.”
Have a poker bankroll separate from necessities; a working professional should treat poker like a business (not just lip service); have a financial plan about poker, long term and for each session. Get a psychological handle on your relationship to money and keep your head in the game.
— Dr. Stephen Bloomfield is a licensed psychologist and avid poker player. His column will give insight on how to achieve peak performance using poker psychology. Email questions for him at firstname.lastname@example.org.