Note: Not at the old Poker1 site. A version of this entry was first published in Poker Player newspaper in 2007.
This is part of a series by Diane McHaffie. She wasn’t a poker player when she began writing this series. These entries chronicle the lessons given to her personally by Mike Caro. Included in her remarkable poker-learning odyssey are additional comments, tips, and observations from Mike Caro.
Diane McHaffie is Director of Operations at Mike Caro University of Poker, Gaming, and Life Strategy. She has traveled the world coordinating events and seminars in the interest of honest poker. You can write her online at email@example.com.
Lessons from MCU
— With bonus content by Mike Caro (pending) —
Lesson 110: Stop Loss (and Mike’s feelings on it), Part 1
This is the first of two columns on stop loss. What is it? It’s a concept that many poker players value. Mike isn’t one of them. He disagrees and thinks it’s foolish.
Stop loss means you have a designated amount set in your head that you’d be willing to lose in a night or sitting and, if you reach it, you won’t play anymore. You will immediately leave the table.
Next time, I’ll tell you why stop loss can hurt your bankroll. But first, the positives. Mike says that one positive is that you won’t continue playing so deeply into a loss that you’ll permanently damage your finances and your psyche. No, when you reach that pre-set limit, you’ll desert the game and leave with the remainder of your bankroll.
A loss beyond what is comfortable for you usually results in your decision-making going on vacation; therefore your ability to win is hindered greatly and you no longer feel the pain of any additional loss. You don’t feel it, because you’ve already maximized that pain, and anything additional feels the same. The failure to feel that pain means you’ve crossed Caro’s Threshold of Misery.
For instance, you set the stop-loss amount of $2,000. You pass that amount and still play. Now you lose an additional $1,500, hardly feeling the latest thrashing. Although you’re losing $3,500, it feels almost exactly the same as when you were losing $3,200.
The loss of the additional money might not be immediately felt, but wait a few hours and reality could sink in. No matter how bad things get, you have to continue making good decisions. That’s right, even if you think the pain can’t possibly get worse, it can and will. Oh, maybe not right now, but in a few hours, or tomorrow or next week, the pain will maximize. You’ll think, “Oh, wow, what did I do?” You crossed the Threshold of Misery. Stop loss can prevent the total depletion of your bankroll.
Again, you must always play your best all of the time, even when things look bleak, even when you don’t think the added loss will matter. Decisions matter, now and later. The loss may seem insignificant now, but at some point in the future it will matter. Keep in mind that the Threshold of Misery doesn’t just apply to poker, it also relates to real life, as well.
For instance, Joe wanted a table saw desperately. You see, his best friend, Ray had just gone out and purchased one. The downside was that he didn’t really have the extra cash to spare. Heedless of the little voices in his head warning him, he dashed out and bought the table saw. Well, his wife was extremely upset, to say the least. Was Joe repentant? Nope, her angry words goaded him into deciding that he was going to “show” her! He ran out and bought a drill press to “show” his fuming wife, instead of cutting his losses.
Lapse in judgment
Upon his return he discovered that his wife had decided enough was enough, and his table saw and clothes were on the front lawn. The locks had also been changed. Poor Joe, he packed his prized table saw and clothes and went to Mom’s, now wondering how he would pay for both new tools.
Making good decisions all the time is vitally important in real life and in poker. A lapse in judgment can have a detrimental effect on your life. If you’re a poker player who doesn’t know when to bail out, stop loss is a consideration.
So, if you practice stop loss, you can keep your losses to a minimum; therefore, you’re able to tolerate that loss in your own mind. Keep in mind that opponents are motivated to play better when you’re losing. It’s often a good thing to leave before thing go further south, since your opponents would no longer be intimidated by you.
So that’s the good part about stop loss. Next time, I’ll tell you why it’s bad. — DM