Note: A version of this entry was originally published (1987) in Poker Player Newspaper.
Rediscovered, updated, and added to Poker1 in 2018.
Excuse me. I didn’t know you were there. It must be time for another column. Okay. I just finished creating a paper called IMPORTANT POKER ADVICE that will be used promotionally by Tom Bowling in his Las Vegas Hilton poker room. Other powerful reports have been contributed to the Hilton by David Sklansky and Bob Ciaffone.
Whenever I hear the word “stop loss,” something terrible happens inside me. I can’t explain it. It’s kind of like a hot rush swirling angrily in my stomach. You know the feeling. Anyway, here come a few questions from the paper. . .
Is it correct to set a stop loss before you enter a game? What people usually mean by stop loss is that they have a certain size bankroll; they’re ready to play in a game; they’re only willing to risk a predetermined maximum; and they’ll immediately quit if they reach that maximum.
Fine. Under that definition, of stop loss, should you adopt it as a strategy? Probably not. First of all, there’s no magic cutoff point that you can set in advance to save yourself from a disastrous losing streak. What usually happens is that players simply quit when the stop-loss limit is reached and they go home. Come the next day, they return to the same type of poker at the same limit, usually at the same club and sometimes against the same players.
How has this helped them? Well, it probably hasn’t helped at all. It’s sort of like recording an afternoon football game on TV and watching it at night. You don’t know the outcome, but you have a bet on it. When your team gets behind by two touchdowns, you pause the recording and go to sleep. The next day you wake up and play some more of the game. You tell me, did you improve your chances of winning? Of course not. Applying a stop loss to a recorded game would be silly. You’d just be prolonging the inevitable.
Not quite the same
But, let’s be perfectly fair. The recorded-game analogy isn’t exactly appropriate. That’s because the images of the football game won’t change, no matter when you watch the video. On the other hand, your cards will be totally different if you quit upon reaching a predetermined stop loss, then return the next day.
Okay, but from a theoretical standpoint the difference in cards doesn’t matter. In a logical sense, it doesn’t even exist! That’s because you have absolutely no idea what that difference is going to be any more than you knew what was going to happen next when you restarted the recording. But, aren’t you apt to get better cards the next day by quitting at the stop loss? No. In fact, you’re just as likely to receive terrible cards tomorrow as you are tonight, if you continue. Sure, maybe the cards tomorrow will be better, but maybe you could have enjoyed them earlier had you continued playing tonight.
If game conditions are good, if you have a skill advantage over your opponents, and if you feel like playing, then there’s no reason to quit if you’ve reached a predetermined maximum loss limit.
There’s a lot of luck involved in poker. But, sooner or later, an accomplished player will overwhelm this luck factor with skillful play. There’s a great deal of fluctuation on how much you will win or lose in a given hour or on a given day. This fluctuation applies to average players and world class players alike. Still, when you add all your inconsistent hourly results together and divide by the number of hours you’ve played, you get an average of how you fare per hour at poker. If this number of hours is large enough, a skilled player who consistently makes the best decisions possible will probably show a positive hourly rate. That means that a skilled player can expect to earn that same given rate for every hour invested at the poker table.
It takes time for this to happen, but eventually your expectations will align with your results. Just wait.
If you’re good enough to deserve a positive win rate, then — on average — every hour you spend at the poker table under favorable conditions will build your bankroll. Conversely, every hour you decide not to play poker for illogical reasons (such as in conjunction with a stop loss) will cost you money and hurt your bankroll.
Bottom line: Stop losses are sometimes silly and can damage your bankroll. In fact, stop loss often means stop win.
Isn’t there anything nice a human being can say about stop losses?
Maybe. The thing that bothers me most about stop losses is that they are often adopted for illogical reasons. In the previous answer, we see how a stop loss can actually cost money.
However, here are some real reasons why it may be helpful to use a stop loss:
- Many players become emotionally upset when they lose beyond a certain point. Their threshold of misery has already been crossed and additional loses don’t register a dollar-for-dollar impact. For instance, losing $3965 may feel no worse to them than losing $3854. Somewhere it fails to have the same value it had when the game began. At first, it meant something. But in your mentally muddled misery, it means nothing now. You’ll play poorly as a consequence. A stop loss can help you escape such predicaments.
- Maybe you’re playing in a home game. Everything looks honest, but you’re not sure. A stop loss can sometimes prevent you from a disastrous loss (perhaps even the destruction of your entire bankroll) in the event you’re being cheated.
- When you’re losing, your opponents aren’t intimidated and they play better against you. A game that was marginally profitable when you sat down can become unprofitable simply because you’re losing and your opponents are inspired. A stop loss will keep you out of such unprofitable situations.
- It may be emotionally easier for you to accept a small loss. Many players have trouble feeling positive about playing poker following a huge loss. They tend to play poorly the next day. A stop loss can provide a cooling-off period during which you go home and repair your attitude before continuing play.
But this is better
There are even a few other nice things I could say about stop losses. Still, if you can do it, it’s better to simply control your emotions and make quality bankroll assessments while you’re actually sitting at the table. If you can do that successfully, you won’t need to resort to a stop loss.
Isn’t there another kind of stop loss where you only allow yourself to lose back a certain portion of what you’re winning?
Yes. Same nonsense. — MC