Posted by Dr Fro 1:59 PM
I recently had a depressing realization while at work: In my November losses, I played $100 buyin $1/$2 blinds exclusively. I lost 10 buy-ins.After those losses, I played $25 buyin .25/.50 blinds exclusively. I won 10 buy-ins.Of course, even though the winnings were exactly 1/4 the losses - perfectly proportional to the stakes. While it is quite possible that I did better at the lower stakes because the quality of play is poorer, I ain’t buying it. The play might be marginally worse in the $25 game, but the play in the $100 game is pretty darn bad. I really think that 95% of the explanation is simple volatility.

What possible lessons are to be learned? I considered the following: 1. This is a good example of why changing stakes is generally a bad idea. Assuming no difference in quality of play, you should neither “move up” when winning nor relegate yourself when losing. To illustrate, take an example of flipping a coin where you start out betting $10 a toss and up your bet $1 after each win and decrease your bet $1 each time you lose and there is a minimum bet of $1 and a maximum of $20. You will lose in the long run.

What?

Really, you will. Most people are surprised by this, so I think I am going to take the Marilyn vos Savant approach and not explain why…yet.

2. Since changing stakes is generally a bad idea, you should always have sufficient bankroll (and stomach) to handle the bad swings at whateer level you are playing. If you can’t handle getting beat 10 times in a row, you are probably playing at the wrong level

I had the bankroll to continue at $100, but I lost the stomach for it when the losses escalated and Christmas was knocking on the door and property taxes were due and Mrs. Dr. Fro was still looking for a job and the Camry needed new tires and the stock market was down and I was headed to Vegas in a month. I simply didn’t want to lose at that level again, so I relegated myself.

I am going to stay at the $25 game on PP for a while. I have built my (re)deposit of $100 to $325 since late November at the $25. I’ll coast along for a while and see what happens. But I won’t move up until I know I can handle big losses and can ride them out.

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