Note: Not at the old Poker1 site. A version of this entry was first published (2006) in Poker Player newspaper.
Fortunately, we are free to make many personal choices in our everyday lives. Unfortunately, wherever personal freedom of choice exists, some people become psychologically disturbed and try to dictate the choices for us.
They envision an orderly world unfolding each day exactly as it does in their fantasies. And when we make choices contrary to those fantasies, it drives the regulators of choice crazy. They want everyone to live like they do.
That’s why, so often, people who postulate extreme views truly are crazy. They may seem sensible in some everyday endeavors, but if you make a personal choice that differs from their secret formula for righteous living, they grow irritated and irrational. Some things that you’d least expect to bother people are advocated with religious zeal.
Sacred secret
In poker, for instance, you dare not challenge the sacred secret to bankroll management called “stop loss.” If you do challenge it, you will wound those who take comfort in the perception of safety it provides.
Stop loss, you see, is a predetermined exit point for losing – a brick wall. If you reach that wall, you must stop playing. Whenever you make personal choices to govern your bankroll more recklessly than stop loss suggests, you challenge its strictest advocates and they root against you.
I’m here today to challenge stop loss and to say that it’s silly. And here’s an old lecture I gave on that emotional subject. I hope it will convince you that I’m right…
Stop loss
For many poker players, one of the most cherished concepts is called “stop loss.” It simply means that you’re never going to suffer a terrible loss, because you’ve predetermined to quit if you lose a given amount.
Let’s say you set a stop-loss at $500 in a $20 and $40 hold ’em game. That’s equal to two-and-a-half minimum buy-ins. As soon as you move beyond $500, you’ll quit on your next big blind. This means you might lose a little more than $500 during the leaving-the-table process, but not substantially more. While other players around you might lose $1,000, $2,000 or more, this will never happen to you.
Should you use a stop loss? I don’t. And, I don’t think you should, either. Before I tell you what’s bad about a stop loss, I’ll be fair and tell you what’s good.
The first good thing is that you’ll never get numbed by bigger losses than you anticipated and start playing poorly and dig yourself into a serious hole it might take a long time to crawl out of – if you ever crawl out at all. With a stop loss, you can accept a more manageable defeat, go home, lick your wounds, and contemplate with your goldfish. That part is good for many players who are afraid they may lose control of themselves if the loss builds too large and who like to hang out with their goldfish.
The threshold
This benefit has a lot to do with Caro’s Threshold of Misery. Did I ever tell you about that?
It states that in poker or in life you can reach a stage where the misery grows so great that you stop caring because you already feel maximum pain. Maximum misery.
If more bad things happen in life or if you lose more money in poker that night, it doesn’t feel any worse. You’re maxed out. You’ve crossed the Threshold of Misery.
I teach that you’re supposed to keep right on playing well, even after you cross that threshold. You’ve got to intellectually remind yourself that even though things don’t seem to matter now, there will come a time when they do matter.
Matters again
So, make good decisions. Maybe right now it doesn’t seem to matter a lick whether you lose $4,495 or $4,125, but there will come a time when that $370 matters again.
Always play poker as if that time is now. That’s important and I’ll repeat it. There will come a time when that $370 matters again and you should play poker as if that time is now.
But, OK, if quitting before you get anywhere near that Threshold of Misery is the only thing that will allow you to avoid logical brain shutdown that will cost you significant money or devastate your bankroll, then – by all means – practice a stop loss.
More good about stop loss
What else is good about a stop loss? Well, you might be getting cheated and not know it. So, quitting because you reached a predetermined limit can keep you out of further danger.
Or you might have misjudged the skill of your opponents. Maybe the game isn’t as good as you thought it was. Maybe you’re not the favorite and you should expect to lose more if you keep playing. In that case, too, a stop loss can keep you out of danger and preserve your bankroll.
And there’s one more thing that’s potentially good about a stop loss. It prompts you to quit when you’re losing, which often can be a good thing in itself, even if the game was originally profitable.
Not superstition
The reason has nothing to do with superstition. It has to do with the fact that when your opponents see you losing, they sometimes get inspired and play better. They think, hey, there’s someone unluckier than I am. I’ll beat up on that player.
When this happens you won’t make the profit you normally would, because players will take unexpected shots at you. And they’ll push their good hands for extra value, because they’re not intimidated by you. In that case, it’s sometimes a good idea to quit the game.
A final thing: For some players a stop loss can keep setbacks psychologically manageable. They can go home and sleep well knowing that no significant damage has been done in a single day. A bad streak can still continue, but it will be broken up into smaller, more psychologically manageable segments.
Bad about stop loss
OK, I’ve been fair. I’ve said all the good things I can think of about stop loss. Now I’m going to tell you that the whole concept sucks. It makes no logical sense at all. It’s just babble.
You see, everything I told you that was good about stop loss can be accomplished by you without it, just by using your own good judgment. You can be aware of the Threshold of Misery and discipline yourself to keep making good decisions. You can decide to quit at any point if you fear you’re being cheated – before that magic stop loss number or after it – whenever you decide it’s right.
How does that predetermined number help you? It doesn’t.
It just takes tools out of your hands – thinking tools that let you decide whether its profitable to keep playing or to quit. Same goes for whether your opponents might be stronger than you estimated.
No good
You can quit or not quit, whichever seems wiser, without a stop loss. Quit very early or tough it out if you think you can still win. What good is a predetermined magic quitting number? No good at all.
Same if opponents see you losing. Yes, they’ll often play better, but it’s up to you to decide right then if this is a strong enough factor to make you quit. You decide. Not a magic number. You decide. Not a magic number. You decide. Not a magic number.
The most illogical thing about stop loss is that it often has the opposite effect of what’s intended. You see, if you’re a professional poker player or even a serious one, you need to think of poker like you would a job. You get paid to make the right decisions and, even though there are lots of fluctuations, you still get paid by the hour.
If you’re a winning player in a profitable game, the more hours you play, the more money you earn. So, if you’re in a good game, you’re earning a given amount an hour, on average. If you take yourself out of that game because you’re losing a predetermined amount of dollars, you’re cutting off your hourly funds, you’re shutting down your profit flow. You won’t work as many hours and, in the long run, and you probably won’t win as much money.
That’s the way to look at a stop loss. If you rigidly apply it, you’ll sometimes be excluding yourself from playing more hours in profitable games and you’ll be costing yourself money. That makes a stop loss a stop win.
Segments
Another illogical thing about stop loss is that people think that by dividing their time into segments, they can avoid long losing streaks. The truth is, if the game is good now, you might be more likely to extend your losing streak if you quit and come back tomorrow when the game is worse than by continuing to play right now.
Interrupting a streak does not kill it. That’s nonsense. The streak will either continue or not continue the next time you play, whether that’s next week or right now.
So, I’m not a fan of stop loss. You should consider quitting when you’re losing, of course. But you need to weigh all the factors working against you and decide whether the next hour is profitable enough for you to play. You can’t make that decision if you’ve taken away your options by setting a pre-determined stop loss. So, why do it? In poker profit comes from personal choice.
This is “The Mad Genius of Poker” Mike Caro and that’s my secret today. — MC
MC, this website is AMAZING.. I am so glad you got it up an running and it was wonderful to watch it grow. I am under a new username, but have been a part of this growing family since 2008 or 2009…
This has to be my most favorite of all your articles; However, I have read a lot of amazing article of yours in your Word’s of Today..
Thanks again for your dedication and never ending hard work for the betterment of the poker community.
thank you Mike for sharing this lesson, i respect and i really think its very true all what you said..
I use a stop loss as a tool. If I hit it, I take a very serious look at how I’m playing. If I’m not 100% sure I’m doing everything right, that I’m one of the top 3 players at the table, etc. then I leave. I’ll usually analyze hands on the way home and more often than not, leaving at that point ends up, to me, being the right move. There are very few instances where I was 100% certain about ignoring my stop loss limit and in the vast majority of those, I’ve gone on to have a good night.
I don’t use it as an absolute limit, but it is a very strong indicator to me that either I’m having a bad night or I’m not as big a favorite at the table that I think I am. Without overwhelming evidence, I’ll go with the data, and the data says that I lost all my money and I should go home.
That being said, I’ve never really had a bad run of cards be a deciding factor. It’s frustrating some nights to be folding like cheap patio furniture when you know if you got decent cards you’d be scooping some of those big beutiful pots in the middle of the table, but those are the breaks some nights. :-(
It isn’t that I disagree in principle with what you say, but what you say is really for winning players. That’s 5-7% of the online poker community.
I’m a winning player in two games, and a losing player in a few others and a break-even player in one. New players, or newbie players, before we develop poker judgment or learn to control our tilt, or who will always be recreational players who don’t care much about putting in long hours, can all benefit, IMO, from some form of stop-loss. For winning players, its probably just as bad an idea as you say.
I use stop-loss in a few games, I don’t in my winning games, because you are, of course, correct. I know when to leave the games I’m a winner at.
In the other games, I use stop-loss inspired by Barry Greenstein’s comment in his book that when he’s winning, he’ll leave after he loses “some of it” back. If I win 1.5 buy-ins, I decide I will leave if I lose a half buy-in back. This allows me to win more, I think, because if I do lose a couple hands in a row, it’s rarely a whole half buy-in and it keeps me from tilting so I can still play my best game. My stop-loss makes feel confidence and control in a game I’m not good at.
It does another thing: if I leave when I’ve been losing a bit, then that becomes an okay thing to do and I don’t hang around trying to “get even” at other times when I should be far away from a poker table.
So I think your way is best, but not for everyone. It’s why some people should take cash to a casino and leave their ATM card at home.
Lis-
I think another reason some players use the “Stop Loss” system, is that they are playing outside their bankroll limits to begin with. My theory is that you should not be afraid to lose money, and if you are playing with that stop loss in mind, it will affect your decisions about when to play. It then replaces logic and judgement, and can make you play worse. It goes back to the theory on the player who is winning, and does not want to go into the red on the session. Sometimes if you bet enough, you know they will not call, because if they do and lose, they’ll be down on the session. Horrible way to play.
Nice write up, as always.
bk