Choosing Your Stakes

For cash game players, choosing which stakes to play is often the difference between success and failure.  The decision comes down to three main factors: in game decisions, out of game decisions, and risk/reward decisions.
 
In the game:  You want to be playing against players where you have an edge.  When at the table you should be watching how your opponents play their hands and find mistakes.  You should also be thinking about how you can capitalize on those mistakes.  If you can not recognize mistakes in your opposition, you are most likely outclassed and should be playing lower.  Another way to know if you have an edge is to keep solid records, and look at your winrate once you reach a reasonable sample size.  When I play in live games I like to rank the players at the table in my head.  If I am not “on the podium”  it is probably not a profitable situation (unless the players below me are much worse). 

Outside the game:  Just because you are generally better than the players that typically play at a specific level does not mean that you should be playing with them.  You need to be properly bankrolled for the game that you are playing.  For online games I would recommend having 300 big bets for casual players and 1,000 for pros before playing at a certain level.  So for $5/$10 that would be $3,000 to $10,000.   For a live player these numbers can be reduced somewhat due to the lower level of the competition. I think 200 bets for the casual player and 600 for the player living off their winnings should suffice.  These numbers are very conservative and there is a good reason for that.  Very few players have the ability to play well and avoid tilt and frustration if they are on the verge of going broke.  Having a sufficient bankroll will keep you out of that situation assuming you are a winning player. 

Having a larger bankroll will also make the inevitable swings (both up and down) feel smaller, which will help keep swings from affecting strategic decisions.  If the money you can reasonably win or lose in a day matters to you mentally, you are probably playing too big.  This does not mean that you should never aspire to play big games, but rather you should take your time getting there so you become a bit desensitized to the swings.  I remember when I first started playing microstakes online, I would open up the $15/$30 tables (which was the big game at the time) and be amazed at the amount of money they were playing for.  The pots were hundreds of dollars and they had over $1,000 on the table! It is funny to think that back then I could not even imagine betting that much money on the turn of a card and now I play in games up to $100/$200 and the swings do not bother me.   All that being said, even at the levels that I play, If I were to jump into a game like $500/$1,000 I would not be able to play my best since the swings would bother me. 

Risk/Reward:  You should be playing in the game that offers the best earnrate for your skill level.  Notice that that is different from playing the biggest game you can beat.  If you would be a mild favorite at a $20/40 game and earn half a bet per hour, you would be better off playing a $15/30 if you could beat it for a full bet.  You will earn $30 an hour compared to $20 and have smaller swings.  If you are in this situation, the only reason you should be playing the larger game would be to sacrifice earnrate for experience in the hopes that you could eventually beat the $20/40 for a bet an hour. 

This decision can also be challenging for the expert player who can beat any game in the room.  For example below is what I feel are possible winrates for an expert player in the mid-limit games at the Commerce Casino in Los Angeles:

20/40 - $55 an hour or 1.38 bets     
40/80 - $100 an hour or 1.25 bets
60/120 - $120 an hour or 1.00 bets
100/200 - $150 an hour or 0.75 bets

As you can see, winrate in dollars increases as you increase the stakes, but winrate in bets decreases since the competition improves.  With an infinite bankroll and a complete indifference to variance, the expert player should play $100/$200.  Since most players are not blessed with infinite bankrolls, a compromise may need to be made.  Now, we know that a higher winrate means less severe downswings in terms of bets, so having a higher winrate in bets is important.  The higher the winrate in bets, the smaller the bankroll needs to be to prevent going broke.  There is no easy answer to which game the expert should be playing, but he should know the tradeoff he is making as he changes stakes.  When I play in LA, the way I tackle the problem is to generally play $60/$120, and play $40/$80 while I wait.   If the $60/$120 is not very good I will play $40/$80 and I generally do not play $100/$200 unless the game is more soft than usual.  I probably end up changing stakes five or six times in any day as I bounce between the three.