12:13am: I fell asleep last night, so I had left off at 3-0. I decided that I would count the games I played today as part of yesterday’s session, and then begin a totally new session afterwards. After going 5-8 the day before yesterday, I rebounded the last 24 hours to go 5-0 (2-0 on Cake, 3-0 on PokerStars). This further emphasizes my point about keeping the correct mindset with my bankroll management strategy discussed 3 days ago.

Finishing 5-8 the other night didn’t bother me at all, because I never write down that I’m down. This might sound like data manipulation, but it’s not, because it’s true. As discussed before, it’s not if you will be up, but when. And fortunately for me, “when” is now, as I was able to make my first withdrawal in 2 1/2 days. Let’s look into the numbers:

My “Threshold”: $2,000
Yesterday’s Record: 5-8 (-$182.50)
Today’s Record: 5-0 (+$237.50)

The threshold was reduced to $1817.50 after the dismal showing the other day. However, my bankroll/net worth sheet still showed my PokerStars account as having $2,000 in it. I can do this, because I know eventually it will return to the threshold over a large sample size. Fortunately, it was sooner rather than later, and if you do the math: [$1817.50 (actual threshold) + $237.50 (today's profit) = $2,055], you will see that I was actually able to withdraw $55, leaving me with my original threshold of $2,000.

Is that a lot of money? Not really. However, my cash out method kept me in the right mindset knowing that I’m never down, therefore preventing me from losing more, and actually enabling myself to get above the threshold the next day (even I didn’t think it’d be THIS quick). Everything else from there is pretty much rinse and repeat.

More later…

Start a Clean Slate at a New Room, a New Sharkscope, and Keep HFL Free in the Process

11:22pm: I see the question of taxes and poker brought up a lot on PocketFives, so I thought I’d give my take on the subject, as well as a simple suggestion of strategy for you to take regarding taxes as well. Here is an example of questions that get asked a lot regarding the subject:

1. Do I have to claim my online poker winnings when I file taxes? Yes. You are required to report all income, no matter where it came from or how you obtained it. The government takes a cut of everything you earn, no matter what. Commercial income, gifts, gambling winnings, it’s all entitled by the government to be taxed. Do I agree with this, or think it’s right? Not at all, but it’s the truth.

2. What percentage of my winnings do I have to claim? That depends on if you plan on filing as a professional or as a hobbyist. There are more perks to filing as a professional, as opposed to filing as a hobbyist. Those who file as a professional are able to deduct and write off a lot more expenses than those who file as a hobbyist. Things such as office supplies, internet connection costs, travel costs, and even computer software used are all deductible when you file professionally. The down side to doing this is that you have to have extensive records and be a lot more organized than a hobbyist because the burden of proof lies on the professional to show these deductions are legitimate. However, to answer the original question, I’ve heard of some people owing as much as 33% for filing as a hobbyist, and as low as 15% for filing as a professional.

3. How long do I have to file taxes after I win? If you’re behind on your taxes, you have up to 3 years an amended return on a form 1040X. However, the obvious advice would be to file as soon as you can.

4. Can I incorporate myself to save on self-employment taxes? No, a professional gambler cannot incorporate himself.

5. What else can you tell me about taxes? I’m not even close to a CPA, but I can refer you to a good one. Google Ann-Margaret Johnston. I’ve read her book “How to Turn Your Poker Playing Into a Business”, and learned a lot from it. I suggest you do the same.

My advice to you regarding taxes is to get serious about it, because it doesn’t just go away. That being said, there’s a good plan I can suggest to you in order to organized and serious about getting squared up with the government. I suggest creating a totally separate online poker account and make a deposit for the sole purpose of paying taxes with it (Cake Anyone?). All games played on this site will be referred to as your “tax games”, and the money in the account should never be regarded as yours, unless you lose it. How much you want to deposit depends on you, but with this plan you don’t need to hurt yourself too bad. For the sake of argument, $200 is fine. Using past statistics, figure out how much you will make this year playing poker (and be honest with yourself, because lying about it only hurts you). With that amount, you can estimate what you will owe at the end of the year and therefore figure out how much you will need to make per day in order to pay your taxes.

Let’s say you estimate that you will make $10,000 by the end of the year playing poker. Let’s also assume for the sake of argument that you will eventually owe 25% of your income, after deductions. Therefore, you need to make $2,500 in order to sufficiently cover your taxes this year. If there are 365 days in a year, that means you will need to earn $6.94/day in order to cover taxes. For this, $5 heads up matches should be sufficient. Or, if you’d like to play less games, $10 heads up matches would also suffice.

However, this is not enough. The money on you earn on whatever site you choose is also considered income, so you will need to adjust your numbers to include this. Therefore, you’re going to owe some amount out of your pocket regardless, because you’ll never be able to pay 100% of your taxes off by playing. But what this method accomplishes is that it prevents you from spending your tax money, and keeps thing in a very transparent and organized manner. When you lose, you can feel a little more at ease because there’s not as much of an “immediate need” to win, as opposed to your real account with your true income. It also serves as good practice, as you get to exercise the same thinking skills, but without denting your bankroll.

I should also tell you that this advice is based on the assumption that whoever takes it is indeed a winning heads up sit n go player in the long run. If you just break even, or have a - ROI, then this advice would not apply to you, as you will more than likely will not owe as much. However, what little you do owe will have to come out of your pocket instead.

I’m not an authority on taxes, I’m just sharing some personal advice as a fellow professional player, so in no way, shape or form is this article designed to serve as a legal authority on taxes. This is just my two cents — take it for what it’s worth, but how much stock you put in it is to be done at your discretion.

Start a Clean Slate at a New Room, a New Sharkscope, and Keep HFL Free in the Process

3:43pm: I find myself in the midst of a very awkward sleep schedule. I’ve been blogging and playing so much that I’ve now deviated from my normal 2am-10am sleep schedule. The average time I get to bed lately is somewhere around 9am, leaving me with only about 6 hours to sleep. From a return on investment standpoint, this is probably the most profitable time to be playing poker (according to my hour-of-the-day SharkScope stats). However, is it really good for me? Probably not.

First off, this sleep schedule isn’t really conducive to participating in society. Human interaction is important, even when your job is to sit in front of a computer 8-12 hours a day. This is one of the things I miss about my old job as a bartender. When you wake up at 4pm, you’re getting up just as everyone is getting in, which therefore limits your exposure to other human beings.

It’s also not very conducive to staying in tip top physical shape. Like many before me, I am guilty of owning a membership to a gym and not taking full advantage of it. I never said I was perfect, and this is something that I look forward to changing in the near future. It takes a very organized and composed personality to perfectly balance everything in life.

How you walk the fine line between balancing life and poker goes a long way into determining how happy you are as a person. When I’m not on THIS particular sleep schedule, I feel like I do a good job. However, inevitably I always find myself staying up progressively later each day. That being said, it’s not totally my fault though. If there’s one thing I’ve come to learn about myself, it’s that if my body doesn’t want to sleep, there’s no way in hell it’s going to let me force it. I’ve always been a night owl, ever since the early days of high school.

I went to private school, and had to be up at 5am everyday in order to be there for 7am. 80% of the time I’d stay up until at least 2am talking to girls on the phone, and the other 20% of the time I wouldn’t go to sleep at all. I did all of this while maintaining my top 15 class rank (out of 400), but admittedly not working as hard as I could have. I actually got on a better sleep schedule in college, although not much better, but that was because I had a steady girlfriend throughout.

Point being, I think we all — including myself — need to evaluate whether or not we are maintaining a healthy balance of life and poker. What I normally do when I want to get back to a normal schedule is to stay up all night, therefore making me tired when normal sleeping hours arrive the next day. That’s probably what I’m going to have to do in order to get back on track, but I will. More later…

4:10am: This is an article I couldn’t resist sharing with you guys, because it’s so true; The first step in the right direction in bankroll management is being able to pencil in what your “psychological bankroll” is.

And in case you’re curious, I’m having a better start to my day than yesterday. I’m 3-0 so far (2-0 on Cake, 1-0 on PokerStars). Enjoy the article.

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“I got a kick out of having a big bankroll in my pocket. Even if I only made a couple hundred dollars, I’d always keep it in fives and tens so it’d look big.” - Mickey Cohen

Nov. 8, 2007

By Evelyn Ng
Bodog Nation Contributing Writer

There have been countless articles written on proper poker bankrolls. You ask any professional player the top-five questions that he or she is asked most frequently, and the bankroll management question is bound to be on everyone’s list. However, I think that the reason people struggle so much with answering this question on their own is because they fail to factor in the fact that there are two bankrolls you must manage: your physical bankroll and the less mentioned psychological bankroll.

Everyone has heard about the physical bankroll. The standard is that it should be between 300-500 times the big bet. There should be some money set aside for living expenses and $100 or so for buy-ins to the average tournament. You could argue these figures, but more importantly, you should start to consider a very widely ignored and important consideration, the aforementioned psychological bankroll.

Whether you are just starting to play poker, or you have been playing for a while, you are always going to encounter your losing days and downswing streaks that can be tough to handle. To me, your psychological bankroll is the amount of money you can stand to lose before it affects your mindset, and adversely, affect your game.

Never underestimate the value of keeping a cool head.

When I was just starting out, I used to play poker and deal blackjack and poker in the casinos. The fact that I had a paycheck coming in every week to fall back on during my losing streaks was important for my psychological mindset, but there was still always a threshold of the amount that I could lose before I would literally lose sleep over it.

When I would lose that amount, it would bother me so much that I found that I was no longer playing well that day, and it would than often affect the next session or two, as I was trying to protect my stack from suffering a similar fate that it had suffered the session before. Losing that amount essentially made it too difficult to continue playing poker optimally until I got over it, and I eventually learned to stop playing when I reached my limits and that helped me to overcome the problem. As you move through poker limits, your threshold may increase or decrease depending on how your results are for that week or that month, but it’s important to stay aware of the amounts that you can and can’t handle, and then maintain the discipline to quit before you overstep your boundaries.

Everyone’s threshold is different, and I have found through my experience that there are several ways to prevent yourself from becoming a victim of what I like to call “psychological bankroll tilt”:

1. You can give yourself a stop-loss limit. The term basically means exactly what it says. You set a limit that you feel comfortable losing for the day, and you stop when you have lost that amount to prevent yourself from falling into the zone that makes you uncomfortable
2. You can keep a detailed record of all your sessions. If you take poker seriously, you should be practicing this method already, but if not, then you should start. On top of the easily recognizable benefits of knowing if you are ahead or behind, the records can serve as a positive reinforcement to get you to feel better about the day’s losses by forcing you to focus on the big picture.

Doyle Brunson once said that to succeed in poker, you have to have a blatant disregard for money. While many of us try and aspire to think that way at the table, it is not easy for the part-time casual player that has a family and rent to pay to think this way. By setting limits for your physical and psychological bankroll, you allow your regard for money to rule the table without it negatively affecting your game.