Daniel Negreanu Bankroll Challenge Analysis

After my last post on Daniel Negreanu's Bankroll Challenge I decided to look into his results a little further. I've created my own spreadsheet using the results he posts on his forum. I'll try and keep it updated and the chart on the right (most charts in this post actually) will update whenever I update my spreadsheet. So you can bookmark this page and come back to it to see how he's doing.

Since the charts will be updating, for reference, this post was made after his 83rd session when he just started playing $0.25/$0.25 NLHE.

In my last post, I questioned whether his aggressive bankroll management might make it difficult to achieve his goal of reaching $100,000 which is why I wanted to take a closer look at his results to see if variance might be creeping up on him. Lots of charts and math if you like that sort of thing.

I'm also doing my own cash game bankroll challenge and wanted to see if there was anything I can learn that might help me in my endeavor.

Another reason I wanted to look closer at his results is in my last post I concluded he had lost 28% of his bankroll in one session. I based this on his last blog post on his challenge, which indicated his current bankroll was at $177.78. His bankroll in his forum and his blog didn't match up. I also didn't find any point in my spreadsheet where his bankroll was at $177.78.

I don't think he's fudging his numbers. What it looks like, he had $187.78 around Feb 12th, accidentally listed only his profit on his blog post and then played a few more winning sessions on the 13th before he hit the $0.25/$0.50 tables. So it looks like I was wrong stating he lost 28% of his bankroll in one hand. It was actually 18%, which I still think is pretty big.

I discussed Negreanu's Bankroll Management Strategy in my last post and compared it to a few others. If you want the details you can click on that link but my conclusion is his aggressive bankroll management strategy is going to prevent him from completing his challenge unless he gets really lucky. After analyzing his results further, I think he might be almost as far as he's going to get unless he makes some changes or is made of shamrocks.

Bottom line is there isn't much room for variance in his bankroll management, especially for his style of play.

He had anticipated tightening his bankroll management strategy when he reached the $5/$10 level but I think he underestimates the competition at the stakes he's playing at now and should start tightening up before it's too late.

At his current $0.25/$0.50 level, the max buy-in is $50. A good bankroll management strategy would mean players at those stakes should have at least a $1,000 bankroll. A grand is only a fraction of what Negreanu might bet on a single put on the greens but to many people it's real money. Some regular players at those stakes have won 10's of thousands of dollars and don't go much higher than that. People at these stakes take the games a lot more seriously than I think Negreanu give's them credit for. (Based on one of his forum comments.)

He's had a good run but I feel he's now hit a level where he needs to make serious adjustments because variance seems to be catching up with him.

Variance isn't just bad luck. It's related to the standard deviation in your bankroll swings. As we can see from the following chart, as Negreanu has gone up in limits his standard deviation has increased dramatically.

Another problem has crept up as the stakes have increased. The ratio of winning to losing sessions has dropped.

At $0.01/$0.02 over 75% of his sessions were winners, at $0.10/$0.20 only 65% were and at $0.10/$0.25 it was almost even at 53%

To keep growing his bankroll he's going to have to make sure he wins more in his winning sessions than he loses in his losing sessions. His bankroll doesn't seem to allow for the types of swings it looks like he'll encounter.

His BB/100 (Big Blinds not Big Bets) has been dropping too. From 97 to 60 to 20. At these stakes, consistent winning players with small swings are at around 16-18 BB/100. At $0.10/$0.25 he already started approaching micro shark results.

This next chart shows how as he's moved up in levels, the avarage big blinds he wins per session has been falling pretty quickly. At the $0.02/$0.05 stakes it went up but there were very few sessions for the data to be significant.

Things just aren't looking promising for KidPokers adventure at the microstakes.

So what are Negreanu's chances of successfully completing his challenge? Doesn't look good but let's try and quantify it.

I found this interesting article by Angel Largey titled How Much Bankroll Do you Need? He suggests the following formula for figuring out a safe bankroll.

Bankroll = - (SD² / 2*HWR) * ln(RoR)

SD - Standard deviation
HWR - Hourly Win Rate. Negreanu didn't provide time for his sessions but I estimated 60 hands per hour using the number of hands be did provide.
RoR - Risk of Ruin. The amount you're willing to risk going bust. 5% means you will have a 5% chance of going broke.

We have Negreanu's standard deviation and a good estimation of his hourly win rate so we can come up with some interesting numbers.

At the $0.10/$0.25 stakes, to have only a 5% chance of going broke, he should have started with a bankroll of $1,100.

Moving things around, we can also calculate his actual Risk of Ruin using the following formula:

RoR = exp(-(bankroll)/(SD²/2*HWR))

Plugging in the numbers it seems that Negreanu had a 71% chance of busting out at $0.10/$0.25.

Obviously he didn't and he won enough to move to higher stakes using his rules. But how long can he keep defying the odds? Especially since his standard deviation seems to be increasing as he moves up?

What Negreanu is doing is basically taking a high risk shot at turning $10 into $100k which is totally different than Chris Ferguson's more conservative approach when he did his $0 to $10k challenge. If you want to run up a big bankroll for yourself, you'll probably be better off using Chris Ferguson's approach because a) it's safer, b) you're not Daniel Negreanu.

He's adjusting his bankroll strategy as he goes and it's going to be very interesting to see how it turns out. You need to be aggressive to turn $10 into $100k in a short amount of time but not so aggressive you go broke. I'm very interested to see if he can do it.

To me it looks like he might not make it, which is going to make it even more exciting if/when he does.