Why do most players lose overall?

Dwilius · Jul 12, 2009

Yeah, someone had a huge database of players...I think you had to email the researcher to get the information. Would think should be able to work out what % losers there are before and after rake from it. Would have to search the interwebs for it...

GCB · Jul 12, 2009

Stu_Ungar said:
Nor do you pay commissions fees as high as poker rake.

This totally depends on the type of trading you do. If you make many trades during a day and are scalping for short term gains you are going to pay a lot more in commissions than if you make few trade and are going for the long pull.

Commissions are basically one tick (one point on the DOW) per round-trip. So if you buy one DOW mini contract the profit is $5 per tick, the cost of buying and selling that contract (what it takes to complete the trade) is going to be about $5.

So basically in order to break even you have to make an average of 1 tick for every trade you make (not counting other business expenses).

If you are scalping for 4 ticks per contract, your commissions are costing you 25% of your profits. It's easier to get 4 ticks than 10, so scalping smaller and smaller is temptng. But eventually you reach the point of diminishing returns with a few stops out (your stops with these types of trade ahave to be bigger than your targets, i.e. you are risking more per trade than you hope to gain) that it becomes unprofitable.

Now if you make few trades per day and go for the long pull, commissions will be much less a percentage of your winnings, but they will still figure in.

Microstakes = 7.5BB/100. Sorry, I don't understand this notation. Could you expand?

Stu_Ungar · Jul 12, 2009

7.5BB/100 means 15 big blinds per 100 hands played.

This means that the rake is more than or equal to the profit made in winnings.

This means that no matter how you try and phrase it, the rake is significantly more than commissions fees.

Effexor · Jul 12, 2009

GCB said:
Microstakes = 7.5BB/100. Sorry, I don't understand this notation. Could you expand?

This goes back to the days before no limit was all the rage and people based their winning averages on "Big Bets" (A Limit term, not a no limit term).

1BB (Big Bet) = twice the big blind. So lets say you are playing 1/2 nl, and you are paying 7.5BB/100 in rake (this is just to make the math simple and easy to see). That means, over every 100 hands you played, you average paying $30 in rake. 7.5 times $4 (1BB).

Stu_Ungar · Jul 12, 2009

Effexor said:
This goes back to the days before no limit was all the rage and people based their winning averages on "Big Bets" (A Limit term, not a no limit term).

1BB (Big Bet) = twice the big blind. So lets say you are playing 1/2 nl, and you are paying 7.5BB/100 in rake (this is just to make the math simple and easy to see). That means, over every 100 hands you played, you average paying $30 in rake. 7.5 times $4 (1BB).

At 1/2 the rake figure starts to come down as you start getting into pots where the rake hits its cap.

However if we ignore that for just a minute. Whilst paying $30/100 in rake a decent player would be looking to earn 12- $30/100 in profit.

So as a % of your overall profit (rake included)

Rake represents 50-70% of total profit. Thats why I don't think its anything like commissions fees. Its perfectly normal to pay more in rake (fees) than you earn.

Stu_Ungar · Jul 12, 2009

Actually thinking about it, its not 7.5BB/100 its 7.5bb/100

Otherwise my win rate would be phenomenal!!

Even so, it dosen't really alter the percentages of rake to profit.

X1PeLo · Jul 12, 2009

LACK OF

PATIENCE

theokiedokie · Jul 12, 2009

they suck or play too high for there skill and rake is a big factor

GCB · Jul 12, 2009

So here's an interesting philosophical question. Let's say I decide to tighten up and fold 15 more hands per 100 hands (not that hard to do) and so not pay the big blind in those hands. All else being equal, would this make much of a dent in the deleterious effect of the rake on me?

Obviously, if my style is to try to limp in with trash where I can (ironically my style) and I tighten that up I will miss those hands here and there that flop two pair or a straight draw and so miss that chance to grab a unexpected windfall. So that will have a backlash effect.

But it seems the only way to push back on the rake is to tighten up. I mean, other than getting better at taking pots overall.

Stu_Ungar · Jul 12, 2009

GCB said:
So here's an interesting philosophical question. Let's say I decide to tighten up and fold 15 more hands per 100 hands (not that hard to do) and so not pay the big blind in those hands. All else being equal, would this make much of a dent in the deleterious effect of the rake on me?

Obviously, if my style is to try to limp in with trash where I can (ironically my style) and I tighten that up I will miss those hands here and there that flop two pair or a straight draw and so miss that chance to grab a unexpected windfall. So that will have a backlash effect.

But it seems the only way to push back on the rake is to tighten up. I mean, other than getting better at taking pots overall.

Well I am assuming that you already play a solid TAG style, what good will tightening up even further do? Its hard enough to get action on your big hands already.

Oviously if you are playing a loose spewey style then tightening up is an option, but once you adapt a good tight style, further tightening isn't really an option.

Stu_Ungar · Jul 12, 2009

GCB said:
But it seems the only way to push back on the rake is to tighten up. I mean, other than getting better at taking pots overall.

You aren't getting it.

Until you reach 100 - 200 NL you pay max rake on all pots (or virtually all pots you win) so if you win a big pot you pay 5% rake on it, win a small pot ... 5% rake on it.

Playing bigger posts wont help because you still pay the rake at 5% until the cap of $3 is hit (pot of $60)

This is why rake is the biggest cause of losing players... 50-70% of all you make goes back to the site in the form of rake.

GCB · Jul 12, 2009

There was a time when commissions were much higher than they are now. Fifteen years ago, $50 a trade as opposed to now $10 a trade for stocks with an online discount brokers even for casual traders. Seems to me poker can't be far behind. Especially when the Feds get the laws straight.

Seems to me discount online poker is a feasible business model. What's the overhead on the business really? No brick and mortar. Just software and support.

Pretty soon someone is going to realize having more winners will generate more business and they can do that by lowering the rake, perhaps by a third or even half, and offer Poker*Mart to go along with Wal*Mart.

And, if the rake is such a difference, they could easily advertise, truthfully, "A Higher Percentage of Winning Players Here than Anywhere Else!"

And the whole world would come running.

GCB · Jul 12, 2009

Stu_Ungar said:
You aren't getting it.

Until you reach 100 - 200 NL you pay max rake on all pots (or virtually all pots you win) so if you win a big pot you pay 5% rake on it, win a small pot ... 5% rake on it.

Playing bigger posts wont help because you still pay the rake at 5% until the cap of $3 is hit (pot of $60)

This is why rake is the biggest cause of losing players... 50-70% of all you make goes back to the site in the form of rake.

You are right. I'm not getting it. How can a 5% rake result in me losing 50-70% of my winnings to the rake? I just don't get that math, and I minored in math in college. Perhaps I should have majored. Thanks for your patience.

Snowmobiler · Jul 12, 2009

Stu_Ungar said:
You aren't getting it.

so if you win a big pot you pay 5% rake on it, win a small pot ... 5% rake on it.

It is 5% of the total pot,Which is often near 10% of your winnings for the pot.

Snow

jamesdenson · Jul 12, 2009

yea rake is a big reason say your playing micro everyone starts out with 2.00 thats 20$ on the table you play 60 hands a hour average rake of .03 per hand thats 1.80 ok you play a four hour session thats 7.20 so theres only 12.80 out of 20 left on the table. that dosent leave much to profit from. so yea i think rake is the most important reason y people lose online.

Stu_Ungar · Jul 12, 2009

GCB said:
There was a time when commissions were much higher than they are now. Fifteen years ago, $50 a trade as opposed to now $10 a trade for stocks with an online discount brokers even for casual traders. Seems to me poker can't be far behind. Especially when the Feds get the laws straight.

Seems to me discount online poker is a feasible business model. What's the overhead on the business really? No brick and mortar. Just software and support.

Pretty soon someone is going to realize having more winners will generate more business and they can do that by lowering the rake, perhaps by a third or even half, and offer Poker*Mart to go along with Wal*Mart.

And, if the rake is such a difference, they could easily advertise, truthfully, "A Higher Percentage of Winning Players Here than Anywhere Else!"

And the whole world would come running.

Maybe

I would like to see lower rake, but TBH on line poker is cheaper than live poker and offered at stakes a casino could never supply.

Lower rake would be nice, but when I play higher stakes I wont suffer from the problem anyway.

Stu_Ungar · Jul 12, 2009

Snowmobiler said:
Stu_Ungar said:

You aren't getting it.

so if you win a big pot you pay 5% rake on it, win a small pot ... 5% rake on it.

It is 5% of the total pot,Which is often near 10% of your winnings for the pot.

Snow

Click to expand...

Oh yeah!!

I forgot about that.

Very high, until you reach stakes where you hit the cap.

LizzyJ · Jul 12, 2009

GCB said:
There was a time when commissions were much higher than they are now. Fifteen years ago, $50 a trade as opposed to now $10 a trade for stocks with an online discount brokers even for casual traders. Seems to me poker can't be far behind. Especially when the Feds get the laws straight.

Seems to me discount online poker is a feasible business model. What's the overhead on the business really? No brick and mortar. Just software and support.

Pretty soon someone is going to realize having more winners will generate more business and they can do that by lowering the rake, perhaps by a third or even half, and offer Poker*Mart to go along with Wal*Mart.

And, if the rake is such a difference, they could easily advertise, truthfully, "A Higher Percentage of Winning Players Here than Anywhere Else!"

And the whole world would come running.

You do have a point. When poker becomes legal, the major casinos are going to get a piece of the action, which is going to cause competition. Instead of a rake, there might be just a monthly service charge for unlimited play.

Stu_Ungar · Jul 12, 2009

GCB said:
You are right. I'm not getting it. How can a 5% rake result in me losing 50-70% of my winnings to the rake? I just don't get that math, and I minored in math in college. Perhaps I should have majored. Thanks for your patience.

How much do you think you earn via poker?

We have established that the rake is around 7.5BB/100

A good win rate is 5BB/100

Most people would settle for a 3BB/100 winrate.

A top pro would look for around 10BB/100

So most people are paying half of their winnings or more in rake.. hence 50-70%

Stu_Ungar · Jul 12, 2009

LizzyJ said:
You do have a point. When poker becomes legal, the major casinos are going to get a piece of the action, which is going to cause competition. Instead of a rake, there might be just a monthly service charge for unlimited play.

Maybe

But its legal here in Europe.. there are 730 million of us and the poker sites haven't seen fit to lower the rake.

Perhaps things will change when the US legalises onlinee poker.

I wouldn't be surprised if rake stays as it is.

GCB · Jul 12, 2009

Obviously some of the rake is on money which was yours, not just on what others put in.

So let's say the pot is at $12, 2 which were mine and I go all in and make the pot $20. Everyone folds and I get the pot. The 5% rake would be $1. If so rake was actually a 10% rake of new money to me.

Now what if I went all in and made the pot $40. The rake would be $2. Which would actually be a 20% rake of new money to me. But essentially there is nothing different about the hands, just that I put in more to win it.

Is this how it works, if so that would seem to mean you should avoid going all in big, which might radically change the dynamics of your game.

Stu_Ungar · Jul 12, 2009

\listen.

Do you have either PT3 or HEM?

If so just look at the bottom of the winnings and rake paid columns.

Have you earned more or less than you paid in rake?

NoWuckingFurries · Jul 12, 2009

LizzyJ said:
You do have a point. When poker becomes legal, the major casinos are going to get a piece of the action, which is going to cause competition. Instead of a rake, there might be just a monthly service charge for unlimited play.

If poker becomes legal.

kidkvno1 · Jul 12, 2009

stuventus said:
Bad bankroll management

Too many starting hands

Multitasking and not paying attention

Some Are only in it for fun and dont mind if they lose

Your own list, sums it up...
If i pay attention, i win, and if i don't i lose..

GCB · Jul 13, 2009

Okay, I finally get how a 5% rake can end up taking 50% your winnings. I thought about this for awhile and finally figured out how it works. It's insidious, because the 5% rake is really misleading at first glance.

What happens is the same money gets raked over and over.

Let's take a simplified example to illustrate:

Suppose you are playing 1 on 1 with another player. Each of you has a $50 stack. The rake is 5% capped at $5.

The hand is dealt and each of you go all in. The pot is now $100 and the rake is $5. Let's say the hands tie. The $5 rake is taken out and the remainder is split. Each of you gets $47.50 back.

Now the same thing happens on the next hand. All in. The pot is $95, the rake is $4.75. You tie and split $90.25. You now each have $45.125.

It's easy to see now, if this continued, each of you could lose practically all of your stack with neither of you ever actually losing a hand!

This scenario is, of course, unlikely, but it does illustrate what is going on with the rake. I think. Please correct if wrong.

Why do most players lose overall?

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