ROI (return of investment)
Anyone that play poker tournaments (MTTs and SNGs) will have a specific return of investment, ROI. It's good to know you ROI as you when will know how much you can expect to win in a certain number of tournaments. You can also compare your ROI between different poker forms and find out there your profit is the best.
ROI in poker is used for tournaments, not cash games (in cash games it's about the win rate and how much you earn by the hour). Here are some examples concerning SNG heads up.
Let's say you are playing $50+$2.50 heads up and thinking about moving up to the next buy-in level, $100+5. Here we compare your profit with two different win expectations:
Buy-in $50+2.5 x 10 matches = $520.50
Result 7/10 won = $700 in money > net win: $170.50
ROI 170.50/520.50 = 33,3% ROI
Buy-in $100+5 x 10 matches = $1050
Result 6/10 won = $1200 in money > net win: $150
ROI 150/1200 = 12,5% ROI
In this example, we can see that you make more money playing $50+$5 supposing the different winning frequences (7 out of 10 vs. 6 out of 10). However, 7 out of 10 it's not very realistic and the difference to the next limit will probably be less.
Therefore, we add another example.
Buy-in $50+2.5 x 10 matches = $520.50
Result 6,5/10 won = $650 in money > net win: $120.50
ROI 140.50/520.50 = ca 28% ROI
Buy-in $100+5 x 10 matches = $1050
Result 6,2/10 won = $1240 in money > net win: $190
ROI 190/1240 = ca 16% ROI
The second example shows that you are winning more money playing $100+$5 given the performances (6,6 out of 10 vs. 6,2 out of 10). As you can see, the ROI in poker doesn't need to be extremely good when you are playing at higher limits because you will win pretty much money even with a relative small return of investment in percentage.
These kinds of calculations can also be made for comparing SNGs with MTTs and other situations.
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