In a cash game, if you’re playing limit, it’s common to use a lot of one denomination of chips, with one or two other colors used in the case that you don’t have a lot of your main denomination. For instance, if I was playing a $1/$2 limit cash game, I’d use a lot of white chips and call them $1. I might use reds as $5 chips for those who have a lot of money on the table, when I’m short on extra whites. I might also use another chip, like the blue, for a $0.50 or $0.25 chip, just for the purpose of small blinds or antes.

If your cash game is pot-limit or no limit, you may have use for extra denominations.

Typical cash denominations are:

White: $1
Red: $5
Green: $25
Black: $100
Blue: Something else… maybe a big amount, or maybe just as ante chips.

Now, in a tourney, you have need for many denominations. I’ll typically use the same as above, 1, 5, 25, 100, and maybe even a 500. I might give each player a starting stack of 300:

20 White
16 Red
4 Green
1 Black

Or something along those lines. Later, as the blinds and/or antes get big, you color up by taking a short break and having players exchange chips for higher denominations, bringing in black and green chips to exchange for whites and reds. It depends on how many players you have, to determine if this is even necessary.
References :

white 5
red 25
green 50
blue 100
black 500

divide the chips equally among the players and if there is an odd number leave chips out until everyone has the same amount of chips per color
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