How to Use the Kelly Criterion Bet Size Calculator
The Kelly criterion is a formula for finding the theoretically optimal bet or investment size that maximizes long-run growth, given a known win rate and win/loss ratio. This calculator takes your win rate and win/loss ratio (average win divided by average loss) to compute the full Kelly percentage alongside the more commonly used half-Kelly size.
The formula is win rate โ (1 โ win rate) รท win/loss ratio. A higher win rate or a more favorable win/loss ratio (bigger wins relative to losses) produces a larger recommended size. If the result comes out at or below 0%, it means there's no statistical edge in your inputs, so the theoretically optimal bet is zero.
Betting the full Kelly percentage every time is risky in practice, because even small errors in your win rate or win/loss ratio estimates can produce extreme swings in your account value. That's why many traders and bettors size their positions at half (half-Kelly) or a quarter (quarter-Kelly) of the calculated amount, trading a bit of long-run growth for meaningfully less volatility.
It's also worth remembering that your win rate and win/loss ratio are just estimates based on past results, with no guarantee they'll hold up going forward. With a small sample size or a shifting market, the real numbers can diverge significantly from what you entered โ so treat the output as a guide, not a guarantee.
Frequently Asked Questions
It means the Kelly formula found no statistical edge (or a negative one) in your inputs, so theoretically the optimal bet size is zero. Unless your win rate or win/loss ratio improves, the strategy is likely to lose money over the long run.
It's the mathematically optimal size, but small errors in your win rate or win/loss ratio estimate can cause extreme volatility. Many practitioners bet only half (half-Kelly) or a quarter (quarter-Kelly) of the calculated size to reduce swings while keeping most of the growth benefit.