Article
The Kelly Criterion: Optimizing Your Stake Size
The formula used by Warren Buffett and pro gamblers. Learn how to calculate the mathematically perfect bet size for maximum growth.
By DCODDS Team•5 min read
Maximize Growth, Minimize Ruin
John Kelly Jr. developed a formula in 1956 that changed gambling forever. It calculates the exact amount you should bet to maximize the growth of your bankroll over time, based on your edge.
The Formula
f* = (bp - q) / b
- f* = Fraction of bankroll to bet
- b = Decimal odds - 1
- p = Probability of winning
- q = Probability of losing (1 - p)
Why Pros Use "Fractional Kelly"
Full Kelly can be extremely volatile. It might suggest betting 10% of your bankroll on a huge edge. That is why most pros use Half Kelly or Quarter Kelly (multiplying the result by 0.5 or 0.25) to reduce variance while still growing exponentially.
Use Our Calculator
Don't do the math by hand. Use our Kelly Calculator to find your optimal stake size instantly. And for finding bets worthy of your bankroll, verify the odds here.