Kelly Criterion Calculator: Optimize Your Betting Strategy
The Kelly Criterion is a mathematical formula used to determine the optimal size of a series of bets. It helps bettors maximize their potential returns while minimizing the risk of losing their entire bankroll. By comparing the true probability of winning against the implied probability from the odds, bettors can calculate the ideal fraction of their bankroll to wager on a given bet.
This calculator takes into account three key inputs: your edge (the difference between your estimated probability of winning and the implied probability from the odds), your total bankroll, and the decimal odds of the bet. By inputting these values, you can easily find out the percentage of your bankroll that you should bet to maximize your expected growth over time.
Formula
The formula used in this calculator is straightforward: it calculates the bet fraction as the edge divided by the difference between the odds and one, multiplied by 100. This gives you the percentage of your bankroll that should be wagered.
How to use
- Enter your estimated edge as a percentage.
- Input your total bankroll in dollars.
- Provide the decimal odds for the bet you are considering.
FAQ
What is the Kelly Criterion?
The Kelly Criterion is a formula used in gambling and investing to determine the optimal size of a series of bets or investments to maximize logarithmic wealth.
How do I calculate my edge?
Your edge is calculated by subtracting the implied probability of the odds from your estimated probability of winning. For example, if you believe you have a 60% chance of winning and the odds imply a 50% chance, your edge is 10%.
Is the Kelly Criterion always the best strategy?
While the Kelly Criterion can maximize long-term growth, it may lead to high volatility. Many bettors use a fraction of the optimal bet size (e.g., half-Kelly) to reduce risk.