What is the Kelly Criterion?
The Kelly Criterion is a bankroll sizing formula used in trading, sports betting models, investing, and other probability-based decisions. It estimates how much capital to risk when you believe you have an edge.
A Kelly Criterion calculator is not a prediction tool. It is a sizing tool. It turns your win rate and reward-to-risk ratio into a bankroll fraction, which makes it useful as a position sizing calculator, an optimal bet size calculator, and a fractional Kelly calculator.
Kelly Formula
where Loss Rate = 1 − Win Rate
Full Kelly % = Kelly Fraction × 100
The reward-to-risk ratio in this calculator means your average win divided by your average loss. For example, a ratio of 2 means your average win is twice your average loss. That is why this page also works as a Kelly formula calculator for trading and betting-style models.
Why Kelly matters
Kelly helps answer a simple question: how much should I risk when the trade or bet has positive expectancy? That makes it especially useful when you want to size positions based on edge instead of emotion.
- Turns win rate and payoff ratio into a bankroll allocation
- Shows when a setup has no positive edge
- Helps compare full, half, and quarter Kelly sizing
- Supports long-term growth planning
- Works as a practical bankroll calculator for trading and betting models
Full Kelly vs fractional Kelly
Full Kelly is the theoretical growth-optimal position size, but it can be very aggressive. Many traders and bettors prefer half Kelly or quarter Kelly because it reduces drawdown pressure and keeps the system more survivable.
In practice, fractional Kelly is often the more realistic choice. It gives up some theoretical growth in exchange for a smoother equity curve and less account damage during losing streaks.
How to use this calculator
- Enter your win rate
- Enter your average win-to-loss ratio
- Add bankroll if you want dollar amounts
- Click calculate to see full Kelly and fractional Kelly
- Use the result as a guide for bet sizing, position sizing, or capital allocation
Frequently Asked Questions
Yes. Kelly Criterion is commonly used as a betting calculator and bankroll calculator because it estimates how much of a bankroll to risk when a model shows an edge.
Often yes. Full Kelly can be mathematically optimal in theory, but it is usually too volatile for real trading. Many people scale it down to half Kelly or quarter Kelly.
A negative Kelly value means your win rate and payoff ratio do not create a positive edge. In practical terms, that suggests no trade, no bet, or a need to improve the setup.
Kelly gives a percentage of your bankroll to risk. That makes it directly useful for position sizing, because it tells you how large the trade should be relative to capital.
Yes. Kelly can be used anywhere you can estimate win rate and average reward-to-risk ratio, including crypto, forex, stocks, and other markets.
Fractional Kelly reduces volatility and drawdown risk. It is often easier to stick with over time, especially when real-world results do not perfectly match the model.
Win rate and average reward-to-risk ratio matter most. Small changes in either input can noticeably change the suggested Kelly allocation.