1. What is the Kelly Criterion Calculator?

Definition: This calculator determines the optimal fraction of your bankroll to wager based on the Kelly Criterion formula.

Purpose: It helps gamblers and investors maximize long-term growth while minimizing risk of ruin.

2. How Does the Calculator Work?

The calculator uses the Kelly Criterion formula:

Where:

• \( f \) — Fraction of bankroll to wager (dimensionless)
• \( b \) — Decimal odds (e.g., 2.0 for even money)
• \( p \) — Probability of winning (0 to 1)
• \( q \) — Probability of losing (1 - p)

Explanation: The formula balances potential reward against risk to determine the optimal bet size.

3. Importance of Kelly Criterion

Details: Proper bankroll management using the Kelly Criterion can maximize growth while preventing over-betting and potential ruin.

4. Using the Calculator

Tips: Enter the decimal odds (must be > 1) and your estimated win probability (between 0 and 1). The calculator will show the optimal fraction and percentage of your bankroll to wager.

5. Frequently Asked Questions (FAQ)

Q1: What does a negative result mean?
A: A negative result means the bet has negative expected value and should not be placed.

Q2: Is full Kelly betting recommended?
A: Many practitioners recommend "half Kelly" or "quarter Kelly" to reduce volatility while maintaining most of the growth benefits.

Q3: How accurate does my probability estimate need to be?
A: The Kelly Criterion is sensitive to probability estimates. Overestimating your edge can lead to over-betting and increased risk.

Q4: Can I use this for sports betting?
A: Yes, this is commonly used in sports betting, poker, and other forms of gambling where you can estimate probabilities.

Q5: What's the advantage over fixed betting?
A: Kelly betting grows your bankroll faster than any other strategy in the long run, while fixed betting doesn't adjust for bankroll size or edge.