Kelly Criterion Explained — Smart Bankroll Growth

The Kelly Criterion is a mathematical formula that determines the optimal stake size based on edge and odds. It maximizes long-term growth but also carries risks if misapplied.

Key takeaways

• Formula: f* = (bp – q) / b, where b = odds − 1, p = probability of winning, q = 1 − p.
• Benefits: prevents overbetting, balances growth and risk.
• Risks: requires accurate probability estimates; misuse leads to volatility.
• Fractional Kelly: many bettors apply half or quarter Kelly for stability.