Question 1

What is a Kelly Criterion calculator?

Accepted Answer

It computes the growth-optimal fraction of your capital to bet on each trade given your win rate and the ratio of average win to average loss. Bizzlytics also shows Half-Kelly and Quarter-Kelly for real-world use.

Question 2

How is Kelly % calculated?

Accepted Answer

Kelly % = W − (1 − W) / B. Where W = historical win rate, B = average win ÷ average loss.

Question 3

Why is Kelly useful for traders?

Accepted Answer

It gives a principled upper bound on position sizing given your edge. Any bet size above Kelly is guaranteed to underperform in the long run and increases ruin risk.

Question 4

Example calculation

Accepted Answer

Win rate 55%, avg win $150, avg loss $100 → B = 1.5. Kelly = 0.55 − (0.45 / 1.5) = 0.55 − 0.30 = 25%. Half-Kelly = 12.5% (still very aggressive — most pros use 5–10% max).

Question 5

Common mistakes to avoid

Accepted Answer

1) Trusting Kelly with a small sample (< 100 trades). 2) Using Full Kelly — drawdowns will crush you. 3) Applying Kelly without accounting for correlated positions. 4) Treating Kelly % as risk %; it is position % of capital.

Question 6

Related tools

Accepted Answer

Use with the Expectancy Calculator (validates your edge first), Position Size Calculator (translates Kelly % into shares), and Drawdown Recovery Calculator (see downside of oversizing).

Kelly Criterion Calculator

The formula

Frequently asked questions

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