Kelly Criterion
A mathematical formula that calculates the optimal bet size based on your edge and odds to maximize long-term bankroll growth.
Like investing more in stocks you are most confident about, but never putting everything in one position.
Why it matters
Kelly sizing ensures you bet more when your edge is bigger and less when it is smaller, optimizing growth while managing risk.
How DMP uses this
DMP's EV calculations provide the edge inputs needed for Kelly sizing. Users can apply Kelly to our +EV recommendations.
Common mistake
Betting full Kelly -- it is mathematically optimal but practically too aggressive. The swings are brutal.